This past holiday season was brutal for almost all retailers. Still, Amazon.com was one company that rose above the carnage and stood out with its positive performance, growing fourth quarter sales by 18 percent and profits by nine percent. Amazon.com's share of traffic compared to the top 10 discount retailers and department stores hit 39 percent in December, up 18 percent from a year ago. In contrast, Overstock.com and CircuitCity.com (since liquidated) saw their share of visits plummet 35 percent and 44 percent, respectively.
 
What is the secret of Amazon.com's success? As always, there is no single silver bullet. Amazon.com certainly provides a great customer experience. The success of Amazon Prime, its free shipping program, is cited as a factor. However, Amazon.com has long distinguished itself among online retailers by the power of its recommendation engine, which tracks the behavior of shoppers, reminds them of what they have looked at and makes also makes recommendations based on past behavior of a shopper as well as the behavior of other shoppers who have displayed similar behavior.
 
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