How did JEFF BEZOS survive the bubble burst?
3 Major strategies that led Amazon.com to overcome the ‘biggest’ crisis ever and become the‘biggest’ online corporation
Amazon, like its name means the biggest river in the world, from the online book store at first launched in Jeffe Bezos’ garage, continued to grow and became one of the biggest and most successful online corporations in the world. Even though it was also one of those thousands of internet start-ups emerged with the Dot-com boom, Amazon.com is now one of internet giant leading the industry. As there is a saying that ‘Risk can be the biggest opportunity,’ how they safely and successfully passed through the dark period of internet actually turned important breakthrough for their success.
So, how did amazon.com survived?
First of all, Amazon has slow and steady business pace comparing to other dot com companies. It’s the classic story of the rabbit and the tortoise. The cocky dot-coms of the mid-’90s were — just like jack rabbits — popping up everywhere, with dollar signs in their eyes, making a mad dash for some fast and easy cash, and lots of it. Young entrepreneurs were living the high life, and venture capitalists were ignoring all they were taught, believing the Internet was some sort of magical moneymaker. Amazon, meanwhile, was the proverbial tortoise, with Bezos deciding that a slow and steady pace to profitability would ultimately win the race — much to the dismay of his investors. Its long term approach for ROI become a distinct edge for its success by surviving. Amazon.com went six years from its launch in 1995 before it finally reached profitability in the fourth quarter of 2001, when Dot-com burst in the beginning of 2000, wiping out a large number of competitors.
In addition, Amazon’s consumer centric business mission is another significant reason why Amazon was not only able to survive from the bust, but also keep their success pace of business. Amazon’s mission statement actually begins with “Earth’s most customer-centric company” By creating user experiences focusing on customer centricity, which provide online shopping service according to consumer’s convenience, Amazon was able to build consumer royalty and this led to company’s profit. Also, Amazon build low cost system which consumers obviously seek the most for their successful online shopping experiences. When Jeff Bezos began running Amazon, he tried to approach to business strategies of Walmart to better understand low margin business. And they built the system inside, if we go to Amazon, we can reasonably expect to find relatively inexpensive prices due to its efficient process of connecting buyers and sellers. This system became the essential drive that constantly attracts consumers pursuing low cost of payment.
Last but not least, Amazon.com has never stopped pursuing innovation in business. They has kept building viable and innovative business model around market changing customer value proposition. Even in the period of Dot-com crash in 2000, Amazon was looking expand in areas other than online retail. It was during that year that Amazon began selling its e-commerce platform to other retailers. Amazon Amazon sells its platform through its subsidiary Amazon Services, giving businesses the ability to sell their products on Amazon.com or make their own Website more successful. Or, like Target, businesses can have a store on Amazon.com but also use Amazon Services to build and manage its own e-commerce site, Target.com. But Amazon did not stop there. And the next stop was the cloud. This computing infrastructure came about because Amazon realized that as it continued to sell ever more items beyond books and as its business grew it needed a system that could keep up with the increasing demands on it. Unfortunately, no such solution existed at the time. So Amazon built the system itself — a system that distributed the work among separate computers, with the computers offering their services on an as-needed basis. Amazon realized that providing such a large computing capacity to organizations would be much faster and cheaper than their building their own server farms — and another way for Amazon to earn a return on this huge capital expenditure. By doing so, it was providing infrastructure as a service and platform as a service. Officially launched in 2006, AWS is made up of Web services, the most well-known being Amazon Elastic Compute Cloud and Amazon Simple Storage Service. EC2 is a Web service that provides resizable compute capacity (like elastic) in the cloud, designed to make Web-scale computing easier for developers, Amazon claims. Today, Amazon dominates the cloud market, according to data from Synergy Research Group. “Amazon dwarfs all competition,” including global IT giants Microsoft, IBM and Google, said Synergy analyst John Dinsdale. Amazon doesn’t break out AWS revenue, but in 2013 it could make $4 billion in revenue. Despite Amazon’s success in online retail and cloud computing — major reasons for its No.49 ranking in the Fortune 500 in 2013 — the company is not resting on its laurels. Case in point are its Kindle ebook readers and tablets, including the Kindle Fire HDX. Amazon occupied 73.7% of market share in Kindle e reader market already in 2011 in the US.
Because it does not only try to stay and stick to one business model and try to drive in other models fitting into each digital ear they face, it was able to survive in the critical crisis in the history of digital economy, and it still maintains its position as a world most successful giant. Amazon is trying to think differently and approach something that really is meaningful to the company, which is finding better ways of delivering physical goods to customers’ homes. So, the company keeps on innovating.
We can see its unhurried and solid business plan become the secret to survive from the crisis become the essence for constant thrive.