The Story Of Amazon.com - Jeff Bezos ,Innovation, Customer Centricity

Pratiti Soumya
Jul 24, 2017 · 6 min read

It was July of 2005. At school, there was to be a class test — the ones who miss to take it, would be served detention. Tara and I sneaked out of school because clearly, our priorities were different for the day. JK Rowling’s Harry Potter and the Half Blood Prince had just been released.

We stood squirming under the scorching sun in an endless queue for nearly five hours in front of a bookstore. We had done the same the day before in front of another bookstore. We desperately wanted our copies today, but the queue never moved.

Out came an employee with a wicked smile.

“Sorry guys! All copies over. Come next week”.

What next you ask? We served detention wiping off boogers from girl’s washrooms.

Ha! Fast forward a decade and all those bookstores are gone. And I have read all of my favorite fiction books without ever standing in front of one (or serving detention) in nearly 3 years. Answer? Amazon.com.

Amazon.com is the World’s largest online retailer with nearly an unlimited product line ranging from books, DVD’s, video games, electronics, furniture, jewelry, groceries to even tanks! Since its launch, it has catapulted the entire retail space to become the largest retailer in United States (beating even physical stores such as Walmart ). It has innovated through use of artificial recognition to launch Amazon Store and Amazon Echo. So how did it all start? Let’s tune back to 1994 -

The Phenomenon called Internet

In 1994, the Internet was growing at a massive 2,300% per year. It was a platform of easy discovery. It had the potential of completely redefining the distribution model by connecting buyers and sellers through disintermediation.

Jeff Bezos clearly saw an opportunity to leverage its potential and knew that the time was just right to ride the tide. He quit his job at D.E. Shaw in 1994 and pursued the dream of founding the largest online retailer in the World.

Early Stage Challenges

While Bezos envisioned an online marketplace where people could buy and sell, it was difficult to decide the domain with which it could start that would be critical to success of the business model.

He ultimately settled down with books for two critical reasons-

· No comprehensive catalogue existed at that point of time in any bookstore

· Book industry was highly disorganised

Bezos borrowed an initial capital of $300,000 from his parents, hired two computer programmers and founded the company in his garage in Washington in 1994. He envisioned the name Amazon from the World’s largest river.

On July 16, 1995 Amazon.com opened its virtual doors to the public with a huge catalogue of 1500+ books. Initial sales were generated solely by word-of-mouth. The business model kicked off and within two months, its online sales were up $20,000 per week.

Product line Expansion and ensuing IPO

Amazon expanded its product line to healthcare, groceries and hardware. By the end of 1996, Amazon was making $15.7 Mn in sales. Innovation was the critical factor in initial success- for example, the software engineers introduced features such as one- click shopping for ease of online transactions.

On May 16, 1997, Amazon was offered $54 Million in IPO. By the end of 1997, stock prices were up three times!

Year 2000 and afterwards

However, an industry wide disaster of the dot-com bubble hit Amazon in year 2000. Stock price crashed to $5.97 per share. It seemed like the end for Amazon due to extremely low investor confidence in online marketplace model. Bezos did not give up. He saw the big picture of making Amazon the world’s largest retailer and stuck to it.

Innovation, again was the key. In order to grow the customer base it was necessary to garner greater traction on its online presence through collaboration with physical stores. Thus it partnered with Target, Toys-R-Us, GAP and 400 other retailers for expanding its reach. Amazon was back in the picture again and it has never looked back since.

The Differentiating Factor

Amazon has truly differentiated itself from its competitors by standing for something bigger than just another retail store. The mantra behind Amazon’s success has been simple- Customer Obsession.

Customer obsession starts with putting the customer at the center of all activities and innovating on part of the customer.

The strategy involves working backwards- thinking like a customer and predicting needs, strategy to satisfy those needs, developing whole ecosystem to serve customers and cater to their ultimate satisfaction.

The mission of Amazon is

“Our vision is to be Earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

So what is customer Centricity?

Customer Centricity has three stages

Stage 1- Listen

Listening to Customers is essential to success of any organization. Feedback is necessary-many businesses fail because they do not listen to what customers speak about them. In the digital world, a singular person’s review has the potential to influence purchasing behavior of another 5000 individuals.

Stage 2-Invent

It is necessary that a company taps into the psychology of a customer and innovate better experiences for him. The organization must decipher his future needs and innovate better features and service for delivering a truly satisfying purchase experience.

Innovation has been a key success factor in driving the growth of Amazon.com. Bezos has often stressed the importance of failing enough times for continuous improvements for bringing out a truly revolutionary product.

Case in innovation- Amazon Echo

Amazon Echo owns more than 70 percent of Voice assisted devices, whose usage grew nearly 130 percent in 2016. With the rollout of the new version of Echo such as Echo Show and Echo light, the echo is becoming a lifestyle platform for communicating, managing our everyday lives, streaming music and even chosing what we wear.

Case in innovation- The Amazon Kindle

One of the major innovations has been the Amazon Kindle devices launched in Nov 2007. It enables users to browse, buy, download, and read e-books, magazines,newspapers and other digital media via wireless networking to the Kindle Store. All Kindle devices integrate with Kindle Store content and as of January 2017, the store has over five million e-books available in the US.

Case in innovation- Amazon Prime

Amazon is going head to head with Netflix with Amazon Prime. The differentiating factor- Prime has 5000+ movie and TV shows for free along with Annual subscription. The pricing structure is deep discount that has enabled it to garner large market share.

Stage 3- Personalize

Treating each customer experience as unique and delivering the best experience is what drives growth for Amazon. Product suggestions, delivery schedules, offer deals for sellers and buyers are all personalized for each unique customer. This has a two pronged impact-it helps in generating positive reviews about the Amazon brand and satisfies the customer, driving repeat visits.

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