How Amazon Built a $1 Trillion Business by Breaking All the Rules
Amazon has become the world’s largest online retailer, and it now makes over $1 billion in revenue every single day. But this wasn’t always the case. Founded by Jeff Bezos way back in 1994, Amazon has grown by expanding into different product categories and embracing new technology that allows it to fulfill orders quickly and at a low cost to itself.
Don’t Charge Ahead of Sales
In recent years, Jeff Bezos has become famous for his practice of moving at grasshopper speed: We are able to be patient because we know that if we execute well, over time we will win. We may be slow, but we are deliberate and methodical. There is perhaps no better example of Bezos’s slow approach than how he built Amazon’s retail business before introducing its most profitable feature, Prime. While other companies rushed to build their own e-commerce platforms in order to compete with Amazon, Bezos took a more measured approach—and it paid off. Rather than building out all of Amazon’s services from day one, Bezos chose instead to focus on offering customers as many products as possible through low prices and fast shipping. As demand grew, so did Amazon’s offerings—and then it launched Prime in 2005.
In his own words, Jeff Bezos describes Amazon’s corporate culture as highly experiment-driven and purpose-built for invention. Of course, when you’re worth over $150 billion (more than Apple and Google combined), you can afford to think big and get creative about things—which is exactly what Amazon has done with its products. For example, the online retail giant introduced Prime Video in 2013. Three years later, Prime Video had expanded into 18 countries and added original programming to its list of offerings (including Man in The High Castle, Transparent, Mozart in The Jungle and American Playboy: The Hugh Hefner Story). You can also order products on your smartphone via one-click ordering with two-hour delivery.
Never Stop Innovating
One of Jeff Bezos’ mantras is to move fast and break things. That gets misconstrued as meaning that he wants his employees to go as fast as possible. In reality, Bezos doesn’t care about speed; instead, he wants his employees to take risks and make mistakes—and learn from them. He says, I want people who are going to be so driven to invent something new that they don’t let a fear of failure stop them. The Amazon Way encourages employees never to rest on their laurels, but rather constantly innovate (at all levels) and try new things. This kind of thinking has led many observers to suggest that Amazon will eventually displace Google, Facebook, or Apple in terms of market cap—however long it takes.
Offer Something Special
One of Bezos’ first big ideas was to offer something special—something you couldn’t get anywhere else. In its early days, it offered customers daily deals and discounts on products. And instead of offering only one or two books in each category, it stocked its shelves with many choices for customers to browse through. Of course, these are things any small business can do—but that doesn’t make them less effective. If your business is struggling and you need an immediate boost, think about how you can offer something special and not-so-standard (like daily deals) as soon as possible. You might be surprised at what happens next! The same principle applies to choosing which products to sell. Instead of trying to become everything to everyone, choose just a few items and excel at selling those few items. It sounds simple enough but it isn’t easy when you have thousands of potential products available. How do you decide? The answer is easy: follow your passion and expertise. Pick out items that interest you and appeal to people who like similar things that interest you too. As long as there’s some overlap between those groups, you should be good!
Have an Enemy
As your business grows, it’s going to attract more and more attention from competitors. How you deal with that competitive environment will affect your success or failure, so pick someone—it could be another business or just an industry leader you admire—and figure out how you can learn from their example. One of Jeff Bezos’ rivals early on was Barnes & Noble; he used to go into their stores and count all of the people who lined up at check-out. When things got tough for Amazon and competitors started coming after them, Bezos referred back to that day in Barnes & Noble: Bezos asked his executives, if we line up all our customers in one line outside our warehouse, how many customers do we have?
Have Frugal Costs and Pricing
One of Jeff Bezos’s earliest lessons came when he tried to sell books. Like most other startups at that time, Amazon offered its customers a set price for all its titles and relied on volume to move them off shelves. But one day, Bezos looked at his sales data and realized that customers were ordering expensive hardcovers more often than paperbacks—perhaps because it took just as long to get the more expensive book in their hands as it did for paperback.
Supply Chain Is King
It’s hard to overstate how important it is for Amazon to keep its supply chain moving. What once started as a relatively simple system of delivering books and other merchandise from one local facility in Seattle has expanded into an enormous, global beast, with massive fulfillment centers scattered around every corner of North America, Europe and Asia. The shipping network is essential to almost everything that comes after—from customer service to inventory management and marketing initiatives—and if something goes wrong on that end, it can have far-reaching effects. It’s been known to happen.
Build on What Works, And Kill What Doesn’t
One key to Amazon’s success is that it built on what worked, and killed what didn’t. Many businesses will have good years and bad years, which is all fine if you take advantage of both. If things are going well, be sure to invest in your brand with advertising and marketing so you can build on that momentum. But if things aren’t working as planned—be prepared to cut your losses quickly. In fact, getting rid of failing ideas early means you won’t waste any unnecessary time or resources trying to fix something that isn’t broken (or won’t ever work). When it comes to your business, be wary of passion projects, especially when there are other areas for improvement.
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