How Amazon Became The Largest and Richest E-Commerce Company?
It was the year of 1994 when Jeff Bezos left his well paid job of investment banking job to start a start-up.
credit - Tech2tip
It was the time when Internet was growing drastically. He thought to start something new, a business related to Internet.
The first idea he thought was to open an online store to sell books. After several trials, he finalized Amazon as his online store's name.
The main motive behind why he chosed Amazon as the name of his online store is because Amazon is the largest rain forest in the world. The same way he want to make his online store the largest book store in the world.
credit - Fortune
Now if you will see the present situation, then according to Jeff's desire, Amazon is not only the largest online book store but the largest online store for any commodity.
Additionally, Amazon owned Amazon Prime is among the largest OTT Platform in the world. It also includes some of the most famous and useable things such as AWS (Amazon Web Service), Amazon-Alexa, Amazon Music, Amazon Kindle and Amazon Pay.
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Amazon had now not only became the largest online store but controls many businesses in differnt and various fields.
What were the business strategies used by Jeff Bezos for the success of Amazon?
Let's Find OUT.
Origin & History
When launched in 1994, Jeff had a clear and unique idea to be followed. As during that time people usually purchase books physically, so the idea of selling books online became quite successful.
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By 1995, the website had a customer base of 180,000 and by 1996, it was able to generate a revenue of $148 million.
In 1997, Jeff decided to list his company in stock market to get more revenue from people for its further development. Therefore in 1997, Amazon became a public company.
By 1998, Amazon's revenue reached $600 million.
credit - The Motley Fool
There are basically 2 reasons said behind Amazon's success namely:
1. Amazon was providing a convenience to its customers. There was no other company which was providing services and offers such as Amazon. Hence, Amazon had no competition in its business.
2. As Amazon was selling books at a low cost with millions of alternatives, it attracted more and more customers and hence more revenue. See its traffic more book sellers were willing to sell their books through Amazon.
credit - Version Museum
There was another key strategy of Amazon that as much revenue they generated, much of it is used to improve their website in order to increase their user-face interface and customer experience.
Successful Ideas of Amazon
In 1998, Jeff deiced to expand their business by selling computer games and music along with books. This plan also proved to be highly successful.
Another strategy used by Amazon was their ONE CLICK BUY idea. The customer had to just click on that button and they will receive the placed order.
credit - Wikipedia
The advantage of using this strategy is that if a user had to click 3 to 4 buttons to buy a thing, he will get some time to think whether he should purchase it or not. But in the case of ONE CLICK Button, the customer have less time to think and hence Amazon was able to sold more items and thus increasing their revenue. It was the year of 2000, when Jeff thought to sold each and every thing on Amazon via 3rd party means. The advantage of using this idea is that Amazon had to built no store house for manufacturing its items.
Other 3rd party company will sell their item through Amazon and Amazon will keep a small share of their sale.
This idea of Amazon became so successful that there were excessive items being sold on Amazon. It led to lack of storage in Amazon.
Jeff decided why not to create our own storage capacity and to invest in other fields which had no competition. Through this the idea of AWS (Amazon Web Service) was invented.
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The idea of AWS was so successful that it saw an immense growth and became among the most profitable business for Amazon. It accounts for 40% of total revenue generated by Amazon. Companies such as Netflix, Facebook, Twitch and Pinterest uses AWS for storage facilities.
In 2007, Amazon introduced Amazon Kindle which provide e-books facility. Now the user was able to rea books digitally. Thought Jeff decided to make this business non-profitable yet it increased the sales on Amazon online book store. Kindle became the number 1 e-book reader application.
credit - Amazon
Failures for Amazon
You have seen that the ideas in which Amazon became successful, it was the first company to apply these ideas properly and efficiently.
As being the first company in a new idea with very less competition and high demand, it was quite easy for Amazon to be successful in it. But when Amazon tried to expand its business in other fields with stiff competition, it had to go through a number of failures.
credit - CNET
The major example to illustrate can be given by Amazon's Fire Mobile. Amazon launched its first mobile in 2014. But it was too late for Amazon to come in this business as during that time there was already a stiff competition between Android and iPhone.
For Amazon being a fresher in this field wasn't easy to fight with these experienced players who had already retained their market capital.
Another failure for Amazon was its late entrance in India which helped Flipkart, an e-commerce company as Amazon, to gain more market capital in India.
For Amazon being a fresher in this field wasn't easy to fight with these experienced players who had already retained their market capital.
Another failure for Amazon was its late entrance in India which helped Flipkart, an e-commerce company as Amazon, to gain more market capital in India.
credit - DNA India
Flipkart was launched in 2007 and Amazon was came to India in 2013. This was the result why there is still a stiff competition between Amazon and Flipkart till date.
Conclusion
Due to its vast expansion in various fields as well as regular investments in the company to improve its quality and user experience, Amazon became a $1.6 trillion dollar company!
Not only this but Jeff Bezos also became the richest person in the world and currently stands in the top 3 position. Jeff's current net worth is about $144.4 billion dollars.
credit - Medium
Amazon had expanded its business in various fields such as e-commerce, web service, storage facility, book store, e-reader facility, 3rd party medium to sell products, OTT platform, UPI payment apps, amazon Alexa and even transportation business.
Jeff continued to invest its profits in the company itself because of which Amazon continued to be in loss till 2014. But after 2014, its net profit increased exponentially.
credit - Statista
This was the interesting story of Amazon's strategy and business models. Hope you enjoyed it.
Do share it with your friends who too want to become an entrepreneur.
Thanks for Reading!
