Amazon: 25 years of success in e-commerce
From the garage to the most expensive company in the world
Monday. Morning. Seattle. New Amazon employees line up to initiate and join the e-commerce giant. They are reminded that they should forget once and for all about the “bad habits” carefully instilled in past works, and focus on the principles of leadership, which from now on they will be guided by every day. “If you hit a wall, climb the wall” - this is the only way to be the best Amazonian, and not the best ones don't work here.
Today, Amazon is so large and omnipresent that many are wondering: “How to create a website like Amazon,” but few people know that the company was created in the garage. Jeff Bezos and the first employees hired by him packed the books at the tables made of old doors, and after that he independently took the parcels to the post office in his 1987 Chevrolet Blazer. In an interview in 2016, Bezos confesses to Charlie Rose: “Then I thought that someday the day would come and we could afford a loader”
Over 25 years, Amazon has grown from a few books to more than 350 million different products shipped worldwide, and its market capitalization in 2019 was $ 797 billion, allowing it to overtake Microsoft and become the most expensive company in the world for the third time.
Today we will tell you the inspirational story of Amazon, going step by step from an online bookstore to an international monster that threatens to swallow up all the niches and industries in its path. Join now!
How was Amazon born?
In 1994, the Internet has already become a reality. Jeff Bezos worked on Wall Street and successfully built a career. The 30-year-old manager, who graduated from the prestigious University of Priston, was in charge of online business, a new direction that emerged in the United States in the early 1990s. With his experience, his thirst for fresh ideas and his visionary bordering on obsession, he could not help seeing the promise of the online environment.
At some point, Bezos understood: the Internet will change the habits of consumption of almost all people, this is already happening before his eyes, and it should be part of this paradigmatic change, not daring to stand aside.
In a speech addressed to Princeton graduates in 2010, he told about this turning point in his biography: “I discovered a curious fact - the use of the Internet in the United States grew by 2300% per year. I have never seen anything grow so fast. I was inspired by the idea of creating an online bookstore with millions of publications - which would not fit in any traditional store. ”
So Jeff Bezos left his well-paid job, New York, and put everything he had (including the savings of parents who helped him finance this idea) to his online bookstore, for which he had enough skills.
Why the books? As with all subsequent decisions that led Amazon to success, in this case, Bezos was not guided by personal tastes or assumptions. Instead of long reflections, he created a matrix of cheap and sought-after products. The books were in the center of both axes, which became the key argument for choosing this niche.
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How do you call a ship ...
Creating a platform in the garage of his house, Jeff Bezos originally gave the company the magically sounding name Cadabra, which was derived from abra-cadabra. However, Todd Tarbert, who is a friend of Bezos and Amazon’s first lawyer, convinced him to change his name, as it was too similar to the cadaver, especially in a telephone conversation, which could be negatively perceived by customers. As a true businessman, Jeff understood how important a good name is for the company, so he immediately set about finding a new one.
The second option was relentless, but Bezos's friends insisted that it sounds too ominous. Domain relentless.com to this day belongs to the businessman and redirects all visitors to amazon.com.
In the end, the fateful name was chosen. Scrolling through the Oxford dictionary in search of fresh ideas, Jeff came across the word "Amazon." Bezos knew that initial success would create imitators and competitors; therefore, innovation and size had to be the key to the company's survival. One of the reasons why he chose the name Amazon.com is because the Amazon is the largest river in the world.
Ideal this name was made and the fact that it began on "A." At that time, users searched sites like Amazon on the Internet through online directories, so his store was always one of the first to appear.
All the stars came together, and Amazon.com was registered in 1994, and appeared online in 1995. Success was almost instantaneous. An important role in the development of the company was played by placing the site on the “What's New?” Page of the Yahoo search engine. The result was a rapid increase in orders - from the sale of dozens of books a day to receiving orders for 20,000 dollars a week!
It was almost unprecedented, and Jeff Bezos was determined to turn his company into the “Largest bookstore in the world.” This motto became part of his philosophy for many years to come.
Work philosophy
If you are interested in how to create an e-commerce site like Amazon, then we suggest that you start to get into the basic principles that help a businessman achieve success. Jeff Bezos turned to data management very early. When he wanted his grandmother to quit smoking, the boy did not try to ask or appeal to the senses. Instead, he made mathematical calculations, determining how many minutes of her life each puff is worth. The verdict was uncompromising: "You have deprived yourself of nine years of life!" After these words, the woman burst into tears. Bezos at that time was 10 years old.
After many years, he created a technological and retail giant, relying on the same impulses: the desire to tell others how to behave, and the all-consuming confidence in the power of metrics that he developed, drawing on his own experience at DE Shaw & Co. - a financial firm that turned over a Wall Street agreement, using algorithms to get the most out of every deal.
Despite Amazon’s interest only in the best specialists, the company has never relied on meeting the needs of its employees in comfortable working conditions and social packages, as is common in many Silicon Valley whales. As the company grew, Bezos turned his ideas into strict instructions, preventing the mediocrity he was so afraid of.
The result was the principles of leadership that the Amazonians are guided by in their work. Unlike most companies, where the postulates about their philosophy are sets of vague platitudes, Amazon has clear rules that are used when hiring and quoted not only at meetings, but also at lunchtime instead of prayer. It is this approach, sometimes bordering on common sense, that allowed the company to take a leading position in the world of e-commerce and not be afraid that the existing alternatives of Amazon will bypass the original.
... an understanding of Jeff Bezos's infectious leadership style
In the era of the dotcoms, most public companies were obsessed only with meeting the short-term demands of shareholders. This meant a steady increase in stock performance for profit, rather than focusing on long-term investments and creating company value. Jeff Bezos did exactly the opposite - he made a bet on the prospect instead of focusing on quick withdrawals. Trade analysts called this style of development "the gateway to bankruptcy."
Within a year after the dotcoms began to burst like "soap bubbles" when most companies collapsed at the dawn of the millennium, Amazon.com announced its first profitable quarter.
Back in 2003, while the technology industry was still experiencing the dot-com crisis, Bezos saw enormous potential for many Internet companies and any multi-vendor marketplace similar to Amazon.
Do what is best for the client
Customer service was recognized by Jeff Bezos as the most important vector in Amazon.com. Guided by this, each employee of the company, including the CEO, was obliged to spend at least two days every two years working in the customer service department. This practice helps to better understand the process of interaction with consumers.
Bezos himself periodically responds to emails. One day, an elderly woman wrote to the company that she really liked to order books from the site, but unfortunately the packaging is too difficult to open, so she has to wait until her nephew returns and helps her. On the same day, Jeff Bezos gave the order to remake the whole package in such a way that its opening would not cause any difficulties.
In an interview for Charlie Rose, Bezos said: “Our guiding principle and philosophy that link all the processes in a company is an obsession with customers, not competitors. When planning, we start from the needs of the client, develop new skills within the team and create a product that will be in demand in the future. ”
Therefore, if you are thinking about how to make a website similar to Amazon’s marketplace, pay attention to the things that allow it to improve and hold strong positions in the e-commerce market.
Chronology of Amazon's incredible evolution
Above, we paid attention to the basic principles and vision of Amazon, but in business, success must be supported primarily by numbers. The most interesting thing in online business is that there are always “footprints” that allow you to return to the past and re-go all the way with the company. We will review in chronological order the main key events in the history of the formation of Amazon, linking them with the value of shares for clarity.
July 5, 1994 - Amazon's Birthday
Jeff Bezos and his wife Mackenzie moved to Seattle and opened an online bookstore in the garage. At this time, the company was financed by Bezos’s own funds in the amount of $ 10,000.
May 15, 1997 - the company's shares appear on the stock exchange
Promotion price: $ 1.96
Amazon has an IPO. After the initial public offering of shares, the company's market value was $ 438 million. In a statement to investors, Bezos indicated that in the foreseeable future, we should expect significant operating losses due to significant investments in technology and marketing. That was how he planned to bypass the main competitor and giant of the book trade, the Barnes & Noble store.
June 11, 1998 - Amazon starts selling CDs and DVDs.
Promotion price: $ 10.42
Having included music in its assortment, the company offered customers 125,000 songs, and also allowed them to watch clips and receive musical recommendations in accordance with their mood.
September 28, 1999 - Obtaining a patent for the technology of "1-Click"
Promotion price: $ 65.88
It was Amazon who owned the idea of buying goods in one click, which is widely used today throughout electronic commerce and on websites similar to Amazon. In the early stages, this technology provided the company with a number of advantages. In October 1999, Amazon sued Barnes & Noble for violation, forcing other sites to obtain a license when using the one-click purchase method.
September 30, 1999 - creation of marketplace on the Amazon platform and business expansion
Stock price: $ 79.94
By allowing third-party sellers to make sales on their website, the company received a rapid increase in transaction volume. In the first four months, over a quarter of a million customers made purchases through the service.
December 10, 1999 - Company reacts to dotcom crash
Promotion price: $ 106.69
Despite the fact that Amazon managed to survive this troubled time, the company suffered significant losses. The value of shares fell, which led to the need to reduce 15% of employees.
November 7, 2002 - Amazon starts selling clothes
Promotion price: $ 19.12
While continuing to expand its offer, Amazon begins to work with major clothing companies. Thanks to this partnership, the range of the site is replenished with more than 400 clothing brands.
June 10, 2003 - Cloud hosting - a new round of development
Promotion price: $ 34.07
By providing web hosting services to other e-commerce sites, the company is discovering a new niche, which in 2006 transformed into a commercial public cloud, Amazon Web Services. Today, AWS is a leader in the cloud file storage market and is one of the company's main sources of revenue.
February 2, 2005 - Amazon Prime Debut
Promotion price: $ 41.88
Bezos launches a new loyalty program that allows you to issue a $ 79 annual subscription and receive free two-day delivery for any order. Today, Amazon Prime is one of the most valuable assets of the company and unites more than 100 million participants worldwide.
November 19, 2007 - Amazon Kindle Release
Promotion price: $ 79.18
The world's largest bookstore forever revolutionized the future of reading books, newspapers and magazines. Amazon sales increased by 38% and profits doubled. Amazon Kindle was introduced during the holiday shopping season, which allowed selling the first batch of gadgets in just five and a half hours.
July 22, 2009 - Zappos online shoe store becomes part of Amazon
Promotion price: $ 88.79
The principle of action Bezos is simple: if you can not beat a competitor, buy it. After futile attempts to circumvent Zappos.com in the market, Amazon buys it, paying $ 1.2 billion. The transaction took place on condition that Zappos continues to function as an independent organization.
March 19, 2012 - Course on robotics. Amazon acquires Kiva Systems
Promotion price: $ 185.52
The company acquires Kiva Systems, a manufacturer of warehouse robots from Massachusetts, for 775 million dollars. This deal allows Amazon to continuously improve the automation of its warehouses. The company gradually discontinues Kiva Systems’s relationship with other customers in order to focus all power on internal operations and not share technology with competitors. Since August 2015, the name Kiva Systems has been replaced by Amazon Robotics LLC.
August 25, 2014 - Purchase Twitch
Promotion price: $ 466.37
The acquisition of Twitch Interactive, a company focused on the production of video games and game content, allows Amazon to embrace the global gaming community and transfer it to its own cloud platform. The deal cost $ 970 million.
June 16, 2017 - Buying Whole Foods
Promotion price: $ 987.71
As in the case of Zappos.com, after many years of struggle in the market for the delivery of products, Amazon decides to acquire its main competitor. The purchase of 471 Whole Foods stores cost the company $ 13.7 billion.
September 4, 2018 - Amazon becomes the second company in the world with a market capitalization of $ 1 trillion.
Promotion price: $ 2,039.51
The optimistic attitude of investors regarding the growth of profits allows the company's shares to rise significantly in price, and Amazon will briefly reach the $ 1 trillion mark. Earlier in 2018, for the first time in the history of this figure, only Apple managed to achieve.
January 7, 2019 - Amazon for the third time becomes the most expensive company in the world
Promotion price: $ 1,629.51
The new year for the company began optimistically. Amazon's stock value increased by 3.4%, and the market capitalization was $ 797 billion, allowing the company to bypass Microsoft, Alphabet (an international conglomerate that includes Google and its subsidiaries), Apple, and for the third time to become the most expensive company in the world.
It was strategic thinking and risk taking that enabled Jeff Bezos to accomplish and continue to accomplish what many can only dream of. Using the example of Amazon, we can clearly see that success is not a happy coincidence of factors, but a series of consistent actions and decisions, often tough and unprincipled, but taken precisely when others are waiting.
“If, going to work, you decide that you are going to do only what you know, you will miss too many opportunities.”
The company continues to focus on innovation. Trucks with 3D printers on board, printing the parts they need right on the road, delivery by drones, robotic warehouses - this is only the beginning of a long road to the future.
Interesting facts in the end
- Cost reduction is one of the main principles of Amazon. In the early stages, as a measure of cost savings, company employees, including Bezos, sat at tables assembled from old, cheap doors. Today, Amazon is awarding the Door Desk Award to those professionals who offer well-thought-out ideas that create significant savings for the company or reduce prices for customers.
- An incomprehensible book on lichens saved Amazon from bankruptcy. Book distributors demanded to buy books in batches of ten, but Amazon did not need such a quantity, and there would not be enough money to buy them. A solution was found allowing the team to bypass this rule. The company began to order one book and nine copies of a little-known book on lichens, which was never available.
- Jeff Bezos was the first to introduce a review system in his store. It was a risky move from which friends and colleagues discouraged the businessman, because negative reviews could scare away potential buyers. However, the company's founder took a risk that proved to be justified. Thanks to the positive reviews, sales have skyrocketed.
- At the beginning of his journey, Jeff Bezos set himself two benchmarks:
- if by the year 2000 the company's annual sales amount to $ 74 million, this will be a normal operating indicator;
- if by the year 2000 annual sales amount to $ 144 million, this will be a success.
Real sales in 2000 reached $ 1.6 billion, making Bezos one of the largest e-commerce players.
Source: https://habr.com/ru/post/460261/
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