How Amazon became an online powerhouse
Jeffrey Bezos was a banker on Wall Street who saw enormous potential in the Internet. In 1994, at the age of 30, he quit his job and started the online retail company he would name after the Amazon River.
Bezos had always planned to offer as many products as he could, but initially focused on books because they were popular as online purchases, relatively inexpensive, and easy to store and ship. He began fulfilling orders out of his first warehouse, which was his garage in Seattle, Wash.
His timing couldn’t have been better. More and more people were buying personal computers and venturing onto the Internet, but most retailers still didn’t see the opportunity to reach them there. Bezos did.
Amazon was noticed and promoted by Yahoo, and sales soon rose to $20,000 a week. Bezos secured $8-million in private funding in 1995, and two years later, took the company public.
Bezos’ business philosophy made many of his investors nervous because he had no intention of turning a rapid profit. Instead, he warned them that he was all about the long-term.
Where many companies looked only a couple of years into the future, or even just a few months, Bezos was determined that Amazon’s timeframe would be five to seven years.
Its focus on gradual growth helped Amazon weather the dot-com bubble, and it announced its first profit in 2001. It was modest, but Amazon was still standing after a huge number of Silicon Valley start-ups had spectacularly imploded. Bezos was building his company by plowing its profits back into it.
Looking so far ahead gave Bezos the opportunity to fully work out any kinks in new projects. It also gave him an advantage over competitors coming late to fully-bloomed technologies that he had already incorporated when they were still in their infancy.
Amazon has purchased more than 40 businesses since the late 1990s, including software developers, publishing firms, data companies, smaller e-commerce companies, and even a robotics company that makes automatic guided vehicles for warehouses. In 2007 it launched its own e-reader, Kindle, and the supply of e-books to go with it.
As with any company, repeat business is the key to Amazon’s success. To that end, it reaches out to its customers proactively. It uses software not only to track purchases but also items that users have perused without buying.
It will then send suggestions similar to purchased items, by email or when the customer next logs into the Amazon site, or will cross platforms when customers log into other sites, like targeted advertising on a Facebook page.
Taking it a step further, Amazon has even patented “anticipatory shipping,” which could predict what a customer will buy. The company would package and ship the item to the closest delivery hub before the customer actually ordered it, cutting down on wait time when the item is finally requested.
Amazon appeals to customers on several levels. It’s convenient, since it carries a wide variety of products that would be hard to find in one place, either stocked at its warehouses, known as fulfillment centres, or from third party sellers.
Items are shipped as quickly as possible, with some products in select areas arriving on the same day. A fee-based service, Amazon Prime includes free shipping, entertainment streaming, free cloud storage, and early access to special deals.
The company also prides itself on service. It assigns dedicated customer service support providers to assist people who have purchased from third party sellers through Amazon, and keeps copies of all correspondence between buyer and seller if it has to settle a problem.
When people call in with issues, Amazon rates its service representatives by whether they’ve made each customer happy, not by how long the call takes or how many customers they help during a shift. Despite fielding thousands of complaint calls each day— everything from delivery issues to not being able to figure out how a product works— Amazon consistently ranks among the top companies for customer satisfaction.
That’s not to say it’s always utopia inside.
Employee turnover can be high, with some reporting they’d been expected to work excessive hours or be available at all times, even late at night.
And not everything the company touches turns to gold. It built an online auction site in 1999 to compete with eBay, but it never attracted many customers, and was dropped.
In 2005 Amazon launched BlockView, which used camera-equipped vehicles to take street photos that were integrated into its Yellow Pages search engine. It was dropped a year later, and ultimately, it was Google that successfully ran with the idea.
Perhaps Amazon’s most surprising venture is actual bookstores. It opened its first in Seattle in November 2015, with a second one scheduled for San Diego later this year.
The store offers free and fast WiFi, and puts all of its books cover-out for maximum exposure. The selection is smaller than in most big-box stores, but customers can order online while they’re in the store.
There’s a display of electronics,most of them the company’s proprietary units such as Fire TV, Echo and Kindle, laid out as in an Apple store for customers to try out. Even in a world of online retail, many people like to browse and touch the merchandise, especially electronic devices, before they buy.
The company posted strong earnings in the first quarter of 2016, much of it driven by another unusual venture, Amazon Web Services, a cloud-computing service for businesses.
It’s experimenting with restaurant delivery and, famously, with delivery drones for packages. Amazon has come a very long way from packing books in a garage, and it’s still looking well into the future for its next big thing.
