email@example.com. Yes, that’s the email address of Jeff Bezos, CEO of Amazon. If you’re disgruntled about some Amazon service or product (and who on the planet hasn’t been touched by Amazon in this day?), just send him a note. Company lore has it that he forwards such emails to the relevant employees with a simple note – “?”. Such an email from the big boss is sure to set some seats on fire!
Amazon, Flipkart, Walmart, eBay, Myntra, Alibaba – these are just some of the names that pop up in our minds when we say the word “shopping”. Among all these companies, Amazon has, by far, beaten the others in the e-commerce race, with its nearest competitor not being able to keep pace.
What makes the story of Amazon so amazing is the dizzying graph of the company: a company that began in a garage at founder Jeff Bezos’ home, with funding from his parents and a limited vision of selling books online, is now a global giant valued at a whopping trillion dollars.
The Everything Store deals with anything and everything under the Sun. It sells products, delivers orders, produces TV shows and movies, publishes books, sells over 165 web infrastructure services, manages data, streams video, music, gives online tuition, and does much more. Nobody dreamt of this rise – even five years after launching the company, Bezos, presently the richest man in the world, himself had doubts about its success.
One-Click Its Way to a Trillion Dollars
Amazon Founder Jeff Bezos operates with a very simple mantra – Being a Day 1 company. Simply put, be there on the first day, that is, be ahead of your competitors. The philosophy embraces focusing on results, not on process. Day 2 companies, Bezos says, are satisfied by ensuring the process is followed, and lose sight of the results.
Amazon’s business model sums up three customer value propositions: low prices, fast delivery (usually on the same day), and a vast selection. These propositions have helped the company to sustain strong revenue inflow from its different wings.
Direct sales: The core part of Amazon’s business is its online stores, now accounting for 7.7% of all retail in the US, the world’s largest retail market. Revenue at the end of 2018 was above USD 200 billion and is expected to hit USD 350 billion at the end of 2019.
Commission-based sales: Acting as a go-between between other retailers and buyers, usually for less common and higher priced products, helps the company net a commission by retaining a part of the sales price. The third party sales increased by 23%, from USD 9.7 billion in Q2-2018 Q2 to USD 11.96 billion in Q2-2019.
Subscription-based services: The global OTT media darling Amazon Prime Video ensures a steady income through consumer subscriptions of Prime. According to a study, 60% of adults in the US watch streamed video for almost 6 hours a day. At the end of 2018, subscription to OTT video services was about 52% of the US population. By increasing the amount of paid ads and OTT advertising technology with visually stunning full screen ads, Amazon is now the third largest ad platform in the US. One hundred million people watch Amazon Prime globally, with 26 million in the US alone.
Amazon Web Services: An important revenue source for Amazon is its cloud service, AWS. At the end of 2018, net sales revenue was over USD 232 billion. It provides more than 165 fully featured on-demand cloud computing services to companies and individuals. AWS is an Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) organisation, offering users a universe of products and services to building and expanding cloud-based digital products. News of AWS downtime bringing some leading services down ranging from Instagram to Netflix to Slack shows how wide and deep AWS penetration is.
Acquisitions:A slew of acquisitions since 1998 has allowed Amazon to step into new terrain: sample acquisitions such as IMDb – the movie repository, Junglee – the data mining company, Joyo which became Amazon China, Audible – the audiobooks company, Lexcycle – the e-book which was renamed Kindle, video streaming company, LoveFilm now called Amazon Prime Instant Video, smart speaker Echo which was earlier called Yap, GoodReads – the social cataloging website, and Tapzo which became Amazon Pay, to name a few.
The rapid pace at which Amazon is acquiring other companies has led to the creation of the verb amazoned, whichhas come to mean your business being taken up by another company!
Customer centricity: The Core Principle Behind This Amazing Rise
Over and beyond these amazing numbers and the range of sectors, the ‘secret sauce’ to Amazon’s growth is its obsession with customers. Bezos’ core philosophy to make Amazon the “Earth’s most customer-centric company” has become the company’s USP. Bezos’ obsession with customer satisfaction is legendary, requiring every employee up and down the chain to have a similar obsession too. Legend has it that even the logo of the company denotes the smile of a happy customer!
As content folks, we watch the rise and the rise of Jeff Bezos and his Everything Store with bemusement and awe. We learn daily lessons in customer centricity. We apply it to everything we do with our own customers. We’re amazed at Amazon!
Watch this space for our next blog on how Amazon has used content to support its march to world retail domination.