In the year 1994, the American entrepreneur, Jeff Bezos, started Amazon as a small online bookstore. Over the last 20 years, Bezos and his team grew Amazon from the bookstore inception to one of the largest ecommerce businesses in the world generating $136 billion in revenue last year alone. Amazon has become a template for how ecommerce businesses should be ran. Amazon uses innovative shipping strategizes such as Prime (free two-day shipping) and drone shipping. Customers are using Amazon Fresh to buy same-day delivery groceries and Dash to instantly reorder household goods with the click of a corresponding button. Amazon has a wide varieties of services like web hosting, online storage and a large array of subsidiaries. When people think about famous entrepreneurs, Bezos is usually high on that list and you can learn a multitude of business lessons from what he has accomplished.
- Experiment Endlessly
Bezos said, “If you double the number of experiments you do per year you’re going to double your inventiveness.” Experimentation is how innovations are created and how companies stay competitive in the market. For example, automobile companies have concept cars and restaurants experiment with new ingredients and flavors. Experimentation helps companies stay relevant with the advancing technology and hypercompetitive market. For experiments to help your business the data you receive needs to be measured. You can measure experiments by looking at recurring orders, helpline feedback or product reviews. Amazon has had an abundance of experiments to be at the top of their industry. Amazon has experimented with advertising on television and online auctions, both which failed. You have to be willing to fail in order to find the best ways to succeed. If you already know that it will work, than it’s not an experiment. Even though some results will tell you not to do it, it doesn’t always mean you shouldn’t. While some results may hurt your short term, they could be beneficial in the long term.
- Think Big Picture and Long-Term
In the early days, Bezos was asking investors for money to get Amazon started. Most of the investors didn’t even know what the Internet was, but Bezos knew people would be buying products from it. This circular thinking helped Bezos realize the power of the Internet before others and realize he would need to add other components when the market started shifting. Amazon started selling just one item: books, but Bezos’s big picture for Amazon was to sell everything from home goods to clothing to children’s toys. He may have started small, but he was always working towards his vision. Amazon was not profitable for many years, because he was putting all the profits back into the business to build his vision. He was investing in other businesses to help Amazon to expand into new areas like web services and fulfillment centers. Bezos may not be able to tell you recent growth numbers, because he is always thinking long term. Short term thinking is not a good indicator of long term outcomes. It may take years for some innovations to turn a profit, so companies need to wait it out. Bezos said, “If we think long term, we can accomplish things that we couldn’t otherwise accomplish.”
- Customers are Key to Business Growth
Customers are the life of your business. The way you treat and interact with customers will determine how many customers return for repeat business and help your business grow. Bezos said, “We’re not competitor obsessed, we’re customer obsessed. We start with the customer and work backwards.” Most companies build products and then see if the customers like it, but Amazon focuses on the customer’s needs first. Amazon has put customer loyalty ahead of their short term gains. For example, Amazon puts a warning on product pages where customers already ordered the product to reduce accidental duplicate orders. Bezos also allowed competitors to advertise on Amazon’s pages and give customers more choices as well as allow customer reviews on product pages. With these reviews Amazon has become the place people look when researching products to buy. In addition, Amazon realized the power philanthropy has on a customer’s mindset and because of this they created AmazonSmile. This a subsection of their site which lets customers donate 0.5% of the price of eligible purchases to the charitable organization of their choice. Customer loyalty turns into boosted profits and overall business growth. Companies may say they are customer oriented but they have to prove it.
Bezos is an ecommerce pioneer and he has created a place customers return again and again to buy a wide variety of everyday products as well as specialty items. Amazon is also providing video streaming and cloud-based storage as well as subsidiaries for audio books, Audible, and independent publishing, CreateSpace. Entrepreneurs should look at the Amazon start-up story and learn Bezos circular way of thinking. Bezos has a multitude of business lessons to help entrepreneurs, but these three are the most relevant to help start-ups, stagnant businesses or failing industries. Entrepreneurs need to think long term and look to the future to stay competitive, experiment to find ways to advance your business and keep customers happy to continue loyalty. Entrepreneurs need to heed Bezos advice to create an ecommerce business that stands the test of time.
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