I have recently read a book by Graham Allison, and one of the chapters on Amazon. In it he discusses some of the challenges that Amazon faced and how they were successfully overcome. He is an associate professor at Dartmouth College and the author of “Who Moved My Cheese?” He was a longtime Amazon employee and went to work for them in 1997.
First of all, as a long time Amazon insider, and someone who know what goes on, I believe that Jeff Bezos and the Amazon Corporation have done a great job. I just think that they got a little carried away with their approach and failed to recognize that their team and employees were falling behind. Now, I’m not saying that the strategy was a bad one, as it wasn’t (Amazon is huge in the ebook market), but there were problems with the execution. I think Jeff and his management team are doing a great job.
The chapter in the book I read was on how Amazon.com became so successful. What was the problem? The author was looking at Amazon’s offline marketing, and how they began to dominate the retail market. If you haven’t heard about this before, there is a whole set of principles and processes that are designed to attract customers to your business, not compete with them. There are very few ways to monetize this type of business model, and it’s not something that anyone has been able to get off the ground successfully since eBay.
Even after they had built up the infrastructure, the online presence, and all the aspects of an internet business, they still couldn’t make the online retailer model work. To achieve growth, they had to change. If you look at how Amazon began, they had everything that was necessary to be successful online. They had the technology to host the website, an effective search engine optimization (SEO) team, good merchandising skills, and an easy to use shopping cart and shopping experience.
This is the set up for any internet business that wants to go into the brick and mortar. You have to have customers, make sales, and get people into your store. With the power of the internet you can do all three things at once, but to do this, you need to connect with people in a way that is direct and effective.
How did Amazon achieve this? They changed their approach and they hired the right people. They have an excellent supply chain system, and a streamlined sales process that anyone can replicate. Their massive data base has made it simple to understand how people are shopping. And the fact that they have very low overheads means that they don’t have to burn a ton of money in order to get the results they want.
So, where does that leave Amazon? They have been very successful at growing their customer base, and the sales they have made. But they also have been successful in marketing the brand through the web. Now, I would say that the money spent on marketing is lower than it would be if they focused on one area and not in multiple areas. But, I’d also agree that they could have been a lot better.
If you are going to run an internet business, you’re going to have to re-think a few things from time to time, and one of those is Amazon’s expansion plans. You’ll be able to take their strong points and adapt them to fit your business model. Maybe they need to hire a few more people, maybe hire a few more SRE’s. You know what’s best for your business.