What We Can All Learn From Amazon's Past, Present & Potential Future
When Amazon was founded in 1994, it didn’t enter the business world with any great fanfare or massive investment behind it. No one could reasonably look at it and think “This company is destined to dominate the retail world one day”, yet through smart tactics and relentless ambition, it just kept growing.
That ambition saw it expand from a bookstore to a general store, and then again to an entertainment producer. Today, it has its eye on revolutionizing the grocery industry, and it doesn’t seem likely to be satisfied any time soon.
In this article, we’re going to see what lessons we can glean from that progression, figuring out how any online store can draw inspiration from Amazon’s wild journey.
Get ahead of the curve
Throughout Amazon’s history, it has consistently managed to get ahead of the curve, and it maintains that approach today — the acceptance of failure as a necessary byproduct of invention remains a core part of Amazon’s business model.
For example, it’s only in recent times that it’s become standard for online vendors to make a point of using their lack of overheads to undercut physical stores, but Amazon was focusing on doing just that 20 years ago — and when it was nothing more than an online bookstore, it was already breaking down customer data to predict what books its users might like.
The prediction methods were nothing compared to what we can do now, but they were revolutionary for the time. Amazon’s system would simply look at the books you had in your basket and use the purchase histories of those who had bought those books to predict what else you might like. To achieve this, it collected half a gigabyte of user data each day, a figure that was mind-blowingly huge at the time but is nothing by today’s standards.
Use new technology
Today, Amazon is still aiming to lead the curve through technology, and its latest projects might be the most futuristic things being attempted by any major retailer right now.
First, let’s talk about the drones. Many people might vaguely remember Amazon’s plan to use drones for deliveries as a funny April fools prank (similar to Google Gnome), but it’s always been real. Testing continues on Amazon Prime Air, and I wouldn’t bet against it becoming a standard option in the new few years.
After that, look at Amazon Go, a project that has already found success. If you haven’t heard about it, it’s a grocery store just like any other, apart from one thing; there’s no checkout. You simply walk out of the store and let Amazon’s tech track and charge you for what you took. There are interesting things ahead for grocery retail, and Amazon is leading the pack.
Ostensibly, Amazon Go uses the same technology that allows self-driving cars to navigate roads: a mixture of deep learning, sensor fusion, and computer vision. The system isn’t perfect, and sometimes people walk out without being charged for everything in their basket, but it happens rarely enough that they won’t even add a feature to let customers report it.
Sure, you can’t currently get your package delivered via drone, and there is only one Amazon Go store in the world, but give it time. After two decades, Amazon is still pushing technological boundaries to reach farther, sell more, and provide a better service.
Pursue your ambitions
To give some context to just how massive Amazon has become, statistics from last year show it made $94 billion in sales in the US. The online retailer with the second-highest sales is Apple, and it pulled in a little under $17 billion. If you look at the top 50 online retailers in the US, Amazon makes more in sales than the other 49 combined. It’s untouchable.
The biggest difference between the Amazon of today and the Amazon of the ‘90s is its scope. What was once just a bookstore is now an everything store. You could live your entire life only using items available on Amazon. If you think about it, going from a bookstore to a general store was quite a natural step once it had a large website with various conversion-optimizing processes and experience with shipping across the world from warehouses— but Amazon wouldn’t have taken that step without extraordinary ambition.
Today, Amazon sells just about anything, but that doesn’t mean it can’t expand further. It looked at the entertainment world and launched Amazon Prime Video and Music, and they were not only big successes in their own right but also excellent for drawing in more customers to the Amazon ecosystem.
Taking everything into consideration, there may be no company that better understands the importance of nailing the onboarding phase to securing loyalty (I recommend checking out this Marketing Speak podcast to learn more about high-level customer retention).
If someone buys an Amazon Prime Video subscription, they get all the other benefits of Prime for free, encouraging them to shop with Amazon whenever they can. And since Amazon bought the video game streaming website Twitch.tv, it has linked Amazon incentives to Twitch actions, leading back to the main ecosystem yet again.
All the innovation and determination to improve would be kept hemmed in without that insatiable ambition to do more, be more, achieve more. And who knows what Amazon will be doing ten years from now?
Never get complacent
Amazon is a product of the early ‘90s. If we look back at all the stores and sites that found success in the 90s but are now long defunct, we can see that very few are still operating today. So why did Amazon get ahead where others were left behind?
We can attribute it in part to the attitude of Amazon’s CEO, Jeff Bezos. In an interview from 1999, when asked if he was scared of losing it all, he said “I know we can lose it all, it’s not a fear, it’s a fact.” And it’s this refusal to be complacent and coast on old successes that keeps Amazon investing in the future.
The high-tech projects we’ve looked at won’t be hitting the mainstream for a while, and the R&D costs have to be huge, but sacrificing current profits to fuel the future isn’t a new thing for Amazon. It didn’t turn a profit for many years in the ‘90s, yet people kept investing because it was always in a position to grow.
And because of its persistent investment, it’s still in that promising position, despite already being the biggest online retailer there is. If Amazon finally launched the option of having items delivered by drone within a few hours, it could crush its competition even further, and if it brought lower prices and an improved experience to the world of brick-and-mortar stores, it could come to dominate yet another market.
In conclusion, if I were to attribute the success of Amazon to some key factors, I would point to management looking far into the future, making excellent use of new tech, maintaining an astonishing ambition, and never, ever, getting complacent. If there’s one thing we can take from over two decades of expansion, it’s this: never bet against Amazon.