E-commerce is a perpetually booming industry - one that has completely changed the notion of shopping in popular culture. While it experienced humble beginnings in the form of the sale of used computers and books and such, it has now expanded to every possible market. From groceries to clothes to electronics, everything is just a click away. This changing landscape has made e-commerce one of the largest industries in the world. In 2021 alone, worldwide retail sales in e-commerce amounted to 4.9 trillion US dollars, and reports suggest that there’ll be a 50 percent growth in these numbers over the next four years.
If there’s one company synonymous with e-commerce, it’s none other than Amazon. In 2018, Amazon officially became the second U.S. public company worth a trillion dollars. The company's humongous rise is such that there are umpteen business lessons that could be fruitful takeaways for emerging companies looking to set up their ground.
In its entire lifecycle, Amazon reached several milestones and was in many ways the trendsetter in the e-commerce business. Before we begin discussing these business lessons from Amazon, let’s delve a little into the history of Amazon and its success story.
The Rise of Amazon
Jeff Bezos started Amazon in his garage in 1994, and within two decades it has become the largest e-commerce company in the world. Very few people know that the initial idea behind Amazon was to sell books online. Jeff Bezos, the founder of Amazon, thought of building an online bookstore to reduce high costs such as storage, display, etc. He, therefore, set up a small online bookstore called ‘Cadabra’ which could see its first sale only after an entire year! After that, there was no turning back. Soon the business gathered pace and the company’s name was changed to Amazon. The company began generating massive revenues within a year and became a leading e-commerce company.
Any company that reaches the top adopts various marketing and financial strategies, and Amazon is no different. The key to understanding the staggering rise of Amazon is to understand the expansion it undertook, both vertical (selling more products) and horizontal (moving to different sectors).
In 2000, Amazon launched its marketplace where local vendors could sell their products. Amazon went from an online bookstore to an online market where you could buy everything. In that year alone the company's sales were recorded at a whopping $2.8 billion. But it didn’t stop here.
In 2005, Amazon launched its Prime membership, giving loyal customers many perks. Today's Prime subscription allows one to have access to free delivery services and music and video streaming services. The company even launched its product- Kindle, which allowed ebooks to become mainstream and accessible. Amazon expanded its operations to many other sectors such as music and video streaming, digital payment, grocery shopping. In 2012, it set up its operations in many countries.
Let's now look at some business lessons from Amazon that every business can learn.
4 Business Lessons to Learn From Amazon
#1 Customer Experience Enhancement
The entire idea of Amazon is built around customers. The company works tirelessly to improve its customer relations by constantly introducing new features such as Amazon pay, Amazon Mini TV, etc. The robust R&D and a keen penchant to work on customer feedback have helped Amazon improve its products to a great extent. Amazon's UI UX ranks at the top and is touted to be one of the best around the world.
It has easy, straightforward features which help people to have a great shopping experience. The ‘Recommended Items’ or ‘Frequently Bought Together’ section shows how Amazon’s algorithm takes care of customers. Even Amazon’s OTT platform reflects the company’s policy in maximizing customers' comfort.
2. Expand According to Market’s Needs
Amazon is a masterclass in expansion, given the way it has slowly entered countless sectors and experimented with different markets. If you want your company to grow bigger, you must look for gaps in the market and try to fill those gaps by bringing in products or services. When Amazon noticed how tiresome and exhausting shopping had become, it introduced its marketplace. And when Amazon saw the potential in OTT platforms, it took no time to launch its shows and films on Amazon Prime. The key in expansion is to focus on ideas that will give long-term returns rather than short-term success.
#3 Use Analytics in Decision-making
Amazon has revolutionized how data analytics, machine learning, and big data can be used to enhance user experience via customization and improved website/app interface. A glorious example of this is Amazon pay, which is Amazon's own digital payment service. Amazon studied its consumer base and launched Amazon Pay to allow consumers to make direct payments while shopping within the app itself. It also allows users to make generic payments such as electricity bills, mobile recharge, etc., and keep track of the same.
Companies can also smartly study their consumer preferences and use data in an evolved way. Many small businesses have already begun to adopt this strategy, especially other online payment companies like PhonePe, Paytm. The whole Fintech industry follows after Amazon in this area. They keep track of house bills, electricity bills, recharge, etc., and give exciting offers to their users.
#4 Adapt to the Technological Changes
Had Amazon been firm in only selling books, it wouldn’t reach where it stands today. Or had the company refused to embrace e-books, their hugely successful product, Kindle, would never have come into existence. We live in an age where technology becomes obsolete with each passing year. It is important to adapt to the changing landscape and always be on the lookout for innovation. Many businesses fail because they simply refuse to change with the changing landscape. It takes no time for a company to fall out of the race and become defunct.
In this age where there's huge competition in the market, keeping a business profitable is an extremely challenging task, but that’s what makes it exciting. Times are changing fast, and you’d want to remain on the memorable side of history. So it's better to follow those who refuse to give up and are always willing to face new challenges. These business lessons from Amazon aren't a guarantee to success, but you’ll surely have a fair chance at it.
