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The Rise of Amazon


The human mind is a very powerful thing. We have gotten accustomed to its existence on a daily basis and overlook much of its wonder. It is only when we look back on a period of years that we realise what humans are capable of.

 When I was a child, shopping meant roaming around from shop to shop, trying on a number of items before finally selecting something. Back then, if someone had told me in just a couple of decades I would be able to browse millions of products without even leaving the comfort of my room, I would have laughed and called that person crazy.

Before Online Shopping crept up on us, the world did not know any other way. We did not have any idea that the very act of shopping could be improved and optimised to unimaginable extents. But then companies like Amazon suddenly showed up on the horizon and took the world by a storm.

Amazon is one of the biggest companies in the world today. I’m sure each one of you have heard of it or even used one of its myriad interfaces. Amazon was not the first major online seller in India; it was launched in India in 2012. However since its inception, the company has only gone in one direction; straight up.

Let’s take a look at Amazon’s meteoric rise from the start, shall we?

You know how people say ideas can change the world?

Well, Jeff Bezos, the founder of Amazon, had ordinary bookstores have to face. There could be a few thousand customers browsing through one such idea early on in his life. He realised that if the internet could somehow be used to sell books, one could eliminate all costs relating to physical storage and display. He real ised that an online bookstore, if one existed, would be unrestricted by the restraints that the virtual stock of a million books, and all without taking a lease for a shop or buying physical stock of books.

That is brilliant, isn’t it?

I mean, we millennials have gotten used to ordering everything off the internet and never leaving our rooms. But can you imagine the foresight of someone thinking this way almost thirty years ago?

In 1994, Jeff Bezos started an online bookstore called “Cadabra”. His parents were the first investors in the company. Soon after, the name of the company was changed to Amazon.

 Amazon’s first sale occurred in 1995. Since then, it grew by leaps and bounds and by 1996, the company was generating an annual revenue of almost $16 million. In 1997, Amazon went public and began trading under NASDAQ at $18 a share. This same year, annual revenue grew to almost $148 million, more than nine times over the previous year.

Amazing, isn’t it?

Can you imagine the stupendous rate of growth the company showed? In just three years since its inception, the company was producing an annual revenue of almost $148 million. I imagine Jeff Bezos’ parents were very happy with the unimaginable potential their investment was showing. They had no idea however, that this was just the very beginning.

In the year 2000, Amazon took a fork in its road and launched Amazon Marketplace. They started allowing other vendors and sellers to list their items for sale on the company website. In other words, they transitioned from a bookstore to a marketplace. In this move, the company became bigger than an online bookstore could ever be.

Guess what the annual revenue was the year Amazon Marketplace was launched.

$2.8 billion.

That’s right. BILLION.

You’d think this was it, right?

Wrong.

There’s even more to come.

You see, Jeff Bezos had a very simple idea. He envisioned the future and he kept making strategic adjustments and alterations, which made the company reach gigantic proportions.

In 2002, Amazon added a feature called Free Super Saver Shipping. As the name suggests, this feature enabled users to avail free shipping while shopping over a particular threshold limit. Earlier, this threshold was at $100. In January, 2002, Amazon lowered the limit to $25.

This seems like a simple alteration, doesn’t it?

That was the genius of Jeff Bezos. His genius was so simple, it seemed almost obvious. This free shipping feature enabled Amazon to increase its annual revenue to almost $4 billion.

At this point, I am sure you understand where the story is going.

Amazon achieved Brobdingnagian proportions early on in its timeline, and it just get getting bigger and better. It was almost like a giant on steroids.

To name a few more of the company’s most noteworthy milestones, Amazon Prime was launched in 2005, which offered free two day shipping in exchange for an annual fee. Today, Amazon Prime has almost 100 million subscribers all over the world.

In 2007, Amazon introduced the Kindle reader for e-books. This smart move enabled Amazon to control almost 80% of all e-book sales around the world. By 2007, annual revenue was close to $15 billion.

Amazon, guys, is the primary example of how big and diversified a company can become if its expansion is executed strategically. Amazon started off as an online bookstore. It metamorphosed into an online marketplace. But it did not stop there.

In 2010, Amazon Studios was launched, for developing movies and series based on crowd recommendations and feedback. This launch brought the annual revenue close to $34 billion.

Following this trajectory of exponential growth, Amazon acquired the supermarket chain, Whole Foods in 2017, for a sum of $13.4 billion. This year, the company’s annual revenue almost reached $178 billion.

This is not a sad story. This is a story of glory. It is an example of what the human mind is capable of achieving. The sheer power of an idea and what it can do is, quite frankly, mind boggling.

Today, Amazon is known as one of the Big Four or the Four Horsemen of technology, accompanied by Apple, Google and Facebook. It is the largest e-commerce marketplace in the world and the largest internet company by revenue. In 2018, Amazon had a market value of $740 billion. It has presence in 15 countries across the world and reaches more than half of the world’s entire population.

Nobody can deny the fact that Amazon and Jeff Bezos are having a moment.

Since 1997 when it first went public, Amazon has emerged as “one of the greatest wealth creators since 1926, and its reached that status in a very short period of time”.

The question is, why them? Why not anyone else?

What makes Amazon Amazon?

It is hard to pinpoint the exact cause of a company’s success. More often than not, companies owe their success to a combination of smart managerial decisions and strategic planning and expansion.

Amazon, too, owes its success to a number of factors.

First on the list, of course, is the brilliance of its creator, Jeff Bezos. This man, also known as the “king of cyber-commerce”, has been so effective in the branching and expansion of the company, that, when Amazon announces its entry into a new sector, there is an effect on the price of its stock. In fact, for a few hours, Jeff Bezos was named the wealthiest man on Earth.

The second reason is one of Amazon’s guiding philosophies; the “heads down” focus on the customer. The company has always boasted world class customer service and has delivered on its promise. In fact, Amazon’s Customer Service team is one of the best in its category and has won multiple awards for its service to the staggering 304 million users who pass through the websites on a daily basis

The third reason is the flawlessly executed diversification strategies that the company uses. It started off as just a simple bookstore. And now?

Amazon sells absolutely everything now. EVERYTHING.

Of course, expansion is the ideal course of action for any successful company. Expanding into newer markets and newer categories of products brings about unparalleled growth for the company. Having said that, expansion also brings countless opportunities for  mayhem, chaos and unmitigated disaster.

Not for Amazon though. This company has successfully integrated itself into a plethora of different product categories and markets.

You know how people say you should follow your dreams?

If you ever needed any more of a reason to listen to this popular opinion and follow your dreams, let the story of Amazon and Jeff Bezos convince you. Let this story be proof of the fact that anything is possible if you want it enough.

Against all odds, this tiny bookstore has emerged as one of the global technological giants. As to whether this steep growth trajectory will continue or not, speculation will only get us so far. So keep believing and keep dreaming.

Happy investing!

By Adrija