Strategies Amazon Used To Become a Business Juggernaut

Introduction

During its early days, it was just another start-up in the 90’s that hadn’t defined the industry it wanted to partake in and hadn’t been profitable for the first three or four years. However, Jeff Bezos, the CEO of Amazon has set his sights, and the company’s, on long-term strategies to ensure dominance in the marketplace.  He would do so by using unconventional business strategies most have argued against yet scratch their heads on how and why they work. Amazon has set its sights on becoming the most powerful company in an online world, and will probably get there over time. These are the key strategies it used to get this far.

What key strategies did Bezos use to grow the company in just 17 years?

It is truly difficult to comprehend, even for a die-hard business enthusiast, just how dominant Amazon has become and how it has managed to do so in just 17 short years. Its revenues have topped $48B and it continues to grow by acquiring smaller struggling companies and using them to position itself for continued long-term strategic growth. Make no doubt about it, Amazon’s success is due to Jeff Bezos’ unbelievable vision and unconventional business practices. He became a pioneer “in delivering unmatched customer service, which back in the early days of Internet commerce was “iffy” to say the least.” (Parker, 2012)

In conducting research to ascertain the strategies that Amazon employed and why it employed them several key strategies stood out:

  1. Be like the Godfather: Make them an offer they can’t refuse
  2. Don’t give up information unless absolutely necessary
  3. Keep teams small enough that members can be fed with two pizzas
  4. Stop talking so much
  5. Get adversarial (Baer, 2014)

There’s a story that no one really knows about when amazon wanted to purchase Melville House, a publishing company when during negotiations things got tense. The owner went on a tirade about it in a blog and the day after, the “buy” button on Melville Houses amazon home page was gone. Bezos made him an offer he couldn’t refuse. The message was clear. Amazon will never disclose Kindle sales, nor will it disclose how may employees it has, its Seattle headquarters has been aptly named Area 51. Amazon doesn’t give up information. Its internal teams or task forces are limited to just 5 or 7 person teams; if 2 pizzas can’t feed them in Bezos’ mind they’re too big and ineffective.

During the early days of Amazon someone brought up how communication needs to be more robust and Bezos angrily stood up and said “No, communication is terrible,” in his mind cross-team communication leads to too much agreement and appeasement toward management. Which brings up strategy 5, Bezos encourages adversarial atmospheres with constant friction and almost exclusively employs people with these qualities.   One of Amazons’ key leadership principals is: “Have a Backbone; disagree and Commit.” (Baer, 2014)

Conclusion

In conclusion Amazons’ revenues actually just went over $78B, it has managed to take over the known universe of the retail world, by methodical, unconventional business practices that have been shunned by many business gurus and enamored by others as cutting edge and forward thinking far beyond its years. Whatever the reason, the five key strategies that Amazon has employed have no doubt contributed to that success.

References

Baer, D. (2014, March 17). The Strategies Jeff Bezos Used To Build The Amazon Empire – Business Insider. Retrieved from http://www.businessinsider.com/the-strategies-jeff-bezos-used-to-build-the-amazon-empire-2014-3

Parker, G. (2012, December 18). Why Amazon Is So Hugely Successful – Business Insider. Retrieved from http://www.businessinsider.com/why-amazon-is-so-hugely-successful-2012-12

This entry was posted in Business and Entrepreneurs and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s