Jeff Bezos and the Everything Store
I am passionate about the intersection of high-tech innovation, entrepreneurship, and finance and have focused my academic and internship experiences on this interest. The summer going into my junior year I interned in Stifel Financial’s Internet & Digital Media Equity Research Group. Throughout my experience, I became particularly fond of Amazon and their disruption of the eCommerce marketplace. This propelled me to read Brad Stone’s book Jeff Bezos and the Age of Amazon, which investigates CEO Jeff Bezos’ early life and how he developed Amazon into a Fortune 100 company with deeply ingrained values and leadership principles. Bezos is described as an intense, type-A personality with an unwavering determination for perfection and customer satisfaction, and he demands that employees of all levels maintain the same attitude. An article in Bloomberg Businessweek explains one such instance of Bezos’ aggressive personality and perfectionism. “Within Amazon.com there’s a certain type of email that elicits waves of panic. It usually originates with an annoyed customer who complains to the company’s founder and chief executive officer. Jeff Bezos has a public e-mail address, email@example.com. Not only does he read many customer complaints, he forwards them to the relevant Amazon employees, with a question mark.” By holding all employees accountable for their actions and by constantly reminding workers of Amazon’s core principles, Bezos has successfully transitioned Amazon into an “Everything Store” that is capitalizing on virtually every growth area within the technology sector.
Amazon survived early turmoil that could have very well halted the firm’s growth and have sent the company into doom. Amazon branched out into selling music, movies, electronics and toys during the dot-com boom of the late 1990s and made it through the dot-com bust of 2000 and 2001. Stone notes that after mastering “the physics of its own complex distribution network,” it expanded into selling jewelry, clothes, sporting goods, automotive parts and just about everything else, becoming the Internet’s top retailer and a leading platform for third-party sellers. The company has gone on to revolutionize bookselling with its Kindle e-reader, even as it also positioned itself as a leading technology business, selling basic computer infrastructure like storage, databases and raw computing power. Customers of Amazon Web Services currently include premier start-ups like Pinterest and Instagram, larger companies like Netflix, and divisions of the United States government, including NASA and the C.I.A. Despite these obstacles, Amazon continues to reach new heights through constant evaluations and reminders of the firm’s values and mission statement.
Amazon’s mission statement states, “Our mission is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.” Such values and focus have resulted in Amazon capturing one-third market share of total online sales in the US, and the firm is currently growing four times faster than eCommerce overall. Amazon, originally founded as an online bookstore, now rivals Wal-Mart as a store, Apple as a device maker, and IBM as a data services provider. It will rake in roughly $75 billion this year.
For his book, Bloomberg Businessweek’s Brad Stone spoke to hundreds of current and former friends of founder Jeff Bezos; in the process, he discovered how Amazon became the Everything Store. These factors have made me want to further explore what has led to Amazon’s massive success and tremendous revenue growth and product expansion.
Bezos has led Amazon’s continued expansion through fourteen key leadership principles: customer obsession, ownership, invent and simplify, be right a lot, hire and develop the best, insist on the highest standards, think big, bias for action, frugality, be vocally self-critical, earn trust of others, dive deep, have backbone, and, lastly, deliver results. Through customer obsession, Amazon’s leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers. Further, frugality promotes the firm and employees to not spend money on things that don’t matter to customers. This mentality breeds resourcefulness, self-sufficiency, and invention as there are no extra points for headcount, budget size, or fixed expense. These two principles have allowed Amazon to maintain lower prices, which has subsequently led to more customer visits. More customers increase the volume of sales and attract more commission-paying third-party sellers to the site, which allows Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website, which, in turn, lead to greater efficiency and the possibility of lowering prices even further. Simultaneously, improving the customer experience through deep discounts and free shipping and increased word of mouth mitigates the need for costly advertising. Other initiatives such as one-click ordering and Prime membership, which costs $99 per year and provides customers with free two-day shipping on all items, has further enhanced brand loyalty, allowing Amazon to be considered as the first point of reference for many people’s purchases.
The case study of Amazon and Bezos’ leadership and personal attributes emphasize the importance of strong leadership and vigorously training employees at all levels. Further, being in the technology sector which is constantly changing, Amazon’s success emphasizes the importance of having the flexibility to embrace change and constantly seek new areas of growth and improvement in order to meet client’s needs. Amazon is one of, if not the premier internet business in the world, and with such deeply ingrained values and principles, Amazon will likely remain so going forward.