Business Today

The Everything Shop

Jeffrey Bezos had a successful career in an investment firm in Wall Street when he decided to resign in 1994, and set up Amazon.
By Prosenjit Datta   Delhi     Print Edition: July 16, 2017
The Everything Shop

Jeffrey Bezos had a successful career in an investment firm in Wall Street when he decided to resign in 1994, and set up Amazon. He was 30 years old. The Internet had stopped being a technological curiosity. The world wide web was born in 1991, and it was a giant step forward in using the Net. In 1993, Marc Andreesen and a group of student programmers developed Mosaic, the first graphical browser for the world wide web - and traffic on the Internet just exploded. By 1994, around the time Bezos was setting up Amazon, traffic on the Internet backbone had exceeded 10 trillion bytes per month.

Amazon initially selected books as the area it would play in. It sold its first book in 1995. It raised some venture funding that year, but went public to raise money in 1997. After that, there was no turning back.

Bezos was by no means the only e-tailer trying to build a business. Between 1996 and 1999, thousands of entrepreneurs raised massive amounts of funding to set up e-tailing businesses in everything from groceries to pet products. Venture capitalists were tripping over each other to fund e-tailers and other Internet businesses (including portals, vortals and many others). Money was cheap and everyone wanted to start a business online.

The key difference between Amazon and others was that Bezos was not spending huge amounts of money to grab eyeballs or build a huge brand. He focused on making the business more efficient, improving customer service and constantly reduce costs while innovating to give the buyer a better experience. He was making money, but ploughing back everything to improve and grow the business. By 2000, when the dotcom boom ended, almost all e-tailers went belly up while Amazon kept growing and thriving. It stopped being only a book seller - it expanded its product range until it became the Everything Store. In 2006, when Amazon was already a dominant force in retailing, it started the web services business (AWS), which offered infrastructure as a service, based on cloud computing.

AWS went on to become wildly profitable. Meanwhile, the e-tail business makes little money because it is constantly spending money to improve the operations and infrastructure.

The Amazon India story started fairly late - in 2013. By that time, Flipkart was already the established leader in the Indian e-tailing field. In four years, Amazon has grown so rapidly that it is forcing Flipkart to merge with other e-tail players in the country in its bid to remain a viable competitor.

What made Amazon succeed when others failed? Many tried to answer the question. One reason perhaps is because of Bezos obsession to improve things operationally and constant experiment to find an edge. It started Amazon Prime, which became a runaway hit. It set new benchmarks in warehouse efficiency. The AWS business took established computing giants completely by surprise just as the e-tailing business disrupted the retailing field.

And Bezos is not done yet. He has already disrupted two different industries, but will probably disrupt a few more before he is finished.

Meanwhile, in our cover story (page 60), we look at the India story of Amazon - and how it trounced opposition.

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