Jeff bezos has become the first human being on the planet, to be worth $200 billion.
History of Amazon of India
In the year 1994, Jeff Bezos left his cushy investment banking job, to work on his startup. Internet was blowing up at the time. So he got the idea of doing something internet related. Of creating an online store, to sell books.
Today Amazon is not only the largest book store in the world, but also is the largest online store for buying just about anything. And Amazon prime video is one of the largest OTT platforms.Amazon music, Amazon pay, Amazon has even started delivering groceries in some countries, under the name Amazon fresh.
At one point Amazon of India had tried to launch their phone called Amazon fire. Thought that turned out to be a flop idea. But today Amazon of India has become as successful not only as an online store, rather as a company spread over so many sectors.
How was it possible Amazon of India?
The idea of Amazon was quite simple right from the start. But it was a unique idea for its time. To create an online book store, at the time people had to go to physical book store to buy books. Why not let people buy books online thought a website on the internet?
Initially, Amazon website was a more book selling website. The advantage of selling book online was that customers could access thousands of books on a single website. A very basic practical and convenient idea one that people needed.
Right from the beginning even as a startup, Amazon of India was a successful company. The website was launched in 1995, and by December 1996, they had amassed a customer base of 180,000.
Amazon of India website looked like this then, by 1997, their revenue had reached $148 million, At this point in time.
Jeff decided that he didn’t want Amazon to remain a private company instead he wanted to list it as a public company in the stock market.
So that the company could access more funds to grow in 1997, Amazon became a public company and by 1998, Amazon revenue had reached $600 million.
What is the business model of Amazon of India?
There are said to be 2 main reasons behind Amazon of India success. First Amazon was offering a huge convenience to the customers. And at the time there were next to no companies that was offering the same service as a competitor.
And the second is something that’s called the flywheel effect. A flywheel us basically a spinning wheel, it keeps spinning evenly even when faced with changes in external conditions.
Amazon of India business model had become like a flywheel by then. They sold books at lower prices, and millions of books were available in their online store, so the customers had a positive experience.
Since the customers were happy, it Drew more customers to their websites, and because more customers were joining their websites, the sellers of the books.
Especially the third party commission based sellers, wanted to join Amazon to sell their books. Because they could see the large number of customers it had.
So more and more sellers listed their books Amazon of India, leading to more options of books to buy on Amazon for the customers, It had become a wheel that was being pushed in the same direction twice, increasing the rotational speed.
When Amazon of India earned more profits, Amazon used that money to improve their websites and to improve the customers experience as well as in keeping the costs low. Because this was a game of low costs more customers and sellers would use their services.
In 1998, bezos thought of using the same strategy to sell not only books, but to sell computer games and music also in 1998, Amazon expanded their business, in addition to books they were also selling computer games and music on their websites.
It saw unprecedented success to such an extent that in 1999, time magazine person of the year was Jeff bezos. With time Amazon adopted many ideas, big and small driving forward the growth of the company.
One of these ideas was the 1 click button. When you shop on Amazon you would’ve seen.
You have to the basic skills in your field, how Jeff bezos had the knowledge of computer science beforehand, it was his field of study.
While working at the investment Bank, he had an idea of the potential of the internet. In his job he was assessing the growth of the internet, and whether they should be investing in internet based companies or not.
Amazon web services
This was another field that didn’t have much competition, not many companies were doing this. And thus business was so successful for Amazon, that currently this is the highest profitable business that Amazon of India is involved in. 40% of the profitability of Amazon is from AWS.
Most of the top companies in the world who have an online presence, Netflix, Pinterest, twitch, linkedin and Face book use Amazon web services to store their data.
Their revenue growth in the last 20 years, from 2005 to 2021, they have crossed quarterly revenue of $100 billion and this chart is rising exponentially.
Corona virus pandemic effect
It increased further, because everything closed during the lockdown, so everyone was ordering goods on Amazon, while other shops were closed. Amazon got a huge advantage from it, due to this Jeff bezos became the richest man in the world.
Amazon e-commerce business
Can be divided into 2 models.1P and 3P
1P means that Amazon buys a product stores it in its warehouse, puts it up on its websites and then delivers that product to the consumers.
The second is the 3P model. It means that someone else makes the product, and sells their product on Amazon.
While Amazon acts as a marketplace, and then the product is delivered to the consumers. In the 3P model Amazon basically acts as a platform that is used by the sellers and the consumers to sell or buy their goods.
Today Amazon becomes a $1.6 trillion company. This was amazons interesting story.
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