As this year’s Prime Day sent bargain-hunters around the world into a frenzy yesterday, Morag Magee examines the elements that contributed to Amazon’s huge global success…
Over the last couple of years many have been asking if, when and how Jeff Bezos will take Amazon Fresh into the mainstream, and if the bricks-and-mortar stores in the US will ever make it across the pond to the UK. Last month we got an inkling, as the e-commerce giant announced it was buying Whole Foods for a hefty sum of $13.7 billion – cementing its entrance into the physical world by making use of Whole Foods’ network of stores in the US, Canada and the UK.
Amazon is without a doubt nailing it in the world of commerce, and while us NBU-ers are content with treating ourselves to a bite to eat from Whole Foods once a week, Amazon is quietly eating the world. That’s right, Amazon – not software (though software obviously has a huge role to play in Amazon’s success).
How, I hear you all ask? Well here are just four reasons behind the company’s success…
- It built its own technology infrastructure from scratch
While Amazon is renowned for Amazon.com, today it is so much more than just an ecommerce provider. Founded by Jeff Bezos in 1994 as an online bookstore, Amazon started to scale at a time before enterprise-class SaaS was widely available, meaning Amazon had to build its own technology infrastructure from scratch.
- The productisation of internal services
When I first read about AWS a few years ago, I wondered what its connection to Amazon.com was, if any at all, and a friend even suggested they were separate businesses. Oh how wrong we were. Amazon Web Services, or AWS, are the on-demand cloud computing platforms used by thousands of individuals, companies and governments to have a full-fledged virtual cluster of computers available around the clock. It’s also the operational infrastructure used in-house by the Amazon team. Amazon essentially took this operational piece of technology infrastructure and turned it into an external product, a product with an annual run rate of $14 billion
- It is futureproofed against inefficiency and technological stagnation
Amazon has replicated this model and has rebuilt other internal tools as external services. The recent launch of Amazon Connect is another example of this. Moulded on Amazon’s own call centres, Amazon Connect is a self-service, cloud-based contact centre platform.Through this productisation of internal services, Amazon has essentially futureproofed itself against inefficiency and technological stagnation. If any one of Amazon’s external services is ever a commercial failure, or if the uptake is slow, this is an indication to Amazon that its own internal services are lagging behind the competition, enabling the business to make the necessary amendments accordingly.
- The company has always, and will always, be customer-centric
Whether these customers are the e-commerce shoppers at Amazon.com (or soon to be commerce shoppers in-store at Whole Foods), developers using the AWS platform or sellers on the Amazon Marketplace, Amazon is committed to being ‘Earth’s most customer-centric company’. Bezos defines this as listening to the customer and inventing for the customer, noting that most of Amazon’s initiatives take 5 to 7 years before they pay any dividends for the company. One of Amazon’s services – Fulfillment By Amazon (FBA) – has been 10 years in the making, with all the profit being put back into investing in improving the service.
It’s hard to see another company coming close to achieving what Bezos and his team have achieved in the last 20 years. The tech giant’s commitment to its customers, and the productisation of internal services, have future-proofed the platform for years to come, enabling Amazon to constantly improve its services and offerings, while investing in new products and acquisitions. What’s next for the company? Could it be the acquisition of Ocado? Or the launch of Amazon small-parcel shipping? Whatever its next move, we’ll all be watching closely.