Amazon growth story is an epic case study for humble beginnings and exponential growth. The hardest thing about starting a startup is starting it up. You will get stuck in the nightmare of operations if you start it too early. It will be called a duplicate if you start too late.
So how do we start? And most importantly, when?
On Wednesday morning, we had a discussion on the Nexel World facebook group. The question that was posed was about finding the connection between Amazon and it’s beginning from books. After all, if we are interested in why did chicken cross the road – we must find what it couldn’t buy on its own side of the road.
What community members shared?
Sourabh Goyal an entrepreneur from Faridabad took the first shot at the answer by claiming that books offered an easy way to capture the customer base once. A satisfied customer can then help you spread. Also, the customer experience is the key.
- Books are something where quality, size, or human issues are not there as a product and can simply gain the attention of regular book readers.
However, when we contrast it with Ikea that started its business with delivery of compact furniture, two questions come to surface.
- How did he make sure of the collection maintained is top notch? Isn’t record keeping for books harder than furniture designs?
- Customer Experience can be replicated, what made Amazon so popular?
Sivesh Kumar: referred and recommended the book Zero to One and quoted “An entrepreneur can’t benefit from macro-scale insight unless his own plans begin at the micro-scale.”
So while starting, start at the micro level.
However, it still was an incomplete answer. Starting small with concept testing is understandable, but why choose books?
Suresh Balachandar added his brilliant points from experience by introducing us to the concept of drop shipping says you can start an e-commerce with any household items. The books were not important when he started Amazon, the concept of flipping the market was important. It could be anything like Toothbrush or napkins and it wouldn’t have mattered.
Accordingly, books were simply a household item that differentiated Amazon from competitors.
Suresh Balachandar further added that Differentiation matters when an e-commerce is starting up and only until you are starting it up. The goal of an established business is to Bring all services under one umbrella.
Exactly how Jio is trying to establish itself in Indian Market. They started with Sim cards understanding that cell phones are the new household items.
But why choose books? What’s different?
Suresh Balachandar: Bezos understood how to flip the market and that is the main groundbreaking thing. He was focussing on delivering stuff in people’s doorstep and not particular about books.
Customer experience is the key driver, similar to Saurabh Goyal’s point.
But how did Jeff flip the market? When most of the orgnizations find it hard to diversify.
Sivesh Kumar: claimed that Jeff was just selling “Time”. Whatever strategy he used, he was saving the time of the customers.
He further underlined that Uber is doing the same, instead of driving for say an hour to the office, now one can check their work while sitting in the back seat.
As rightly pointed out by Suresh Balachandar, what Bezos sells is comfort and time is a by-product of it. The same with uber. It’s the comfort.
Sourabh Goyal: They worked on innovation in selling and how people do shopping.
In the current world scenario, I spend more time browsing the product list on Amazon than buying. So if they were selling time-saving, the model has changed over the years.
Aman Singh further added that a book doesn’t break easily during shipping, it doesn’t expire and storage is also very easy.
Aman Singh: That’s not always impulsed purchase, there are times when we search for books recommended to us by our mentors or seniors and they also sold academic books like medical and engineering books. Online selling facilitates searching also. I can easily list all the books available in all the stores in my city. Then why would someone go to store to find out the book one needs? When one could simply do a search on my portal and get it delivered?
Sourabh Goyal, further added that People who read books are addicted and it is like a drug to sell. When it comes to the USA, Canada, Europe – The focus is a lot on their consistent learning and reading books is the best relaxing time for them with a glass of wine.
But the question remains, why did Amazon grow so fast? How did they manage to gather attention like no one did?
Aman Singh: agreed and complimented our question and underlined that Alibaba did the same in China.
Pia Singh rightly pointed out that books appeal across demographics and must have helped in understanding who to choose as the target audience.
Amanjot Malhotra made an awesome list that justified the choice of books
- Average ticket size
- Non-expiration of the Product
- Damage during shipping to the product was minimal
- Shipping charges were less than the product cost
- Timing, People were more into books than electronics in the 90s
- Procurement was not an issue
- Non-seasonal demand from the market
However, Suresh Balachandar rightly pointed out that, All this can be said for both toothbrush and Napkins too.
Shourya Kumar Sharma found the answer in the vision of creating a one-stop solution for every customer.
But Everyone wants that, isn’t it? The choice of books, however, had one more interesting reason behind it.
Amazon gathered attention through its word of mouth in communities. Readers, Libraries were strongest and most common communities that helped spread the word.
Every such community depends on the word of mouth to select the titles to read, they are early adopters because they learn from the stories they read. Readers made the strongest community apart from Church, labor unions, and colleges. Books and the words offered a chance to connect with people, like the modern day telecommunication.
What better to establish a connection than a community that shares values and collaborates to make the best of their time.
And what better to establish the community vision by making them question the role of a community.
However, Amazon did not use books as a Global Expansion tool in the regions other than English Speaking Developed economies – something they learned from their Japan expansion. Want to know more?