Learn from how Jeff Bezos and Amazon.com Look Beyond the Short-term


Jeff Bezos, founder and CEO of the online retailing giant Amazon.com, once said, “Companies are rarely criticized for the things that they failed to try. But they are, many times, criticized for things they tried and failed at.”

Amazon.com was born of strategy. Since its founding, Amazon has been willing to plant seeds and wait a long time for them to turn into trees.

Amazon.com built a splendid organizational culture obsessed with today’s customer. Amazon’s corporate strategy has always pursued what’s best for customers in the long run, even if such strategies were to be painful for the company in the shorter term.

Jeff Bezos, Amazon.com For instance, when Amazon introduced free shipping on orders of $25 or more (since October 2013, $35 or more,) Amazon acknowledged that free shipping lowered the profit margin for the company. But Amazon.com’s founder and CEO argued that such is the case in the current quarter and in the current year, but wasn’t true over the longer term. The distinct benefit, Bezos argued, was that offering free shipping would escalate the frequency with which Amazon’s customers shop would shop with Amazon.com.

If free shipping wasn’t enough, Wall Street analysts were further displeased when Amazon introduced Prime, an offer for unlimited two-day shipping for a flat annual fee of $79. Customers loved it and further increased the frequency of purchases with Amazon. The results were stunning: Amazon’s business analysis showed that the average member of the Amazon Prime spent $900 year during his first year of Prime membership, but had spent only $400 during the year prior to becoming a Prime member.

In an interview on innovation and corporate strategy, Jeff Bezos commented, “There are a couple of other things that are essential for innovation and invention that are not as fun. One of them is you have to have a willingness to fail. You have to have a willingness to be misunderstood for long periods of time.”

Recommended Book: “Jeff Bezos and the Age of Amazon” by Brad Stone is an excellent introduction to the founding of Amazon and the vision and strategy employed by Jeff Bezos to transform Amazon.com into a retailing powerhouse.

Posted in Business and Strategy Management and Leadership

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