Amazon.com a risk worth taking for Bezos

Amazon.com a risk worth taking for Bezos

BY MAILEEN HAMTO
Special to the Rice News

Fueled by advancing technology and innovation,
profound changes in the business landscape brought about
by e-commerce in recent years will increase, and developments
in e-commerce will continue to expand and astound.

Such was the outlook for the future of e-commerce
delivered by Jeff Bezos, founder, chief executive officer
and chairman of Amazon.com, to the Rice community Sept.
5.

At the invitation of Rice alumni Albert
Kidd, Bezos addressed a full McMurtry Auditorium in Anne
and Charles Duncan Hall, sharing the story of Amazon.com
and his zeal for the burgeoning new economy and the sweeping
changes it continues to make on various industries.

“I firmly believe that this is the
Kitty Hawk era of e-commerce. We’re going to see some
amazing stuff over the next 10 years,” said Bezos,
Time Magazine’s 1999 “Man of the Year.” “The
biggest myth about the Internet is that there are only going
to be a few winners. There are going to be thousands of
winners, thousands of failures, because we are in an era
of maximum experimentation.”

Experimentation is at the heart of Amazon.com’s
success. From its humble beginnings in the Bezos’ garage
in Seattle in 1994, the company has mushroomed into the
world’s largest online retailer, boasting more than
17 million customers in more than 150 countries.

Recognizing the enormous potential of the
Internet when the technology was still little-known (but
already gaining popularity), Bezos left his job on Wall
Street and moved west to Seattle with his wife, MacKenzie.

He says the decision to leave what he called
a “secure existence” in New York City to head
a startup Internet company was a hard decision to make.

“I projected myself forward to age
80 and asked myself if I would genuinely regret not having
tried to participate in this thing called ‘the Internet,’
which I thought would be a big deal. The answer was ‘Yes,
I would regret not even trying.’”

Creating a virtual bookstore that holds
more volumes than any existing bookstore in the world was
Bezos’ vision for the new venture. Finding the perfect
name for the new virtual marketplace was an important decision.

“I wanted a word that began with an
‘A,’ one that was memorable, universal,”
he says. Named after the Earth’s biggest river, Amazon.com
has proven to be the perfect choice for a company that has
single-handedly paved the way for the e-commerce revolution.

The company’s first year was devoted
to software development and formation of a corporate culture
that revolves around customer experience, Bezos says.

“We knew that in a growing market,
the company that succeeds the most is the one that best
serves customers,” he says. “We made our own desks
then, made with doors and 4 x 4’s. It’s sort of
become a symbol for us, that we spend money on things that
matter to customers, not on things that don’t.”

When Amazon.com opened its virtual doors
in 1995, no one in the company knew what to expect. “We
didn’t know if we were incredibly optimistic or hopelessly
pathetic. We simply did not know. But the Internet was a
much smaller place in July 1995, and in the first 30 days,
we shipped books to more than 45 different countries.”

Bezos attributes the initial and continued
success of Amazon.com to its customers, who referred many
new customers to the online bookstore.

Customer obsession has been key to Amazon.com’s
success since its launch. When Barnes and Noble opened its
online store in 1997, forecasts for future success of Amazon.com
were dim. Bezos recalls the clever nickname naysayers concocted
during this period of change: Amazon.toast.

“I knew we had some significant advantages
over our competition. In the physical retail business, the
most important thing is location, real estate. But our business
is technology-oriented,” he says.

The launch of competitors’ e-commerce
sites only fueled Amazon.com’s customer obsession.
“Don’t be afraid of competitors, be afraid of
our customers,” Bezos remembers telling his Amazon.com
staff. “(Competition) is the reason why we have to
be smart, why we have to be good at what we do.”

E-commerce competition also has given rise
to a new trend in business and marketing. “The balance
of power is shifting away from the merchant and toward the
customer. It’s a great thing. The days of selling mediocre
products through excellent marketing are numbered,” Bezos says.

— Maileen Hamto is an assistant
editor at the Jesse H. Jones Graduate School of Management.