CASE STUDY 2

JEFFREY BEZOS: AMAZON.COM

1. Biography
Jeff Bezos , byname of Jeffrey Preston Bezos, (born January 12, 1964,
Albuquerque, New Mexico, U.S.), American entrepreneur who played a key role in the
growth of e-commerce as the founder and chief executive officer of Amazon.com, Inc.,
an online merchant of books and later of a wide variety of products. Under his guidance,
Amazon became the largest retailer on the World Wide Web and the model for Internet
sales.
While still in high school, Bezos developed the Dream Institute, a centre that
promoted creative thinking in young students. After graduating (1986) summa cum
laude from Princeton University with degrees in electrical engineering and computer
science, he undertook a series of jobs before joining the New York investment bank D.E.
Shaw & Co. in 1990. Soon named senior vice president—the firm’s youngest—Bezos was
in charge of examining the investment possibilities of the Internet. Its enormous
potential—Web usage was growing by more than 2,000 percent a year—sparked his
entrepreneurial imagination. In 1994 he quit D.E. Shaw and moved to Seattle,
Washington, to open a virtual bookstore. Working out of his garage with a handful of
employees, Bezos began developing the software for the site. Named after the South
American river, Amazon sold its first book in July 1995. Bezos was inspired to start
Amazon because of the statistic he saw. Web usage was growing at 2,300 percent per
year and Bezos didn't want to miss the opportunity of participating in it.
In 1993 Bezos married Mackenzie Tuttle, whom he had met at D.E. Shaw. The
couple announced in January 2019 that they were divorcing, and the following day the
National Enquirer printed a story revealing that Bezos was having an affair with another
woman. Bezos subsequently launched an investigation into how the tabloid had
obtained his private text messages. Then, in February, he posted a lengthy essay online
in which he accused officials at American Media Inc. (AMI), the parent company of the
Enquirer, of “extortion and bribery” for suggesting that they would release nude
photographs of Bezos if he did not stop his inquiry, amid other demands. The Bezos-led
investigation later alleged that his lover’s brother had leaked the texts.
Life lessons by Jeff Bezos:
1. The “regret minimization framework” : There is no such thing as living a
“perfect” life. But it is possible to live a life without regrets. Whenever you’re going to
make a big life decision, ask yourself, “Will I regret not doing this if I were 80 years old,
or possibly on my death bed?” He wondered to himself, “If I were 80 years old, would I
regret not experimenting with this ‘internet’ thing?” He decided the answer was “yes”
— so he quit his job (at the dismay of everyone around him) and started Amazon.
2. Avoid the narrative fallacy : Ignore all these books on “how to become
successful in life” — because nobody has the answers. A lot of these “success” stories
can be merely attributed to luck (and of course, some hard work). What applies to the
life of others won’t apply to you. The formula for success doesn’t exist. Rather, it is
about you leveraging your personal strengths, making the best of what you have, taking
risks, and trying to add value to the lives of others.
3. It is easier to invent the future than to predict it: Don’t wait for the future to
happen. If you find anything you’re frustrated about in life, be the change which you
wish to see in the world. Jeff Bezos applied the same concept with Amazon. When he
started Amazon, nobody sold books online— and it was considered strange to buy
things online with your credit card. Yet instead of trying to predict what the future was
going to be like — he invented it. He innovated with Amazon with first with books, then
made it the store for everything. With Amazon Prime, Jeff Bezos did the unthinkable —
made almost all the products available for “free” 2-day shipping (with an Amazon
Prime subscription). He innovated with the Kindle e-reader as well as the Kindle
publishing platform (that made anyone an author). Furthermore, they have pushed to
become a monopoly by pursuing risky ventures— into making smartphones, tablets,
voice-controlled assistants, TV/Music/Movie streaming, 1-hour delivery, groceries,
fashion, and tons of other things I don’t even know about.
4. How to make money? : Making money isn’t just selling things, or selling your
time or services. Rather, you can make money in a myriad of different ways. You can
create a business and make money by making the lives of others easier. Help your
customers make complex decisions, and give them meaning and direction in their lives.
Many people are confused about Amazon — they think that Amazon’s value is by
selling things. Instead, the strength of Amazon is the recommendation engine, as well as
the system of reviews on products. Jeff Bezos says the following: “We don’t make money
when we sell things. We make money when we help customers make purchasing
decisions”.
5. The customer always comes first : treat your customer how you would like to
be treated. This simple ethical tenant can guide your business well. One of the things
which has helped Amazon become so successful is Jeff Bezos’ belief in always serving
the customer first. He knew that customers wanted low prices, faster shipping — so he
made that a priority of the company (which prevented Amazon from turning a profit).
Yet Bezos is in the long-run game with Amazon. He knew that if you did everything to
please the customer, he would get customers hooked (like myself), and then build long-
term value.
6. It is better to cannibalize yourself; than let others cannibalize you : Don’t be
afraid of cannibalizing yourself. It is better to cannibalize yourself; rather than letting
someone else cannibalize you. This is a similar philosophy to Apple — it is better to
cannibalize (hurt) yourself, rather than letting others hurt you. The world is a dog-eat-
dog world. And if you don’t continue to push yourself and innovate — someone else
will take your spot.
7. Be stubborn on your vision; flexible on details : Even if you set a great goal for
yourself in life, and fail — you will still get closer to greatness (than not having any
goals). If you don’t have a big vision for your life — make one. I feel it is better to have a
big vision for your life and fail, rather than to have a mediocre vision for your life, and
accomplish it. The higher we set our goals for ourself, the more we will achieve in life.
 By becoming inflexible on the details, we will lose sight of potentially better options. We
need to stick to our big vision, but be flexible on the details to make that happen.

2. Beginning of Amazon.com
Amazon quickly became the leader in e-commerce. Open 24 hours a day, the site
was user-friendly, encouraging browsers to post their own reviews of books and
offering discounts, personalized recommendations, and searches for out-of-print books.
Jeff Bezos quit his job at an investment bank in 1994 and moved to Seattle, Washington,
to open a virtual bookstore. Working out of his garage with a handful of employees,
Bezos began developing the software for the site, which he called Amazon.com. It sold
its first book in 1995. In June 1998 it began selling CDs, and later that year it added
videos. In 1999 Bezos added auctions to the site and invested in other virtual stores.
The success of Amazon encouraged other retailers, including major book chains,
to establish online stores. Amazon.com is a vast Internet-based enterprise that sells
books, music, movies, housewares, electronics, toys, and many other goods, either
directly or as the middleman between other retailers and Amazon.com’s millions of
customers. Its Web services business includes renting data storage and computing
resources, so-called “cloud computing,” over the Internet. Its considerable online
presence is such that, in 2012, 1 percent of all Internet traffic in North America traveled
in and out of Amazon.com data centres. The company also makes the market-leading
Kindle e-book readers. Its promotion of these devices has led to dramatic growth in e-
book publishing and turned Amazon.com into a major disruptive force in the book-
publishing market.
As more companies battled for Internet dollars, Bezos saw the need to diversify,
and by 2005 Amazon offered a vast array of products, including consumer electronics,
apparel, and hardware. Amazon diversified even further in 2006 by introducing Amazon
Web Services (AWS), a cloud-computing service that eventually became the largest such
service in the world. In late 2007 Amazon released a new handheld reading device called
the Kindle, a digital book reader with wireless Internet connectivity, enabling customers
to purchase, download, read, and store a vast selection of books on demand. Amazon
announced in 2010 that sales of Kindle books had surpassed those of hardcover books.
That same year Amazon moved into making its own television shows and movies with
its Amazon Studios division. The unprecedented numbers were, in part, caused by a rise
in home shopping during the COVID-19 pandemic.
In 1994 Jeff Bezos, a former Wall Street hedge fund executive, incorporated
Amazon.com, choosing the name primarily because it began with the first letter of the
alphabet and because of its association with the vast South American river. On the basis
of research he had conducted, Bezos concluded that books would be the most logical
product initially to sell online. Amazon.com was not the first company to do so;
Computer Literacy, a Silicon Valley bookstore, began selling books from its inventory to
its technically astute customers in 1991. However, the promise of Amazon.com was to
deliver any book to any reader anywhere.
 While Amazon.com famously started as a bookseller, Bezos contended from its
start that the site was not merely a retailer of consumer products. He argued that
Amazon.com was a technology company whose business was simplifying online
transactions for consumers.
The Amazon.com business strategy was often met with skepticism. Financial
journalists and analysts disparaged the company by referring to it as Amazon.bomb.
Doubters claimed Amazon.com ultimately would lose in the marketplace to established
bookselling chains, such as Borders and Barnes & Noble, once they had launched
competing e-commerce sites. The lack of company profits until the final quarter of 2001
seemed to justify its critics.
In 2007 Amazon.com began to sell its own Kindle e-readers, which helped
energize the e-book market. In 2011 the company introduced a related low-cost tablet
computer, the Kindle Fire, and by 2012, the Kindle Fire was estimated to constitute 50
percent of the tablets sold that used Google’s Android mobile operating system.
Over the years, Amazon has complemented its own delivery fleet with third-
party providers such as the U.S. Postal Service, UPS and FedEx. That mix has changed
considerably with Amazon’s share in its deliveries increasing while those by USPS have
steadily fallen. Amazon’s use of USPS services has attracted sharp criticism from
President Trump. Last year, Trump tweeted that the USPS was effectively subsidizing
Amazon, and described it as Amazon’s “delivery boy.” Managing relationships with
third-party carriers has become all the more important now for Amazon. “Without these
third-party logistics, Amazon would not exist in the first place,” Abdallah noted. “So
they have to keep good connections with those other carriers.” (Changing Delivery Mix)
To be sure, Amazon has been firing on several cylinders to meet its last-mile
delivery challenge. A program it launched in May incentivizes employees who set up
their own package delivery company with $10,000 in startup funding and three months’
pay. That is part of a larger delivery service partner program created last year, under
which 200 entrepreneurs have launched delivery businesses using their own Amazon-
branded trucks or leasing them from a third party with whom Amazon has partnered. A
third effort in the delivery space is a “Flex” program where individuals are encouraged
to take up local deliveries with flexible schedules. The program to provide seed money
to employees who start their own local delivery businesses is significant because
“warehouse jobs are hot jobs and there are not many of them” said Veeraraghavan. “It
makes sense for them to have enough of a labor supply to do the last mile delivery. One
way to encourage and guarantee this is to have businesses that can take part.” (The Last-
mile Push)
“The real problem for Amazon is: How do they continue to be competitive as an
e-commerce platform while increasing their quality of service in terms of same-day
delivery and whatnot, but still without compromising on their healthy revenues?”
According to Abdallah, Amazon’s strategy going forward would be “to build its
network gradually, trying to tackle strategically those customers that are closest to their
fulfillment centers and those in dense areas rather than suburban areas.”
 As Amazon plots its strategy to build out its last-mile delivery network with
third-party providers, it would “most probably run a loss-leader model,” said Abdallah.
“They will be very generous in terms of their compensation [in the beginning]. And
then, over time, as they gain power, they’re going to start being more aggressive with
their pricing.” Some media reports have talked of Amazon offering large discounts to
third-party sellers, in order to encourage them to ship with Amazon instead of rivals like
FedEx, he noted. “They will probably do the same thing with the drivers.” If Amazon
does go with its loss-leader model for last-mile deliveries, rivals like FedEx would feel
compelled to review their own business models, according to Veeraraghavan. He noted
that FedEx has in some ways been “ahead of the curve” in terms of how automated its
warehouses and its sorting locations are. “FedEx has to make a very good call right away
in thinking, ‘These are these are areas or core parts of the businesses for us, so we will
continue to grow them. Some of them are uneconomical and hard to scale, and we
shouldn’t jump in just because Amazon’s doing that.’” FedEx could also try to build
close relationships with other major e-commerce firms or retailers like Walmart and
Target, he added. Amazon’s push to grow its delivery infrastructure using third party
providers has courted much controversy, too. An investigation by ProPublica, co-
published with the New York Times on Thursday, identified more than 60 accidents
since June 2015 involving Amazon delivery contractors that resulted in serious injuries,
including 10 deaths. The report noted that Amazon’s contention is that it is not
responsible for the actions of its contractors, citing agreements that require them to
“defend, indemnify and hold harmless Amazon.” It added that the agreements cover
“all loss or damage to personal property or bodily harm including death,” citing recent
court testimony by an Amazon operations manager.