Join Anil Gupta for an in-depth discussion in this video Growing Amazon: An evolutionary journey, part of Designing Growth Strategies.
- Amazon's evolutionary journey illustrates well the systematic application of all of the ideas for growth that we have discussed in this course. It's an extremely impressive journey. Jeff Bezos, a Princeton graduate, and a high-flying analyst on Wall Street, founded Amazon as an online bookstore in 1994. Since then, the company has diversified into almost all corners of online retailing.
Notwithstanding diversification into new products and services, Amazon is relentless in the pursuit of growth within existing product lines. Illustrated well by the company's strategy to keep growing the original book retailing business, Amazon launched Kindle, an ebook reader in 2007. Over time, Kindle has become smarter, lighter, and cheaper.
Today, it dominates the market for ebook readers. The outcome: ongoing growth in the total market for books as well as in Amazon's share of it. Amazon is similarly relentless in pursuing sustained growth in every product line that it takes on. Beyond book retailing, Amazon has diversified aggressively, to broaden the portfolio that it sells to its original customers, as well as to broaden the customer base.
Today, one can buy almost every imaginable product for use by individuals and families. The ever-expanding portfolio includes not only products for use in homes, but also industrial and scientific goods for use in workshops and labs. It comprises not just physical goods, such as books, clothing, and tools, but also information goods, such as movies and music.
Amazon has also moved beyond simple products, physical or digital. It now also sells pure services, such as for landscaping, home repairs, and the like. Going beyond retailing, but building on their heritage, Amazon has redefined itself as the world's preeminent intermediary. If the buyers and sellers of any product or service have difficulty in discovering and connecting with each other, Amazon stands ready to play the market maker role.
Beyond rapid growth in the portfolio of products and services on the one hand, and targeted customers on the other, Amazon has also expanded into every major market in the world. Given that the US accounts for only 5% of the world's population, and 23% of the world's GDP, the global market represents a much larger and faster-growing opportunity for the company.
Not surprisingly, Amazon has committed billions of dollars to both China and India. Perhaps even more impressive, Amazon has undertaken an extremely well-planned and well-executed radical diversification move. That is, entirely new products and services for entirely new markets. By this, I refer to Amazon Web Services, AWS, a division which leverages the company's IT infrastructure and sells cloud computing services to software developers as well as enterprises.
AWS clients include The New York Times, many other corporations, as well as various agencies of the US government. AWS is now the number one player in cloud computing and has beaten competitors such as IBM, Google, and Microsoft in head-to-head battle for large clients. Wall Street analysts predict that one day, AWS may even account for more than half of Amazon's total earnings.
Aggressive as the company is, Amazon has been careful to stay away from arenas that do not rely on the company's core capabilities. Jeff Bezos knows well that smart discretion is as important to growth and success as smart aggression.
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- The growth imperative
- Identifying opportunities for growth
- Assessing and choosing among the growth options
- Implementing the chosen growth strategy
- Organizing and leading for growth