233 Jeff Bezos’ 10 Business Lessons for Amazon Sellers
Today I’m going to go over 10 lessons in business from Jeff Bezos. I got these from analyzing an interview he gave in 2017 at an internet conference. I would want you to apply these to your Amazon business.
1. Identify a fast-growing market.
Jeff Bezos left a prestigious high-paying job when he left to found Amazon.com. He did that because he saw a growth curve of 1000% per year on the internet. This was definitely a big leap but he was excited by the potential of his company. Where is that market right now? With online retail growing at 20% per year, the answer is probably Amazon because of its rapid growth.
2. What product fits in that marketplace?
Jeff Bezos constructed his business plan when driving across America to Seattle, Washington because he thought he would get good programmers there since that was Microsoft’s location. He knew Microsoft would provide programming talent because he was going to be selling stuff on the internet. He figured books would be the best product to sell at the time. This decision was not because he wanted to create a bookstore but this was the door that would get him into the business. He wasn’t a product-centered person but was centered on the internet as a sales channel.
Once he decided he’s going to sell books, he would get them from wholesalers. Jeff Bezos started off as a middleman and wasn’t scared of getting his hands dirty. He would drive packages to post offices every day. He got his first million after setting up quite a number of meetings for funding. It’s worth noting, though, that he already had his business up and running at this particular point.
4. Do you proceed adaptively?
You should most definitely double down on your success. Most people try and have a big business plan, which is not a bad thing, but Jeff Bezos was smart enough when he created that plan while going down Seattle. It’s rather common, though, that your business plan won’t go exactly as planned.
So what is proceeding adaptively? This is a fancy way of saying, ‘’When you get here, what do you do next?’’ A scenario would be when you put your products out and they sell off like crazy. This will obviously cause some problems with either cash flow, delivery, or even sales. This is not exactly what you planned for, but you’ve got to respond to the market. Try stuff out and see where the market leads. They will make sense this way.
5. What is the center or focus of your business?
Jeff points out that there are many ways to center your business. For example, you can be product-centric and build the entire company around one product. You can be technology focused, business-model focused etc. You have to be really aware of the center of your business. If you don’t want to be competitive focused and want to be focused on a certain type of customer, then you need to focus on where that customer is. Are they online or not? Again, you need to be very clear on your focus.
6. Focus on your business center.
In 2018, close-following competitor model is going to get harder and harder which means you need to be a bit innovative. If you’re innovating slightly but basically copying what your competitor is doing but in a faster, better, or more aggressive way that’s great.
You need to be focused on customer experience. Hang out with your customers and go on forums on social media with your customers. Make the best widget in the world to solve a specific problem and know what your customers’ core problems are.
Innovation is part of pleasing customers. Amazon is all about being customer-centric. Not only do they listen to their customers but they also create stuff. Jeff believes customers are always dissatisfied even when they don’t know it. You’ve got to try new stuff out because sometimes the customers want it and sometimes they don’t. But when they do want it and you’ve provided it to them, they develop a sense of loyalty. However, your innovation might end up being the best thing ever or it might just be a total fail. It’s therefore important to give yourself the space to fail.
8. Are you looking for asymmetric returns?
If you have a 10% chance of 100X return, you should definitely take that investment. This means it will still fail 9 times out of 10 times so be mentally prepared for failure and have the mental resourcefulness, and enough money to handle that. You don’t require a crazy amount of money to start but make sure it’s enough for your business. Being aggressive in a business environment is a huge requirement. So it’s a rational behavior to go completely nuts and miss a few wins but make a major hit that wipes out all the losses. This is a common venture capitalists behavior.
9. What time frame do you operate in?
Most businesses think in 2 to 3 years’ timeframe. But if you have a store in Amazon, you need to be aware of every minute. To get focused from one day to a week is a development but with this kind of business, you need to start looking into 3 to 6 months chunks. When starting out, it’s not necessary to have long, massive plans just have a long-term vision. I believe the rise is gradual. From days to weeks to months and finally to a year.
For Jeff, this is not enough. He advises thinking in 5 to 7 years chunks. His principle is to be the first in a growing niche and making sure the business is growing at 10% a year. This long-term thinking suggests that he’s so focused on market share and not profit taking and this should be the mentality of all Amazon sellers. Of course, there are some trends which are so hard to time in a short timespan but it will be obvious if you put the timeframe long enough.
10. What are your big ideas?
If you have a big vision and timeframe as well as a centered focus on it, you have a presence and definition of your business. It’s very easy to get pretentious and talk big while making no money which is what most people do. I’m not left out in this. I tend to think of myself as more of a communicator than a product person.
Jeff says you’re only going to have 2 or 3 big ideas which are, more often than not, obvious. The trick is getting them implemented at all levels- strategy, logistics, tactics, hiring people, and product choices – so that everything lines up together. As mentioned earlier, Amazon is quite customer-centric. What is the obsession or center of your business?
With customer satisfaction in mind, the quickest delivery Amazon has done recently is 14 minutes. This is absolutely insane. Right now, there are lots of physical manifestations of the flash delivery idea, which are huge projects when dealing with a company the size of Amazon.
A simple idea gets a customer faster and competition makes this even more essential. But more to that, having a great product selection is a big idea. Amazon capitalized on this by bringing in third-party sellers to their platform who also happen to sell at low prices, which is an even bigger win for the customers.