Features

Technology behind the wheel

As consumer expectations evolve, transport and logistics companies are being prompted to make their operations more efficient.

01 November 2024

Kimberley Taylor, Loop

In the 2013 bestseller, The Everything Store: Jeff Bezos and the Age of Amazon, author Brad Stone explains how the “flywheel effect” worked in the early stages of the retailer, which was started in 1994. Lower prices meant more customer visits, Stone says, and more customers meant increased sales volumes, which, in turn, attracted more commission paying third-party sellers to the site. This allowed Amazon to get more out of their fixed costs, like the fulfilment centres and the servers needed to run the website. And by upping efficiency, they could lower their prices even further. “Feed any part of this flywheel, they reasoned, and it should accelerate the loop,” Stone writes.

In 30 years, the company now has a valuation of $1.5 trillion, and had a 37.6% share of all ecommerce sales in the US in 2023. From just selling books, it has branched out into cloud services, digital advertising and streaming. Amazon Web Services, which has about 32% of market share, accounts for 16% of Amazon’s total revenue, but is responsible for 74% of the whole company’s operating income. Other than the flywheel, there are any number of reasons for its success, among them its high-performance culture, as well its “working backwards” model. This means imagining what the consumer wants, and then working backwards until the product team knows exactly what to build. Teams will produce press releases, or FAQs, and if the product described isn’t better (or easier, or quicker to use, or cheaper), then it won’t be built.

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