But, what we never realize is the fact that this shiny image we conjure up from the news and big promotional events and shows is an illusion. Behind that illusion runs a never-sleeping company which has to make sure that they stay ahead in the business. Reaching the top, never guarantee your continued success.
Being the number one makes you restless with responsibility to make sure you don’t slip down, losing your respect everywhere. Behind the pink curtains is a hard working labor guided by their highly focused leaders (who tend to be called as ‘ruthless’, ‘heartless’, ‘eccentric’ and even ‘maniacs’).
It is everywhere. Whether it’s an IT company or any other industry. To stay on the top demands a ruthless (yet not unjust) guidance to make sure that the company provides its best to maintain its position.
eCommerce giants like Amazon and eBay are running their businesses for almost around 20 years. We perceive their success as a lucky call. We think that just because they were the primitive eCommerce sites, they got lucky for having the huge and readily available market for themselves and it was easy to run an eCommerce company in those times. Just like eating a pie in the drawing room while their websites were selling things worth of millions.
It isn’t the true picture. It never was and never will be. Being significant in anything firmly demands high level of commitment (almost similar to a serious relationship commitment) and an unprecedented level of effort if you are aiming for an unprecedented gain or stance.
Listed success stories of these eCommerce stores reflects the same idea. They shows us that how companies of which we think runs on smooth highways are actually paving their way through rough lands leaving the highways for the followers.
Amazon is the eCommerce giant. Everyone knows it. And also knows some facts about its history that how it was, for 7 years, an unprofitable business.
Well, that was the history. Right now, Amazon is selling things worth of $75 billion a year. It is also larger than the next 12 online retailers combined. But, how it achieved this stance. How it reached on the top and from being an online bookseller became the online store which sells literally anything and everything online.
Jeff Bezos started the company in 1994 packaging and selling things from his home in Bellevue. It was a local store and the website was called ‘Cadabra.com’. From there, after seeing some progress, the business officially began in 1995.
Amazon.com’s initial run was based on books. They sold only books and here is the first page of amazon.com.
It offered a million titles online. It was already the biggest online collection of books at the time tag-lining itself as ‘Earth’s biggest bookstore’.
It was a good business. Computers were seeing unprecedented popularity in general life, internet connections were spreading and rooting into the daily lives of people more and more. Amazon.com was basing them as its ground for the future growth. Internet was its ground, obviously. And a fortunate thing for the founder was, computers were only going to integrate in people’s lives more densely, as we know it now.
As business expanded next couple of years, they started to receive mails requesting them to also sell music and electronics. Because, people found it very convenient to buy in that home-shopping way. It was a bliss for all the lazy people who find it cumbersome to go outside and buy stuff. Clicks were way…more straight-forward and effortless than the conventional buying.
Bezos, the founder, found this trait of his customers as a way to expand his business. After his success with books, he started to sell music in 1998. Before that, in May, 1997 it already had gone public. You can imagine its size and growth by only selling books. What if they not only books and music but also start to sell more things?
That was the motivational question for Amazon. They started to acquire new businesses and expanding their stance in new countries in Europe before 2000.
Though, big and beautiful, it wasn’t creating profits yet. That was normal for any new eCommerce business at the time. You don’t see profit due to the huge investment in infrastructures and other resources to run the company.
Well, as mentioned above, after 7 years of its establishment, the public company saw its first profit of $35.3 million in 2003. The amount wasn’t big for the giant, but the great news for the founders and the share-investors was that it was making money now. The cow they were nurturing for 7 years had finally started to produce milk. Everyone was happy.
You can just imagine how hard it must have been to run a constantly loss registering company. The pressure to make it profitable and a success forced them to loose significant numbers of employees in 2001. But, that turned out to be a wise step. Jeff Bezos’ leadership was working out well.
Bigger, brutal and competitive acquisitions followed over the years. Taking over the new companies (mostly successful start-ups) and enriching their range to new products and segments was simultaneously creating amazon a bigger company. With acquisition of bigger companies like Borders (giant bookstore company) and Drugstore.com, company was really stepping into the segments never taken before. Now, there were also competitors like Walmart.com and eBay who also were trying to grab new companies. Amazon’s recent acquisition of Diapers.com has seen such a fierce competition between Walmart and amazon before amazon closed the deal for $545 million. The thrilling story of acquiring Diapers.com really interests us to see how hard it becomes to run even a successful business if you compete with an established giant. At a point, to compete and breakdown the business of Diapers.com, amazon was ready to lose $100 million in just 3 months.
But, that’s the real industry. That’s how one survives or stays in lead.
Jeff Bezos had a clear mentality about running the company. He always considers the consumers’ requirements and comfort on the front-line. Even after being such a big company, Amazon is reinventing their relations with every individual consumer. The attitude is never like they are buying from us and are not going anywhere else. It has stayed as they are buying from us and make them keep doing it with a smile on their faces.
Such long term mentalities help any company survive the longest. Jeff Bezos knows this very well and his every strategies comes out accordingly.
When in 2007, he introduced Kindle e-book reader, his agenda was like ‘we want to earn from consumers when they use our product, not when they buy it.’ That fits with the price range of his whole kindle product range. Qualitatively, the products are fantastic and still the prices are dirt cheap. It makes them affordable for the average buyer of the website. Moreover, the integration of other offers and the Amazon Prime service makes the whole deal a lucrative offer customer can’t refuse.
Amazon kept believing in expanding even in the fields which doesn’t directly connect to their core business. Much like what Google is doing for years and is succeeding tremendously. Apart from the selling online (and buying loads of other big websites like IMDB.com, Alexa.com, etc.) Amazon has started to invest in TV shows, online services similar to Netflix, selling aforementioned electronics (kindle products) and so on. Even a project of ‘delivery drones’ is announced by the company recently. Also, Jeff Bezos is personally owning Blue Origin since the year of 2001 – its a rocket science research technology firm.
Though, every new acquisition and investment by Amazon.com somehow connects to its core and empowers the company in indirectly, even if it is a far-fetched support. This way, they are creating a network, a strong network of their business and services, which will stand strongly during the industrial storms. They are expanding themselves, while staying attached to their core. The core, which has made it the The Everything Store.
The success story of eBay is not that much groundbreaking or filled with high voltage drama and excitement. It was more of a calculated beginning which turned out to be a huge success.
The founder of the company Pierre Omidyar had launched the homepage of eBay in 1995. He wanted the website to become an online auction center. Unlike Amazon, which is an online retailer, eBay was a more of an open bazaar where people/businesses could come buy/sell their things. It was a simple idea. The idea also reflected in the website’s first name, AuctionWeb.com.
Though, the founder wasn’t so sure of its success either as there was no reference or success in the past to gauge on. He still went on.
Then, the first selling happened on the ‘AuctionWeb’. It was a broken laser pointer put online by the founder himself as a test. Though, the question would be, “In the whole universe, who would by a broken laser pointer?”
It sold for $14.83. It was the best bidding price.
When Pierre called the bidder and clarified about if he understood that it was a broken laser pointer, the answer came out as ‘I am a collector of broken laser pointers.’
That was it. In that simple answer, Pierre had found the answer of the question, could his website be something bigger than what he initially thought? Frankly, starting eBay was kind of a hobby for Pierre during 1995 when the dotcom bubble was on the rise.
Pierre realized the opportunity and planned to expand the website and the company on serious note. He hired the first employee the next year and the by the end of 1998, he had the staff of 30 and over a half million users on his website buying and selling things. From there, eBay never looked back. It became a listed company in 1998.
The concept of online buying and selling became so popular among the visitors that company had no other option but to expand. Expand in every way. From infrastructure to employees and from technology to countries, they expanded in every way. That was demand generated by the users.
eBay bought PayPal in 2002, Skype in 2005 and StubHub in 2007. There were many other minor acquisitions which brought great minds direct into the company environment.
Well, the amazing success they were having for more than a decade, came to a halt when the company had ‘become fat and happy.‘ It happened around 2007 when the company was on the verge to get vanished.
Actually, an envisioned beginning and huge success, the internet giant had become the victim of over-enjoying its own success for some time. For new technologies, which were required to run their website efficiently, they had relied on their own competitors like Amazon and Google. They had become lazy to innovate and just took the services from their rivals. This steps stopped them from leading the industry through new technological waves. They didn’t even have the similar algorithmic analysis system on their own and had to use Amazon’s which Amazon had innovated for their website’s traffic. For search algorithms, eBay relied on the Search engine Giant Google. It was harmful for the company in long terms and that had been proven.
Though, when in 2007 the company saw their capital shrinking around $30 billion, they were under pressure to do something about it. Since its establishment and becoming profitable, company, for the first time, registered loss in 2007.
A new management was required. Meg Whitman who was the CEO of the company since 1998 left her post and assigned a new person in her seat, John Donahoe.
The businesses acquired by eBay in past came to its rescue at the end. Here is a story about how one of the new entrepreneur acquired by eBay helped the company to sustain and come out from its almost-disastrous situation in 2007. The same article states ‘even the meetings with bad news happened to end with applause.’
From there company started to stand on its own once again. In 2012, eBay reported revenue of 29% with net income of $570 million for the first quarter of the year.
Now, eBay is stable again. But, its success-story tells us that if you indulge in the happiness of your own success too much, you will have to succeed once again beginning from the scratch.
Alibaba.com is the best example to show that how the most distinct and remote things could fit in together well enough and can create something unprecedented. It is a case where the most unlikely people meet together to create something about which they had very little idea about.
The founder of the B2B website, Jack Ma learned English by being a guide of the foreign tourists for eight years. He learned a lot from them. Among those visitors, a family became very good friends with him and even after their departure to Australia, they stayed in contact with him.
Few years later, that family called Ma over Australia for a summer vacation. That was the time, when Ma’s thinking changed a lot. In his own words, ‘I was taught that China is the world’s richest, happiest country, but those 31 days changed my life.’ That was the time, which made Ma thinking differently from a typical Chinese.
Though, it didn’t bring any big consequences in Ma’s life overnight. Although, his mindset had seen some radical changes, he still was fighting with the general life. He wanted to become teacher to make a living. Eventually, he got a place in the worst university of their town. He became a teacher around the year of 1992. A normal university teacher without any knowledge of computer or internet. He didn’t have touched a computer until then.
But, as he recites, even after becoming a teacher, he wanted to do something. He didn’t want to teach people his whole life. His current position of teacher was just for 5 years top.
The urge of to do something, helped him to get interested in new things. In 1995, one of his friend introduced him to a computer and internet. They searched beer on internet and found no results from the China.
This encouraged them to start a website called “China Pages”. He borrowed some money to run the website and saw it being a success. His website was in direct competition with China Telecom – a large corporation. After sometime, China Telecom offered him $185,000 as an investment in their company. The offer was inciting. Ma accepted it.
Though, the political factors in a business hit Ma in the face after the deal was done. China Telecom had 5 board members against Ma’s 2. They never let Ma to apply his plans and strategies. He was pushed aside from his own company.
He simply left. He wasn’t good at playing politics at the time. He was a simpleton from the beginning not loving the politics which are played in big companies.
But, his dreams never were demolished. He was a visionary.
In 1999, right before the dotcom bubble burst happened, he gathered a team of 18 people in his apartment and talked about the new eCommerce company he wanted to start and convinced everyone to invest in it. He raised about $60,000 in that meeting.
Ma led the company with his visionary approach and started the website, Alibaba.com. The reason of choosing such name was its widespread popularity around the globe and an indication for the business owners that the website was opening up many opportunities for them just like in the story of Alibaba in which when saying ‘Open, sesame’ a cave full of fortune would open up.
Now the road was open for them. But, they weren’t in a BMW. Their vehicle was a Mopel with very low fuel. They had to use it very carefully to reach the milestones.
Company saw initial success. After gaining some stability, they raised around $25 million from investors and drove the company with more power. They were riding in a car, not a BMW yet.
The site grew, more investment came in. They started to acquire other similar companies and products. Right now, they have a list of different companies. All of them being leaders in their segments in China. Alibaba.com’s main subsidiaries are Taobao, Tmall.com, eTao, Alipay (similar to PayPal), AliExpress, ChinaYahoo! (China Yahoo’s shakehands with Alibaba), etc. They grew big.
Now, we could say they were riding in 10 BMWs simultaneously occupying the whole road even before they got public in 2007.
Today, Alibaba.com’s total B2B transaction amount conquers Amazon and eBay. summed up figure. According to some reports, Alibaba.com handled transactions worth of $148 billion in 2013 alone. The figure for the same of Amazon is $74.45 billion and eBay’s around $ 56 billion.
The founders of Apple, Microsoft, Facebook, Amazon and eBay, all were from geeks to tech-savvy. Founder of Alibaba was a teacher, who never touched a keyboard until he started a website.
Such things happen real life, too.
If eBay is giant and Amazon is Goliath then Alibaba is a monster. But, such comparisons are just for amusement. All of their unique struggles, history and journeys tell only one thing at the end : on the top of everything else, you only need a great vision to accomplish something and then a will to make it happen. Nothing’s impossible.