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Whenever an unknown company gains momentum everybody questions, “why didn’t I see that coming?” Often, it’s because people are looking for patterns, but not the right ones. Founders and investors look for one or two shared variables from similar businesses in the space as success signals. However, no two businesses are identical, so that model of prediction doesn’t work.
For example, if you discovered Amazon back in its infancy, it would’ve been difficult to predict its success based on traditional growth indicators. And while it comes as no surprise that Amazon is in the top ten highest growth technology companies based on our calculations now, you might still struggle to recognize the science behind why.
Here, we look at how the science of evolution explains Amazon’s incredible journey to the behemoth it is today and what it tells us about where the company is headed now.
Amazon’s Early Days
When Amazon started in 1994, it appeared to have one focus — launching an online bookstore. The idea was to jump into ecommerce ahead of the curve, and books were the perfect gateway.
Physical bookstores were inconvenient and often lacked the right inventory. So it seemed obvious to Jeff Bezos that the process could be simplified by ordering online. Clearly, his assumption was spot on.
Just years after its inception, Amazon started to expand. First, to DVDs and music, then everything else. Once Amazon proved the model, it moved forward at full speed — often beyond what its current logistics supported. But Amazon wasn’t only ahead on becoming an online marketplace. It also realized the power of memberships long before its biggest competitors and launched Amazon Prime in 2005. Amazon’s gift was – and is – engaging with emerging trends before competitors catch on.
However, as large as Amazon is, it’s far from the only player in the ecommerce space. To understand the company’s future, we need to first look at the industry as a whole.
A Brief Industry Analysis
Due to Amazon’s expansion, it’s tough to pinpoint one industry. However, since its primary focus and supporting services tend to serve growing its ecommerce division, that’s where we’ll focus.
The ecommerce space has been primed to grow for the last decade. All it needed was a behavior shift from older consumers, and the pandemic delivered that in a big way. Moreover, the younger generations with growing buying power already prefer to purchase online, especially for commodity items or repeat purchases they don’t need to physically touch or try on before buying.
According to industry analysis, ecommerce sales are only going up, which is both good and bad news for Amazon because an increase in shoppers comes with an increase in competition.
In 2019, ecommerce was already a $9 trillion industry and predicted to grow. Fortunately for Amazon, it had the foresight to conquer space long before the staunch competition arrived, so it has a significant advantage. Last year, Amazon's revenue was approximately $140 billion, and the company in second place – though scaling rapidly – was notably behind at $53.2 billion.
So, what makes Amazon the juggernaut that it is?
Company Indicators of Growth
You don’t need insider information to predict a company’s future growth, but you need to know what to look for. So, based on the science of evolution, we’ll evaluate company vision, culture, leadership, employee sentiment, net promoter score, and sales and stock trends as growth indicators.
Company vision
According to Amazon, its focus is “customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking.”
Certainly, Amazon lives up to its vision. When competitors were committed to purchasing products wholesale, Amazon went with third-party sellers, lowering its overhead. When delivery services weren’t meeting its high standards, it launched its delivery service. And, when it sees an entirely new industry it believes it can conquer, it jumps in headfirst.
Company culture
When you hear Amazon, you automatically think of things like powerful, convenient, and fast. Of course, to earn that reputation, you actually have to do something different. The company has worked hard to cultivate that culture both in and out of the workplace.
There are two distinct ways that Amazon creates a unique culture for its employees. For one, Amazon trains a portion of its talent from the inside. The company offers nine upskilling programs and has placed 90% of enrollees into software roles. The best part? All you need to qualify is a high school diploma or GED.
Additionally, when Amazon searches for top talent outside of the company, it’s skewed to favor the potential employee. If the applicant is extended an offer, it’s for two positions. Then, the employee gets to choose which they believe is the better fit. Amazon’s talent acquisition processes demonstrate that the company understands that it has to share the qualities it desires to attract the most talented, loyal, and innovative employees.
Leadership
As you undoubtedly know, Jeff Bezos was the long-running CEO of the company he founded. Bezos possessed the rare quality of being both the mastermind and executer – a combination that served Amazon well. However, in 2021, Bezos stepped down as CEO to pursue other interests, and Andy Jassy took over the leadership role.
Jassy was already in charge of the mega-successful cloud platform, AWS, prior to taking the top spot. And, considering Jassy has been with Amazon for around 25 years, it’s not a dramatic change in leadership the way bringing in an outsider would be. Still, it remains to be seen how the company will shift – if at all – in upcoming years. Though, given its upward trajectory, it’s a fair assumption that the company's vision will stay the path.
Employee sentiment
As with many large companies, employee sentiment is somewhere in the middle. A portion of employees love working for Amazon – 43% are very happy – and others don’t. In general, employee sentiment seems to fall somewhere around 3.5 to 3.9 out of 5 stars on third-party employee reviews.
What’s notable is that this trend is consistent across positions, from software engineers to warehouse workers to delivery drivers. Ultimately, employee sentiment comes down to culture fit more than the role or even salary — the employees committed to the cause enjoy working for a company with drive.
Net promoter score
It’s evident that Amazon shoppers are advocates of the marketplace. Otherwise, it wouldn’t be the leading ecommerce platform.
Along with its robust collection of goods, what people love more than anything is the extra perks, like Amazon Prime. Prime has over 153 million subscribers, and the number continues to grow. Amazon accomplished an incredible feat with Prime because not only did the company figure out the logistics to deliver packages in two days, but it did so with thousands of third-party sellers.
Amazon shifted consumer expectations in such a significant way that it forced every other competitor – big and small – to change the way they do business to the benefit of the customer.
Sales trends
Amazon experiences peaks and valleys in sales throughout the year – as is the nature of ecommerce – but year-over-year, sales continue to grow.
We may see a slight dip in 2022 compared to 2020 or 2021 since consumers anxiously returned to in-store shopping after the restrictions of the pandemic began to fade. However, the overall growth from 2019 still capitulated even if there is a minor leveling-off.
Stock trends
Beyond being the ecommerce leader, Amazon is the second most valuable brand across every industry — it’s only second to Apple by around $5 billion.
This tells us that in addition to employee and customer buy-in, it has investor buy-in. Only a handful of companies have ever reached a trillion-dollar valuation — showcasing the unshakable confidence that Amazon will continue to grow in value.
Science of Evolution Analysis: Amazon Strategy for Growth
Yet, according to the science of evolution, it’s not the individual aspects of a company that determines its growth — it’s the relationship between the company’s values and services and how they resonate with its target customers.
The science of evolution teaches us that relationships between entities – in this case, a company and its customers – are the drivers of survival and growth. A company’s values must align with the customers’ needs for it to survive, and beyond that, a company must add significant value for its customers to experience meaningful growth.
Once you dig in and determine the relationship between the entities – in this case, why Amazon over other marketplaces? – then, you can begin to predict the outcome.
Minimal strategy for survival
What ensured that Amazon survived even in counter-cycle periods when so many competitors failed was the core service it provided its customers — a convenient way to get everything they needed at a fair price.
Amazon understood that putting its customer experience first would gain attention from consumers tired of driving from store to store to get everything they need. Consumers wanted to shop online without paying a premium or order from multiple websites, and Amazon delivered.
Instead of mimicking its competitors, Amazon provided customers with a superior offering that drew them in and made them excited to shop on the marketplace. In addition, new products and programs were introduced constantly, so the experience only continued to improve.
And in turn, the customers grew to trust the marketplace, so they continued to flock to Amazon for all their needs. With the support of customers, the marketplace became a go-to providing the stable revenue and sales it needed to continue to maximize its vision — the best outcome all around.
As we’ve already discussed, ecommerce was set up to win. It was only a matter of time. So, Amazon could have stuck with its original game plan of becoming the largest online marketplace and survived — but that’s not what made it into the company it is today. Moreover, it’s the extras that Amazon adds that make it irresistible to consumers and unstoppable to competitors.
Maximal strategy for growth
Amazon’s astronomical growth occurred because of its willingness to expand. The company never let fear of failure stop it from jumping on every opportunity, and every new endeavor only further served customer needs.
For example, if we look at Amazon Prime, we see precisely what sets Amazon apart as a marketplace. Back when Prime launched, Amazon was still an underdog in the ecommerce space. It needed an innovative way to add massive value for its customers. So, what were the biggest problems with ordering online? The wait and the shipping fees.
But a Prime subscription took the edge off. Instead of waiting a week or more for your items, you could have them in two days, and for a seemingly bargain price — consumers saved money even if they ordered only ten times a year. Starting Prime is the shift that separated Amazon from the rest of the online marketplaces in customers’ minds.
At this point, while Prime is the most popular of Amazon’s perks, it’s far from the only. The company added everything from grocery delivery to music and movie streaming.
Plus, Amazon offers programs like Try Before You Buy to support the growing number of customers purchasing clothing online (not to mention Amazon makes returns a breeze).
At every turn, Amazon aims to add value to the customer experience and add it in such a way that slow-to-change competitors don’t have a chance. After all, when you can’t anticipate where Amazon is headed next, how can you defend against it?
As the science of evolution shows us, there are patterns in growth. However, you can't make an accurate prediction without knowing what they are for each entity. Simply looking for similarities between leaders or sales trajectory in early companies isn’t a reliable predictor. Instead, you should look at the relationships between a company and its customers – and the differentiators – to identify growth levers and ensure they’re maximized to their fullest potential.
Fortunately, Amazon created a flywheel effect that served its customers and its sales equally – a rare accomplishment. The more products and services Amazon added and the more it improved operations, the more customers shopped, and the more third-party sellers flocked to the marketplace to meet those customers’ needs. Once the momentum started, it didn’t stop — and still doesn’t show any signs of slowing. Given Amazon’s past growth and ongoing expansion, who knows what the company may ultimately become.
See the entire list of Top 10 Ranking – Companies Most Likely to Innovate and Grow Innovation Predictor