Monday, August 20, 2012

Amazon - The power of customer focus

I was reading a very interesting article by Henry Blodget on Facebook's stock price decline and the role of near-term financial focus on a company's future. It mentioned the case of Amazon that I'd like to share. 

Amazon had a period of hyper growth in its stock price between 1998-2000 after which its stock price crashed to pre-1998 levels. For around seven years the stock price of Amazon traded side-ways before Amazon's extensive focus on customer service started paying off. Their stock gradually rose and it became the e-commerce behemoth that it is now. The lesson is simple. In 1997-98 Amazon's focus was on quarterly financial reports. It had its advantage in the short run but kicked back soon. Their focus on customer service took time but was necessary in the long term success of the company.