Clock Icon Jun 03, 2022

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5 min read

Amazon Flywheel Explained: Jeff Bezos Sustainable Business Strategy

What is the Amazon “flywheel effect” and how can you leverage the company’s framework to drive sales? Find out in this article from beBOLD Digital.

In the business world, there are a few names that are spoken with an almost reverential tone. One of those is Jeff Bezos, the founder, and CEO of Amazon.com. Amazon has been one of the most successful companies in history, and much of that success can be attributed to Bezos’ unique business strategy known as the “flywheel”. In this blog post, we will explain what the flywheel is and how you can use it to create a sustainable business strategy for your own company!

beBOLD Amazon Beauty Flywheel

Tell me the history of Amazon Flywheel?

The Amazon Flywheel business model is an approach where multiple values in harmony function to increase volume and growth. Jeff Bezos, the founder of Amazon in 2001, formulated the following policy focusing primarily on customer interests. Believe he wrote it on paper napkins! You might be surprised how many of those people operate in complex operations. Simple is the main feature of this business philosophy and I'll give a detailed explanation.

Amazon Flywheel Explained

The Amazon e-commerce company, like other online retailers, follows the same development approach. There are a few modifications in the flywheel as the business expands throughout each stage of its development, which has aided this firm to flourish.

The Amazon Flywheel model was created as a whole system. This was due to the existence of a vicious cycle. Amazon Flywheel is a basic idea that relies on user experience to attract visitors to the platform, which results in third-party sellers being able to sell their products through Amazon's marketplace.

The Amazon Flywheel strategy created by Jeff Bezos is to make Amazon a customer-centric business and growth strategy that focuses on creating a virtuous circle of three key elements:

  • Low Prices (or Lower Prices than competitors)
  • Fast shipping
  • Wide Selection of Products of Top Selling Products

and combined with

  • Excellent Customer Service
  • Positive Reviews
  • Customer Obsession

This circle creates a feedback loop that drives customer engagement and loyalty, which in turn drives more sales, gains more customers and ultimately helps to gain momentum for the flywheel.

How effective is Amazon Flywheel?

The Amazon marketplace has grown in popularity and value. You would never guess that Amazon sees 2 billion visitors to its sites every day. It is nearly impossible to generate the same level of traffic as a brick-and-mortar store. Amazon's stock had increased by more than $3200 by June 2021, according to Forbes. Despite the fact that most people are moving online to acquire things following COVID-19, beauty is one of the categories that has been least likely to make the transition.

How does Amazon Flywheel work on their e-commerce platform?

Amazon lowered prices to attract customers. Consequently, Amazon will increase its customers by promoting its services and a better customer experience if it uses its products. However, Bezos believes it'll be easier to reach more people with more third-party sellers allowing their products to be sold other than Amazon-exclusive products. It impacts traffic on the site as well as fuels an important component – Selection.

Is Amazon a good competitor? Nonetheless, it's worth remembering the customers first; Amazon is the most important priority.

Breaking down Amazon Virtuous Cycle

The Amazon Flywheel, or Virtuous Cycle, begins with the customer experience. According to Jeff Wilke, customer experiences are usually focused on several aspects such as customer experience. The company instead decided to let third-party sellers sell product products through Amazon, a principle of third-party stores. Instead of focusing on Amazon's current offering, Amazon allows third parties to make choices - a choice which Amazon is unlikely to have. This choice enriches customer experiences.

Check Your Brand Analytics

As an Amazon seller, it's important to understand how the flywheel effect can help you grow your business. The flywheel is a term used by Amazon to describe how their platform works to drive sales. By understanding how the flywheel works, you can better leverage it to grow your own sales.

To do this, you'll need to track your brand's analytics. This data will show you whether or not the flywheel is having an impact on your sales. If you see a positive trend, it means that the flywheel is working and you should continue to invest in it. If you see a negative trend, it means that the flywheel is not working and you should consider other growth strategies.

Amazon Flywheel: Frequently Asked Questions

What is Amazon's flywheel concept?

Amazon Flywheel or Amazon Virtuouscycle are strategies that leverage customer experience to generate traffic to the platform or third parties to sell products. Amazon has also increased its price structure to reduce the prices spinning the flywheel.

Does Amazon use flywheel?

The flying e-commerce business on Amazon is driven by customer experience and is gaining more 3rd party customers using Amazon's services as the primary market. The platform provides customers with more products to choose from and helps improve the buying experience.

What is the flywheel principle?

The flywheel effect takes place as small wins accumulate as time passes, enabling you to build momentum to grow. The invention consists of mechanical flywheels that operate Rowing Machines. Creating flywheels, it requires reducing friction and exerting force.

What is flywheel marketing?

Flywheel Marketing strategy generates a continuous stream of leads and prospects. Those who have friction when consuming your content might get lost. Eliminating friction lets flywheels move freely.

Amazon Flywheel Conclusion

So, what is the Amazon flywheel and how can it help your business? In short, the Amazon flywheel is a business strategy that focuses on creating a virtuous circle of growth. Once you have implemented the flywheel, it will help you achieve sustainable long-term success by leveraging economies of scale, customer loyalty, and brand equity.

At beBOLD we’ve helped beauty brands across the globe create and execute successful Amazon flywheels. Are you ready to take your business to the next level? Contact us today for more information about our services.

 

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Denny Smolinski

CEO & Founder - Denny’s experience and knowledge of the professional and prestige beauty industry and Amazon allows him and his team to grow beauty brands globally within the Amazon ecosystem. He understands the full scope of brands that are doing business in professional beauty or retail such as Ulta, Sephora, Nordstrom and more. Denny’s stands behind his professionalism and years of reputation in the beauty industry.

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