Organic Growth Drives Q4 Sales at Amazon.com

by Sat Duggal

Businesses that have mastered the critical processes of organic growth can increase their revenues, and take share from competition, even in an economic downturn when their customers are cutting back expenditures.

Here is an example:

Amazon.com grew topline revenues by 18% and profits by 9% in the 4th quarter of 2008, when US GDP was down 3.8%. Amazon.com exhibits the growth results of customer centricity: they are leveraging long term trends as well as short term trends, expanding their consumer domain, constantly refining their value proposition and providing consumer solutions that increase loyalty and revenue generation per customer.


Building on this growth framework, Amazon.com capitalized on short term trends in the 4th quarter of 2008, when consumers were cutting back on their bricks and mortar shopping trips and reducing spending on Christmas gifts. They reduced some unit pricing to sharpen the value proposition (such as flat screen TV’s at $699 with free shipping compared to $999 in some stores) and provided added price transparency so consumers knew they were getting a good deal. Existing customers did not feel as though they needed to go to any other site for Christmas purchases. Consequently, though some prices were reduced, Amazon.com’s topline revenues and operating margins were up.

In a poor Christmas season for retailers, Amazon.com enjoyed excellent results because they followed all 4 principles of the organic growth framework: (1) know your market and its trends well enough to place confident bets on the future; (2) know your consumer segments well enough to be able to focus resources only on your best prospects when times are tough; (3) sharpen your value proposition; (4) make sure you deliver on that value proposition every time, at every touchpoint, without fail.

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Keywords: Value Based Pricing, Customer Experience Design