Amazon Story - how to grow business with "flywheel" concept

Amazon is managing growth rate following "flywheel" concept of pushing a giant, heavy flywheel, turn upon turn, building momentum until a point of breakthrough.

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Problem description

Amazon is not always able to accurately forecast growth rate. They base expense levels and investment plans on sales estimates. A significant portion of expenses and investments is fixed, and they are not always able to adjust spending quickly enough if sales are less than expected. Revenue growth may not be sustainable, and percentage growth rates may decrease. Revenue and operating profit growth depends on the continued growth of demand for the products and services offered by Amazon or sellers, and business is affected by general economic and business conditions worldwide. A softening of demand, whether caused by changes in customer preferences or a weakening of the U.S. or global economies, may result in decreased revenue or growth. Sales and operating results fluctuate for many other reasons, including due to factors described elsewhere in this section and the following:

  • ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands;
  • ability to offer products on favorable terms, manage inventory, and fulfill orders;
  • the introduction of competitive stores, websites, products, services, price decreases, or improvements;
    changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services, including outside the U.S.;
  • timing, effectiveness, and costs of expansion and upgrades of systems and infrastructure;
  • variations in the mix of products and services Amazon sells;
  • variations in level of merchandise and vendor returns;
  • the extent to which Amazon offers fast and free delivery, continue to reduce prices worldwide, and provide additional benefits to our customers;
  • the extent to which operators of the networks between Amazon customers and stores successfully charge fees to grant Amazon customers unimpaired and unconstrained access to online services;
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