Eric Siu explains how Amazon Prime started as Jeff Bezos's desperate gamble during the 2002-2003 holiday season. Growth was slowing and competitors were catching up, so Bezos bet on free two-day shipping. The payoff wouldn't show for five to seven years, but it worked.
The origin of Amazon Prime. This was like 2002, 2003, and they were growing really quickly. Here's the problem. They were growing really quickly. This was like November leading up into Christmas, which is like their busiest season, right? And Jeff Bezos is like, we need to create a new offering, right? But everyone's like, dude, like their numbers are going up, everything's looking good. But what most people didn't see is that their growth rate year on year was decelerating. Each month year on year was decelerating. It's because a lot of these online retailers were catching up with Amazon. They're like, okay, so we need to create like a low-priced offering that's going to keep people in. And eventually they land on this free 2-day shipping thing, right? The biggest lesson I learned from this one. They needed to do something because their business was decelerating. But the other thing is this bet, this is the type of bet where you don't know if it's going to pay off for 5 to 7 years or so. And you have to have a lot of guts to launch something like this.
