Flywheel A heavy revolving wheel in a machine which is used to increase the machine’s momentum and thereby provide greater stability or a reserve of available power.
Amazon is full of contradictions. The retailer whose strategy was to be ‘unprofitable for a long time’ is now the second most valuable company in the world. Amazon is a retailer that doesn’t own most of the stuff it sells. Amazon is both a feared competitor and, increasingly, retail partner. Depending on who you ask, the phrase ‘The Amazon Effect’ can either mean putting a company out of business or drastically enhancing the customer experience.
Amazon sells everything from nappies to treadmills, but it also produces hit television shows and provides cloud computing services to the US Government. Amazon is a hardware manufacturer, payment processor, advertising platform, ocean freight business, publisher, delivery network, fashion designer, private label business, home security provider and an airline. It doesn’t stop there. Amazon wants to be a supermarket, a bank, a healthcare provider and, by the time you’re reading this, it will probably be on the cusp of disrupting at least one more industry.
Amazon is aware that, to the outside world, such diversification seems scattered and illogical. Is Amazon simply a jack of all trades, but master of none? ‘As we do new things, we accept that we may be misunderstood for long periods of time,’1 the retailer stated on its website in 2018. To understand Amazon, you first need to understand their strategic framework: the flywheel.