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What is Amazon Flywheel and How to Apply it to Your Business?

How to Apply Amazon Flywheel to your Business

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What is Amazon Flywheel and How to Apply it to Your Business?

There is no denying the fact that Amazon has remained seriously committed to customer centricity ever since its inception. The spell-binding transformation from a simple online bookstore to a wondrous marketplace that offers an insanely large number of products while becoming a stand-out company in the process is truly a mesmerizing story to tell. 

You will be amazed to know that amidst all the aforementioned revolutionary transformation, Amazon has truly relied on its own adapted version of the framework that was initially introduced by strategist Jim Collins in 2001. This awe-inspiring frame is known as the “flywheel effect,” and is wholly and solely focused on preserving customer-first mindset.

What Exactly is Amazon Flywheel?

From the definition point of view, Amazon Flywheel is a kind of heavy revolving wheel that is made the most effective use of in a machine to enhance momentum and therefore offer greater stability to the machine. Taking its weight into consideration, the flywheel is extremely difficult to push from a standstill however once it starts to move it generally builds momentum, which finally enables the wheel to turn on its own and thus establish even more of its own momentum through a fascinating self-reinforcing loop.

The question arises at this point is what this strategy means for businesses and the clear answer is the “flywheel effect” or also the “virtuous cycle” as we call it represents a tangible way to produce traffic to the platform. Moreover, you can also speed up sales rank and also enhance conversions to your Amazon product listings by making the most of an AI-driven advertising optimization solution.

What are the Main Focuses of the Amazon Flywheel?

  • Jeff Bezos came up with an amazing strategy as he identified the three most compulsory aspects while believing that these would lead to the true success of Amazon.
  • Amazon’s CEO noted that if the company’s employees truly focused on customer experience, selection, sellers, or traffic, the flywheel would definitely receive more and more energy, and henceforth the whole system would grow. Jeff truly understood the significance of the linkages.
  • As far as the second principle of Bezenomics is concerned, it professes that flywheels are not static. In order for the momentum at Amazon to keep on moving quickly, Amazon has to carry on renewing each element of the flywheel and this they have to perform by innovation.
  • There were three major innovations that truly identified Amazon and there was Kindle then AWS, and also Echo, with every next year to develop. The moment Amazon failed, it truly while becoming really innovative. As per Jeff Bezos, the result did not affect their decisions as they believed that they would eventually rise.
  • The three features are lower prices, superb selections, and also splendid delivery experience. By coming up with a real lower cost structure, Amazon truly gets huge and which definitely gives them more leverage in the logistics structure and also the fulfillment. While having customers who are content obviously means that you get more traffic. Therefore, rather than monetizing the traffic, Amazon focuses mainly on customer satisfaction.
  • It is also worth mentioning that Amazon does not rely only on what they have. If it occurs to them that some of the stock is difficult to hold and deliver, they opt to sell that stock. For this purpose, third parties are commonly known even if they are too small and also regardless of the fact that these companies have not more than six employees.
  • It is also worth mentioning that Amazon works on a very tight profit margin however they have bigger volumes. However, a crucial part of the flywheel model is by reinvesting the profits to the business. This will obviously lead to reduction in prices and also other Amazon Web Services.
  • The flywheel truly gains momentum with the reach and benefits, which are then carried forward to third-party suppliers and customers.

How to Apply Amazon Flywheel to your Business?

The very first thing that you should be able to do is to truly deliver that first push to truly initiate the Flywheel’s rotation. While it is not going to be convenient and you may have to face losses, you should also keep in mind that Amazon faced too. That is why you should be in it for the long run.

Below are some of the steps you can take while applying the Flywheel to your own brand.

1) Make Sure that You Develop Excellent Products

Keep in mind that no amount of marketing and marvelous customer service can really make up for subpar products. That is why you should be able to develop exceptionally quality items that your customers can really appreciate.

That is why; you should be able to follow certain things in order to create the ideal product for your business:

  • Choose a niche that you have real knowledge about, or something you are really passionate about.
  • Make sure that you do your research about which kinds of products can be profitable while keeping in view keyword search volume and also the number of competitors among others.
  • Make sure that you differentiate your product so it can distinguish from the rest. 
  • Make sure that you further lessen the initial cost of the product or your MOQ. This will definitely make it convenient for you later on to successfully attract new customers through lower prices.
  • Choose the most ideal supplier or manufacturer that can easily meet your quality standards.

Once your supplier is done with the manufacturing, make sure that you ask for samples as well.

2) Driving Traffic is Crucial

An important thing you can do is to spread awareness among people about your products, which can be done in a couple of ways that are not only inside but also outside of Amazon.

Some of the useful ways through which you can drive traffic include:

  • Make sure that you launch your products right through investing rightly in PPC ads.
  • Make sure that you get as many reviews early on to gain more and more attraction.
  • Opt for doing giveaways and discounts if you can during the initial few weeks of launching.

3) Offering Marvelous Customer Support is the Way to Go

Make sure that you listen to your customers and also get to know as to what features of your business they opine you can work on. Answer all the queries promptly and try to be generous when it comes to returns. It’s also better to afford some losses and make sure that you keep your customers happy than lose them as you care about your profit as well.

You should also keep in mind that “Collect Profits” is not included in the Flywheel however this is implied. This clearly means that it is not that significant in this strategy. Keep in mind that the focus of the Flywheel is wholly and solely the customer. That is why what you can do is to truly make the customer happy and you should do that.

Is Amazon Flywheel Really that Effective?

The basic reason why the flywheel is truly practical is just because of the adaption of third-party sellers to Amazon. In the past, we would definitely call them competitors. The real effect of inviting the competitors was to enhance the potential assortment of the goods offered. This would definitely leave the company with the true ability to wholly and solely focus on the customer support and also enhance the cost structure and also decrease the prices.

Keep in mind that the third-party sellers may truly lead to an increase in the selections. In addition, it allowed Amazon to really sell through its platform or make the most of Amazon fulfillment to easily manage and deliver orders.

Wrapping Up

It goes without saying that the Flywheel strategy has truly catapulted Amazon into what it is these days and also a highly successful eCommerce giant that wholly and solely controls a greater percentage of the market. It is truly an efficient growth strategy that any company can easily implement in their own business model. However, it should also be kept in mind that this will need a certain level of dedication as well as commitment and one that won’t be convenient to achieve.

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