How Jeff Bezos helped Amazon overcome a major competitor to become an ecommerce giant

In 1997, Barnes & Noble's new website seemed like it would give Amazon a run for its money

In late 1997, things weren't looking great for Amazon.

Barnes & Noble had just launched its own website to compete with Amazon -- which started operating for the general public only two years before.

At the time, Amazon only sold books and people were skeptical about its ability to survive competition from such an established bookseller.

Amazon was making about $60 million a year in sales and had about 125 employees, CEO Jeff Bezos said years later during a 2018 interview with Axel Springer CEO Mathias Döpfner. Meanwhile, Barnes & Noble made $3 billion in sales and had 30,000 employees.

"They were giant; we were tiny," Bezos told Döpfner. "We had limited resources. And the headlines were very negative about Amazon. The one that was most memorable was just 'Amazon. Toast.'"

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Bezos founded Amazon in 1994 out of his garage in Washington state. He had moved to Seattle to start the company after he left his job at investment and technology firm D.E. Shaw in New York.

Jeff Bezos, founder and CEO of Amazon, speaks in Washington, D.C., on Sept. 19, 2019. (Andrew Harrer/Bloomberg via Getty Images)

Amazon's ecommerce website launched in July 1995 and in May 1997, Bezos took the company public.

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Later that year, Barnes & Noble launched its website and Amazon had its first major competitor.

The competition scared the team at Amazon, but Bezos knew they had to keep their focus in the right place, he said.

In an all-hands meeting with his 125 employees, Bezos reportedly said: “Look, you know, it's OK to be afraid, but don't be afraid of our competitors, because they're never going to send us any money. Be afraid of our customers. And if we just stay focused on them, instead of obsessing over this big competitor that we just got, we'll be fine."

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In his interview with Döpfner, Bezos explained that’s a principle he still stands by.

"No matter what the drama is, whatever the external distraction is, your response to it should be to double down on the customer, satisfying them," he said. "Not just satisfying them — delighting them."

Jeff Bezos, founder of Amazon and Blue Origin speaks during the JFK Space Summit on June 19, 2019. (REUTERS/Katherine Taylor)

The strategy seems to have worked. The following year, Amazon added CDs to its inventory and by 1999, the company was selling other items including toys, electronics and tools, according to History.com.

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The website reported that by the end of 1999, Amazon had shipped 20 million items.

Today, the Amazon empire includes far more than just online retail. It also operates cloud computing platform Amazon Web Services (AWS) and owns numerous subsidiaries including Audible, Whole Foods and Twitch.

In 2019, Amazon posted $280.5 billion in revenue.

And Bezos himself is the wealthiest man in the world, worth an estimated $161.1 billion, Forbes reported.

As the CEO, he owns just more than 11 percent of the company's shares.

Ticker Security Last Change Change %
AMZN AMAZON.COM, INC. 3,389.79 -47.57 -1.38%

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