2.4 The flywheel theory once and for all
As mentioned in Section 21, Amazon is not only an e-commerce shopping website, but also a cloud computing, big data company, and now the most popular artificial intelligence (AI) It is also widely used on the Amazon platform.
What we know most about artificial intelligence is the duel between AlphaGo and the Korean Go master. Go has always been regarded as a powerful enemy of AI. In chess, there are an average of 35 possibilities per round, and a game can last 80 rounds; while in Go, there are 250 possibilities per round, and a game can last 150 rounds. At the same time, there are 3361 possible positions in Go, but the number of atoms in the observable universe is only 1080.
The artificial intelligence of Amazon platform is mainly used in the following three aspects.
(1) For sellers: Collect buyers’ shopping behavior through big data, feed back buyers’ shopping needs to sellers, and help sellers make product selection and marketing decisions.
(2) For buyers: Based on previous shopping data, push products that buyers like to promote second purchases.
(3) For the platform: In terms of logistics, the goods we send to the FBA warehouse will be allocated to different warehouses. According to the previous sales volume of this product in different regions of the United States, the greater the sales volume of the product in which region, the more likely it will be allocated to warehouses near that region, so many buyers can receive the product the next day after placing an order. It is based on the core algorithmic logic of the platform, which is also the core theory of the founder of Amazon: flywheel theory. This is also the rule that the Amazon platform has not changed for so many years. Flywheel theory.
Amazon’s official interpretation of flywheel theory: This is a closed loop that can start from any point but has no end. It should provide consumers with more choices and convenience in the product selection process. The rich selection and convenience are to achieve a good customer experience. When the buyer’s shopping experience on the Amazon platform is good enough, the buyer will become a free promoter of Amazon. Through word-of-mouth, you can influence people around you to join Amazon’s shopping army, thereby achieving an increase in traffic or even a geometric increase.
In this way, the Amazon platform with enough traffic can naturally attract more sellers to join. More sellers will join, which not only enriches product categories, but also reduces the price of products on the platform from a competitive perspective. The more sellers there are, the lower the price. And lower prices also further improve consumer satisfaction. If this cyclical process continues to occur, sales on the Amazon platform will continue to grow along this flywheel-shaped cycle.
Cross-border e-commerce sellers, especially those on American platforms, should fully understand the flywheel theory. This will be very beneficial in our future product selection operations and when we encounter inevitable thorny problems. Amazon is very different from domestic e-commerce platforms. If you want to get a real experience, you can go shopping on Amazon China and try to return or exchange the goods. The Amazon platform offers fast delivery, good service, and guaranteed product quality.