Amazon started as a massive online bookstore since local shops couldn’t possibly house or list millions of selections like an online storefront could. They saw themselves having a strong chance at taking over this market. Ebay was a marketplace for regular people to list items to compete against companies through means of auctions. The creator had a vision that everyday items that people didn’t need anymore could still be valuable to someone else as a cheaper alternative to what a corporation might be selling. Many of the first listings on Ebay however were collectibles. 8% of those listings were Beanie Babies. In order to gain traction on Wall Street, they needed a respected business person to assist their endeavors. Their choice was Meg Whitman who was a marketer at Disney and an executive at Hasbro. Amazon was able to grow from the Get-Big-Fast approach. Basically bezos would slash prices and limit profits early on to garner in consumers and create a name for himself. Once he was able to dominate the market, he could then restore prices for maximum profits while maintaining this brand loyalty he’s been able to create.
Amazon was able to double their stock price in a matter of a few weeks even with financial losses. This made investors frenzy to buy up stocks in many “.com” type public businesses. The frenzy sparked by Amazon paved the way for stock brokers to trade in a new manner, day trading. Venture capitalists were funding many ecommerce startups so as to not miss out. They knew most were destined to fail from the start, but were trying to hedge their bets and hope that one in a field hit big and made up for the losses. The day the NASDAQ crashed, the market saw a 25% drop. This was one of the hardest falls the market had seen. Along with the bubble burst came the closure of most of the failed ecommerce websites. Much of the blame for the bubble was pushed onto Wall Street as they were the ones who were inflating the situation here by investing in worthless companies. Some good from the bubble was that it implemented the idea into brick and mortar stores that the online storefront has potential and could harm their future if they don’t join in.
