Amazon’s most recent $13.7-billion acquisition of Whole Foods has moved Jeff Bezos into the top spot—he is officially the richest man in America. As a result of this takeover, his empire has disrupted the grocery industry and amassed a treasure trove of consumer and market data. But as MIT Sloan’s Bill Aulet reminds us in a recent article on entrepreneur.com, it was not always so.
“Once upon a time, Amazon sold only books. Bezos’s initial focus on books constitutes the greatest execution of a beachhead marketing strategy ever.”
In his bestselling book, Disciplined Entrepreneurship: 24 Steps to a Successful Startup, Aulet, who teaches in the Entrepreneurship Development Program at MIT Sloan Executive Education, defines the beachhead market as the holy grail of specificity and the most important place from which to launch your invasion of the market. Named for the WWII battle of Normandy, where allied soldiers stormed the beachheads of Normandy enabling them to dominate one of the most important battles of the war, the beachhead market is the place where, once you gain a dominant market share, you will have the strength to attack adjacent markets with different opportunities, building a larger company with each new following.
“By creating a narrow and winnable focus for his first product, Bezos was able to build the fundamentals of his company, and create a launching pad for Amazon to grow into different markets over time,” writes Aulet.
Emerging entrepreneurs can learn valuable lessons from Bezos’s approach. In this case, the book industry provided an ideal beachhead market because it was:
- Really simple. Bezos was able to launch Amazon out of his garage with minimal investment.
- Easy to enter with a high chance of winning. In the 1990s, the book industry had not yet utilized technology like other industries. Take note: the ideal beachhead market has low entry costs. Once in, entrepreneurs can erect barriers, making it harder for others to enter.
- Visible but not too visible. The big retailers didn’t see Amazon coming.
- A safe haven in which to build critical skills to win follow-on markets. In the early 1990s, Bezos sensed that the internet was the future, and he wanted to be in the game. The beachhead of books gave him a chance to build up a web-based marketplace and develop transferable fulfillment approaches and back-end operations.
Aulet encourages budding entrepreneurs to seek specificity but not get caught up in analysis paralysis. There are many market opportunities, and ultimately there is more than one path to success. But, like a military operation, you are much more likely to succeed if you focus your resources.
“There’s an old Romanian proverb,” writes Aulet. “The person who chases two rabbits, catches neither.”
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