Dot Com Bubble
Amazon was launched in the summer of 1995 and around the same time that Pierre Omidyar was working on an online auction site. This website was going to be “eBay”. Both Pierre Omidyar and Jeff Bezos(founder of Amazon) saw the web as a place to do business.
Both Amazon and eBay saw instant profit, in just a month of release.
Rate of Growth
The rate at which it was growing can be compared to various other inventions such as: after the invention of the radio it took 38 years before a large number of people started using it, for TV it took 13 years, but as for the internet it took only 4 years before it had 50 million users. Not only the quick popularity success, but the rate at which it was growing/ developing was also very high.
Amazon 2 years after release mainly sold books, had few revenues but not a lot of profit, but Jeff Bezos claimed Amazon to be one of the biggest bookstores and claimed the company had a lot of potential. Many people did not believe the company was going to last while others believed that it was the future and had a really good model. Bezos reduced prices whenever he could and believed that profits could and should be sacrificed temporarily in favor of rapid growth.
Meanwhile the ipo window opened up for eBay and the company saled right through it beyond anyone’s expectations. The same with Amazon was seen as predictions by analysts caused high success in the market. With Amazon and eBay being successful inspired others to their own startups, especially with so much potential in the market.
The Collapse
A lot of money was being thrown around in different things like advertisements, and at least 1 new ecommerce venture was brought into the world everyday. The kids running these new companies were inspired by amazon’s and ebay’s “get big fast” methods but not successful. They did not have a grasp of the strategy or business knowledge.
The internet bubble was building up, with a lot of money in line. The collapse of the market is exactly what happened, and was also what caused the ‘ black friday’. It was the single greatest collapse in the industry of the stock market. The majority of blame fell onto Wall Street.
The only major ecommerce companies that survived and were able to continue making profits were ebay and amazon, this was mainly due to its early start and aggressive marketing.