Jeff Bezos received advice from Costco's founder that helped Amazon transform from a near-death business to a $2 trillion enterprise.

One of the world's largest retailers, Amazon has been in business for 30 years and is now worth $2 trillion.

In 2001, Amazon's stock dropped by 90% after the dot-com bubble burst, leading some critics to believe that the company would never recover. However, founder Jeff Bezos, with the help of Jim Sinegal, founder of Costco, managed to turn things around.

In 2013, according to "The Everything Store" by Brad Stone, Bezos met Sinegal for coffee at a Starbucks inside a Barnes & Noble near Amazon's offices in Bellevue, Washington. The purpose of the meeting was to discuss using Costco as a wholesale supplier for some products, but the main topic of discussion ended up being pricing strategies.

Costco's annual membership comprises most of the company's gross profits due to its ability to sell products for "dirt cheap" by eliminating unnecessary costs and maintaining strong relationships with suppliers to secure the best deals on bulk goods, as explained by Sinegal.

"According to Stone, Sinegal informed Bezos that the membership fee is a one-time expense, but it becomes more valuable every time customers enter the store and see the forty-seven-inch televisions that are two hundred dollars cheaper than anywhere else. This reinforces the idea that customers will always find affordable products at Costco."

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Sinegal emphasized that Costco's approach was to prioritize value over everything, and they would always work hard to ensure customer satisfaction. He shared this belief with Stone, who thought it was something that could be applied to his own business.

Amazon's "incoherent" pricing strategy was discussed in a meeting with Sinegal, which Bezos called just a few days after their meeting, according to Stone. The executives present at the meeting revealed that the topic was Amazon's need to deliver on its promise to always have lower prices than its competitors.

During that summer, Amazon reduced the prices of some of its popular products, including books, music, and videos, by as much as 30%. According to The New York Times, Bezos stated at the time that there are only two types of companies: those that increase prices and those that decrease them. Amazon, he emphasized, would always strive to be the latter.

By the end of 2001, Amazon's sales bounced back, resulting in its first ever profitable quarter. Bezos attributed the rebound to lower prices and vowed to cut unnecessary costs to offer more discounts, according to the Times. This approach mirrors Costco's strategy.

""We had a successful Q4. We're proud of it. The key factor was lower prices for customers, which we pushed further to achieve our results." - Bezos, as reported by Fox News in January 2002."

In 2005, Amazon introduced its own membership program, Amazon Prime, which offered discounted prices and free shipping on orders for members who paid an upfront fee. In a 2016 letter to Amazon's shareholders, Bezos described the value of Prime as so great that it would be irresponsible not to become a member.

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