Success, the Amazon Way

Feature Article | November 28, 2013 by Nicolas A. Zeitler

JeffBezos_Amazon

Amazon founder Jeff Bezos (Photo: Amazon)

Does anyone still refer to Amazon as an online bookstore? Selling books online was certainly where it all started. But, today, you can buy literally anything on Amazon  ̶  from toys and footwear to cloud computing services (through Amazon Web Services). Fittingly, Brad Stone, a journalist at Bloomberg Businessweek in San Francisco, decided to call his new book “The Everything Store”. In it, he reveals why this epithet applies perfectly to Amazon and why Amazon’s founder, Jeff Bezos, is, quite simply, “the man who sells everything”.

Stone claims to have conducted hundreds of interviews with friends, associates, and rivals of Jeff Bezos and even to have met the head of Amazon in person. Bezos, says Stone, sees his “baby” less as an online retail store than as a technology company that has to keep renewing itself. Stone traces this development in detail, explaining, for example, how rapid growth resulted in chaotic IT structures and ultimately led to the decision to set up a new, service-oriented architecture (SOA).

Four factors for Amazon’s success

Viewed as a guide to doing successful online business, this book reveals four factors that have made Amazon what it is today:

  1. Absolute focus on the customer
  2. Book prices dictated from Seattle
  3. No comfort zone for managers
  4. All-out pursuit of the vision to sell everything online

This article is part of our focus on retail: For related articles, please see our Special on Retail.

1. Absolute focus on the customer

The author describes how Jeff Bezos created positions such as Vice President of Shopping Experience and Chief Algorithms Officer – his aim being to focus on the customer at all times and at all costs. The example of Toys’R’Us reveals that he is not one to shy away from conflicts with partners in pursuit of his goals. The toy seller perceived its partnership with Amazon as giving it exclusive rights to supply products on Amazon’s site. Bezos ended this relationship in order to extend his company’s offering for the benefit of customers. The dispute had to be settled in court and ended with Amazon being ordered to pay millions of dollars in compensation to Toys’R’Us.

2. Book prices dictated from Seattle

But this experience did not change Amazon’s behavior toward its partners.  Brad Stone describes how Amazon spent years persuading publishers to digitalize their offerings for the planned Kindle e-reader. Apparently, Bezos had been toying with the idea of offering all new publications for US$ 9.99 right from the start – not based on any market research, but simply on the fact that this was less than the psychologically critical limit of US$10 dollars. The publishers knew nothing of this until Bezos mentioned the figure at the first public presentation of the Kindle: It came as a complete kick in the teeth for the industry representatives present.

Amazon setback: the lost Pokémon figures

Yet, this overly confident approach to conducting business should not create the impression that Amazon’s success story has been plain sailing all the way.  Brad Stone portrays the difficulties that beset the company at the end of 1999, in the middle of the busy Christmas period. Chaos reigned at several distribution centers: a box containing Pokémon Jigglypuff figures had vanished, making it impossible to complete orders that contained the figure. According to the IT systems, the figures had been delivered correctly. It was not until two days later, following a search of the entire warehouse – covering an area of several hundreds of thousands of square feet – that the figures were found.

Next page: Amazon employees pay for parking and snacks

3. No comfort zone for managers

It is episodes like this that make “The Everything Store” a compelling read, and Brad Stone’s insights are evidence of thorough research. He depicts numerous conflicts between Jeff Bezos and Amazon executives, gradually placing together the pieces of the puzzle to reveal the personality of the company’s founder.  Even as a child, says Stone, Bezos was fiercely ambitious and possessed a strong competitive streak. As a boss, he writes, Bezos follows his own unique rituals, insisting, for example, that meetings begin with everyone reading a document together in silence. Bezos likes to keep his employees on their toes by asking unexpected questions. And he has a reputation for being tight-fisted: Amazon employees, says Stone, have to pay for their own parking and for food and snacks from the company cafeteria.

4. All-out pursuit of the vision to sell everything online

Stone’s insight into the world of Amazon makes one thing very clear: its success story would not have happened without Jeff Bezos. When he has a vision, he pursues it; he sets new targets all the time; and he wants to push sales figures ever higher. Bezos’ personality is reflected in Amazon’s strategy too, says Stone, manifesting itself in absolute, unadulterated customer focus. In a statement that could make sobering reading for the members of the retail industry, Stone points out that Amazon has shaped the concept of online retail from the start and, in doing so, has changed the way we shop for ever. And it is precisely this consistent focus on how today’s customers want to shop that many retailers are still failing to achieve, as studies show.

Mackenzie Bezos critical

Stone’s book tells the story of Amazon in an exciting and compelling way, coherently explaining why the company has become almost synonymous with the concept of Internet shopping. Jeff Bezos’ wife, Mackenzie Bezos, on the other hand, accused the author of using “factual inaccuracies” and – as reported in the media – posted a scathing review of “The Everything Store” on Amazon. She gives the book only one star out of a possible five. In a written response to Mackenzie Bezos’ review, Brad Stone pointed to his long record of accuracy in journalistic writing but announced that he would “gladly correct” any obvious errors.

The Everything Store: Jeff Bezos and the Age of Amazon. Little, Brown and Company.

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