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Friday, July 25, 2014         

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Relentless CEO drives Amazon's dominance

By Michiko Kakutani

New York Times

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Amazon.com was named after the Amazon River, the largest river on the planet (by volume). According to Brad Stone's absorbing new book, "The Everything Store," some of the other names its founder, Jeff Bezos, initially considered were "MakeItSo.com" (after the command used by Captain Picard on "Star Trek: The Next Generation"), "Awake. com" and "Relentless.com." "Relentless" is certainly the perfect adjective to describe the company's growth, and the tenacity with which Bezos has executed his vision: to use the Web's infinite shelf space to create what Stone calls "the merchandiser's dream of the everything store — a store with infinite selection."

Amazon started out modestly as a Seattle-based online bookseller in 1995: It was so small that every time someone made a purchase, Stone writes, "a bell would ring on Amazon's computers, and everyone in the office would gather around to see if anyone knew the customer." In 2012, Stone reports, the company "cleared $61 billion in sales," and it will probably become "the fastest retailer in history to surpass $100 billion."

Amazon branched out into selling music, movies, electronics and toys during the dot-com boom of the late 1990s. After mastering "the physics of its own complex distribution network," Stone notes, it expanded into selling jewelry, clothes, sporting goods, automotive parts and just about everything else, becoming the Internet's top retailer and a leading platform for third-party sellers. The company would go on to revolutionize bookselling with its Kindle e-reader, even as it also positioned itself as a cutting-edge technology business, selling basic computer infrastructure like storage, databases and raw computing power.

Although "The Everything Store" retraces early ground covered by Robert Spector's 2000 book, "Amazon.com: Get Big Fast," Stone has conducted more than 300 interviews with current and former Amazon executives and employees, including conversations, over the years, with Bezos.

"The Everything Store" does not examine in detail the fallout that Amazon's rise has had on book publishing and independent bookstores, but Stone does a nimble job of situating the company's evolution within the wider retail landscape and within the technological revolution that was remaking the world at the turn of the millennium. He gives the lay reader an understanding of how Amazon was able to outmaneuver the already established book chain Barnes & Noble, and how it's been able to grow and mutate and take on Internet giants like eBay and Apple.

Stone, a senior writer for Bloomberg Businessweek, also provides a dynamic portrait of the driven and demanding Bezos, going so far as to track down his biological father, Ted Jorgensen, a former circus performer and unicyclist, with whom Bezos hadn't been in contact for decades.

Two of Bezos' basic principles are putting the customer first and thinking for the long term. Bezos and his lieutenants reasoned, Stone writes, that "lower prices led to more customer visits. More customers increased the volume of sales and attracted more commission-paying third-party sellers to the site," which "allowed Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website," which, in turn, led to greater efficiency and the possibility of lowering prices even further. At the same time, improving the customer experience — through deep discounts or free shipping — would lead to word of mouth and take the place of costly advertising.

But if Amazon aspired to reduce friction for customers, Stone suggests that it remained a high-friction place to work. He describes the in-house culture as "notoriously confrontational," and writes that because managers in departments of 50 or more people are required to "top-grade" their subordinates along a curve (and dismiss the least effective performers), "many Amazon employees live in perpetual fear" of termination.

Manufacturers and retail rivals also became well acquainted with the sort of hardball that Amazon played. Small publishers dependent on Amazon sales of their back catalogs were pressured for better terms, Stone reports, while shoe brands like Nike and Merrell worried that Amazon was a "dangerous discounter" that would "very likely consign their new in-season products to the bargain bin in an effort to garner new customers and gain market share."

What lies ahead for Amazon? Stone predicts that Amazon might one day use 3-D printing to print merchandise in its fulfillment centers, and that it will most likely introduce a mobile phone or an Internet-connected television set-top box soon so that it can offer its services on all the connected devices its customers use.

The relentless Bezos, this book concludes, is not content simply to make Amazon an "everything store," but ultimately envisions "an everything company."






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