retail news in context, analysis with attitude

Fast Company has a long piece about Jeff Bezos, founder and CEO of Amazon.com, that is even more timely because of his announced acquisition of the Washington Post for $250 million.

You can read the whole story here, but here are three excerpts:

• "Amazon, in fact, is an eyes-wide-open army fighting--and winning--a battle that no one can map as well as its general. Yes, it is still the ruthless king of books--especially after Apple's recent loss in a book price-fixing suit. But nearly two decades after its real day one, the e-commerce giant has evolved light-years from being just a book peddler. More than 209 million active customers rely on Amazon for everything from flat-panel TVs to dog food. Over the past five years, the retailer has snatched up its most sophisticated competition--shoe seller Zappos and Quidsi, parent of such sites as Diapers.com, Soap.com, Wag.com, and BeautyBar.com. It has purchased the robot maker Kiva Systems, because robots accelerate the speed at which Amazon can assemble customer orders, sometimes getting it down to 20 minutes from click to ship. Annual sales have quadrupled over the same period to a whopping $61 billion. Along the way, incidentally, Amazon also became the world's most trusted company. Consumers voted it so in a recent Harris Poll, usurping the spot formerly held by Apple."


• "AmazonFresh is arguably the last link in Bezos's big plan: to make Amazon the dominant servicer--not just seller--of the entire retail experience. The difference is crucial. Third-party sellers, retailers large and small, now account for 40% of Amazon's product sales. Amazon generally gets up to a 20% slice of each transaction. Those sellers are also highly incentivized to use Fulfillment by Amazon (known as FBA). Rather than shipping their products themselves after a sale is made on the Amazon site, these retailers let Amazon do the heavy lifting, picking and packing at places like the Phoenix center. For the sellers, an FBA agreement grants them access to Prime shipping speeds, which can help them win new customers and can allow them to sell at slightly higher prices. For Amazon, FBA increases sales, profits, and the likelihood that any shopper can find any item on its website."


• "Given the astounding growth of Amazon, and the seemingly infinite ways it has defied the critics, Bezos may have proved himself the best CEO in the world at taking the long view. But he doesn't like talking about it. 'Did you bring the crystal ball? I left mine at home today,' he quips. He does, however, like discussing what the future might bring for his customers. In fact, he likes talking about his customer so much that the word can seem like a conversational tic; he used it 40 times, by my count, in just one interview. 'It's impossible to imagine that 10 years from now, I could interview an Amazon customer and they would tell me, 'Yeah, I really love Amazon. I just wish your prices were a little higher,''he says. 'Or, 'I just wish you'd deliver a little more slowly.'' In Bezos's world, the goal of the coming decade is a lot like the goal of the past two: Be cheap. Be fast. That's how you win."


By the way, the Washington Post itself has a story about Bezos that is worth reading, which you can read here. Here's an excerpt that will give you a taste:

• "This demanding style is as much a signature of the Amazon.com founder as his famously long-term approach to developing new products or services, say people who have worked with the man who this week agreed to buy The Washington Post for $250 million. Bezos ... has developed a precise and inventive approach to management that has powered Amazon to the top ranks of U.S. technology companies.

"He favors a nimble, loosely organized company in which 'two-pizza teams' execute important corporate tasks, because a work group requiring three pizzas over a lunch meeting is inherently too cumbersome. And he often requires employees pitching new ideas to write mock news releases for their product’s imagined launch, a way of focusing their minds on what will most excite customers.

"Annual salaries at Amazon are modest by the standards of the technology industry, with compensation weighted toward lucrative stock benefits designed to instill a sense of ownership and long-term purpose among employees. The key is measurable performance. His management team produces what some have called ruthless annual evaluations; top performers get larger stock benefits while laggards sometimes face pointed suggestions that they find new jobs."
KC's View:
Among the questions that I think business leaders have to ask themselves when reading stories like these...

• To what degree should I be trying to emulate the Amazon business culture?

• How do I compete with it?