Put the customer first. Invent. Be patient.
Three simple principles, but principles that have provided the bedrock for Jeff Bezos’ strategy from the very first day he created Amazon – and will continue to do so even after he hands the reins to Andy Jassy, the boss of Amazon Web Services, later this year.
Bezos, unfortunately for Amazon’s rivals, is not going far. He will step up to the role of executive chair in the summer and will continue to play a crucial part in the business he set up in his garage in 1994.
On that day Amazon was conceived, surely not even Bezos himself could have predicted the monumental impact the online bookstore would go on to have on global retail.
Many did not understand the internet at the time. Others failed to see its potential as a retail channel. Some expected Bezos to fail.
Amazon.com was disparagingly referred to by one observer as ‘Amazon.toast’ in the mid-1990s, as bricks-and-mortar rival Barnes & Noble set about establishing an online proposition of its own – one that was expected to take down Bezos before he could build up a meaningful head of steam.
How wrong they were.
Much will be written about Bezos in the coming days following the shock revelation that he is stepping aside as Amazon chief executive.
Cynics will point to the struggles experienced by retailers such as Barnes & Noble, Topshop and Debenhams in physical locations across the world as evidence that Amazon is killing high streets.
Some will suggest Amazon has had the deck stacked firmly in its favour in the fight against bricks-and-mortar rivals such Walmart in the US and Tesco and John Lewis in the UK, owing to the long-term thinking it has been afforded by investors and the fact it has not had to shoulder the tax burdens weighing heavily on traditional retail competitors.
In that sense, there is no ignoring the fact Bezos has been dealt a favourable hand down the years. But he has still had to play his cards right and make the most of the aces in Amazon’s pack.
Success does not arrive simply by virtue of operating as an online-only business. Just look at Tesco Direct, the grocer’s general merchandise website that closed in 2018 after failing to find a path to profitability, or AO, which pulled out of the Netherlands the following year amid similar bottom-line pressure.
Amazon now accounts for $5 in every $10 spent online in the US and more than £3 of every £10 spent online in the UK. That does not happen by accident.
Bezos’ laser focus on the consumer, which has cascaded down through his business, has allowed Amazon to move into new categories, invent new propositions and purchase new businesses that meet its customers’ needs.
“Amazon is not the reason physical retail is dying – but it is the reason mediocre, uninspiring retail is dying”
It is well known that Bezos demands any new major Amazon project begins with the writing of a press release announcing the finished product. Each development meeting starts with one such document, in the form of a six-page memo, before poring over its strengths and weaknesses.
That focus has established Bezos as a great retail pioneer. Amazon blazed a trail for fast and free deliveries. It launched the first e-reader. It led the smart speaker revolution through the development of Echo products. It is rolling out ‘just walk out’ payment technology in its Amazon Go grocery stores. It offers video and music streaming services to rival Netflix, Apple and Spotify. It created an online prescription medicines service last year. And who could forget the 2005 launch of Amazon Prime, the subscription service that now has more than 125 million members in the US alone?
But to suggest such innovations are killing the high street is to miss the point. Amazon is not the reason physical retail is dying – but it is the reason mediocre, uninspiring retail is dying.
Bezos’ customer-first approach has forced his rivals to adapt and innovate at a quicker pace than they might otherwise have imagined.
Retailers such as Walmart, Target and Nordstrom have become digital leaders, having invested money and people at scales that would not have been reached without Amazon putting the squeeze on them.
Would Walmart have launched its own marketplace or the Walmart+ subscription service without Amazon breathing down its neck?
Would Kroger, Sobeys, Carrefour and Aeon have struck deals to license Ocado’s technology were it not for Amazon’s growing presence in online grocery?
Would Marks & Spencer have created its MS2 division – bringing online, digital and data teams together with the aim of better serving its customers – were it not for Amazon’s influence on shoppers?
“Some have wilted under that pressure and rapid pace of change. But for those that remain, Bezos has transformed the retail landscape for the better”
Would retailers ranging from Tesco to B&Q, Argos to Zara, be focusing on speeding up their fulfilment propositions had Amazon not set the bar on same-day delivery?
The answer to all of those questions is almost certainly ‘no’.
Some have wilted under that pressure and rapid pace of change. But for those that remain, Bezos has transformed the retail landscape for the better.
For every Arcadia that pays the ultimate price for taking its customer base for granted and failing to meet their changing needs, a Gymshark, built on cult followings and social media buzz, is emerging to take up the mantle.
Bezos said it best in his 2016 shareholder letter: “Customers are always beautifully, wonderfully dissatisfied.”
His legacy will be not just having spearheaded Amazon’s drive to meet ever-evolving shopper demands in the digital age, but forcing rivals across the world to do the same.