The Everything Store: Jeff Bezos and the Age of Amazon

The Everything Store

As I read this book, it was as if George Bernard Shaw’s theory of progress had been conceived with Amazon CEO Jeff Bezos in mind: 'The reasonable man adapts himself to the conditions that surround him... The unreasonable man adapts surrounding conditions to himself... All progress depends on the unreasonable man.'

Amazon is an astonishing business and this book will both inspire and intimidate marketers. Author Brad Stone shows how Bezos bet the ranch and won big often enough to build the $200bn giant that is Amazon today.

For example, by setting the annual subscription to Amazon Prime at $79, Bezos was risking potentially huge losses. Senior VP of international consumer business Diego Piacentini said: 'We made this decision even though every financial analysis said we were crazy to give away two-day shipping for free.' But the Super Saver shipping service had changed customer behaviour, leading to bigger orders across more categories.

Launching Prime at such an aggressive price accelerated Amazon’s ‘flywheel’ – the virtuous circle created when customers spend more, volumes increase, shipping costs reduce and better deals can be negotiated with suppliers. The launch of Amazon Marketplace was also counterintuitive and highly unpopular among key people in the company, who saw their competitors being set up against them on their own sales platform.

Former Amazon technology VP Neil Roseman said: 'Jeff was clear [that] if somebody else can sell it cheaper then we should let them and figure out how they are able to do it.' Bezos also used his aggressive pricing strategy to draw competitors into Amazon Web Services, which myriad online businesses now depend on. The people leading its development calculated that 15 cents an hour would be break-even, but just before the launch Bezos slashed it to ten. South African entrepreneur and technologist Willem van Biljon told him: 'You realise you could lose money on that for a long time?' 'Great,' retorted Bezos. There’s little doubt that it’s Bezos’ unreasonable nature, contrarian decision-making and driving leadership that have built the behemoth that is Amazon, and Stone reveals the family history and culture behind them.

Perhaps Bezos’ estrangement from his natural father led to his hard-hearted attitude towards employees. Amazon’s tax avoidance strategies have also been heavily criticised, but don’t yet appear to have resulted in significant customer defections. When people see a viable alternative with a greater sense of corporate social responsibility, however, they may drift away. Alibaba could be that alternative.


This review was taken from the June 2014 issue of Market Leader. Browse the archive here.

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