With Amazon.com coming off another record holiday shopping season--more than 36.8 million items were ordered on "Cyber Monday" alone--and its Prime Air shipping system set to deliver merchandise by drone in 2015, it is safe to say the company will shape the retail landscape for years, if not decades, to come. But how did CEO Jeff Bezos's online bookstore transform itself into a corporate behemoth, where almost anything imaginable can be sold? In his new book, The Everything Store, author Brad Stone cracks Amazon's culture of secrecy to offer a behind-the-scenes chronicle of Bezos's high-tech empire.
Q: Can we envision a time several years down the road where I'd be able to go a whole year without buying anything from anywhere but Amazon?
A: I think, actually, that day is here, particularly in some parts of North America. In San Francisco this week, Amazon introduced its
AmazonFresh grocery service. You pay $299 a year for same-day or next-day delivery of all your fruits and vegetables and cereals and meat. It's expensive and it's early, but Amazon's trying to achieve a kind of density in its most popular markets so that it can support these services for a broader customer base. So, already in places like Seattle and L.A., and now San Francisco, where AmazonFresh is active, it really is the everything store, from books to flat-screen TVs to strawberries.
Q: One of the fascinating things I found out about Amazon through the book was that Jeff Bezos, the founder, had this notion of the everything store right from the beginning. I first saw them--as most people did--as a book retailer, and I had a sense, watching them from a distance, that they were a bookseller who just happened to grow, not that this was a clear, ambitious plan by a guy who saw books merely as a way to a much grander vision. Was that a surprise to you, or did you know that was the Bezos story going into this?
A: Part of the lore is that he determined to pursue the books opportunity by making a list of all the possible product categories, then determining if books presented the best opportunity. I was a bit surprised by the extent to which the DNA of Amazon was present at D.E. Shaw, the hedge fund where he worked in the early '90s. I think David Shaw viewed his company as a technology company whose first market was finance. Jeff really admired David Shaw, and he was inclined to view Amazon as a technology company whose first market was bookselling. I think Jeff really did conceive it as a bookstore, and all the early employees--including Jeff--believed they were building an online bookstore, but it was the availability of free capital during the dot-com boom that suddenly awakened in him this notion that you could do more than just books, and caused Jeff to press his foot On the accelerator. So the idea of an everything store was there. It was kind of dormant, and then it was the business climate that had him suddenly relieving this character of ambition and aggressiveness.
Q: I'm trying to get a handle on just how big Amazon is in the world of retailing now. As an online retailer, they're an absolute giant, by far the biggest out there; if you look at it in the context of the overall retail landscape, they're still relatively small, compared to a Wal-Mart.
A: Amazon is larger than it looks. Amazon has not just changed the way a lot of people shop in [that they leave] the house less often, but it's changed the way people read: The Kindle was a success in its own right, but it sparked an e-book revolution. And Amazon has also had a tremendous impact on Silicon Valley in the way lots of start-ups and companies run their operation. So Amazon's impact isn't just in retail--which itself is pretty large--but in all these other categories, as well.
Q: Bezos is on the cover of your book, and I noticed when I picked it up that I recognized him almost instantly. I was trying to think of another retailer I might recognize almost instantly and I can't really think of one. I'm not sure I could pick Sam Walton out of a lineup. In the iconography of American business, is he going to go down as the greatest--or one of the greatest--retailers of all time?
A: Oh, I think there's no doubt. He was fairly ubiquitous in the first decade of Amazon history, and that was very tactical. He also saw how Steve Jobs did the same thing: elevated himself and, thus, Apple, and kind of built a mystique around himself. And we've only seen the first phase of Jeff's career. His legacy might end up having more to do with flying drones, or even space travel, since he's got this other company, Blue Origin, that's trying to revolutionize space travel.
Q: You have a fascinating chapter in the book about his early family life that I don't think has ever been told before: his relationship with his birth father--or lack thereof. Was that the biggest surprise to you in writing about Bezos personally?
A: I decided, because I wanted to tell the complete story, to try to find this man's story, and the biggest surprise to me was when I finally tracked him down. I'd learned that he had been a unicycle performer--which itself was an interesting twist--but the biggest surprise was tracking him down and walking into his bike shop outside Phoenix and learning that he had never known what had become of his son and didn't know who Jeff Bezos was, or that his son--who he had had as a teenager--had grown into one of the wealthiest people in the world. That was an incredible moment in the researching of the book.
Q: So, circling back to where all this headed, is there going to be a time when a lot of us are essentially running our retail life through Amazon? Are they going to be as dominant, or are there going to be several Amazons? How do you see it shaking out three, five, 10 years down the road?
A: You know, the retail market is so big that there's room for a lot of different experiences. There are lots of retailers that are now scrambling to emulate the Amazon model, so Amazon does not have a monopoly on same-day distribution or broad selection or low prices. All that said, there are advantages that accrue to the largest player, so I don't see much in the way of Amazon slowing down. I think it'll continue to grab an ever-larger percentage of market share, but its success is no longer a secret in retail, so it's going to have a lot of competition from a lot of different quarters.
Q: If Amazon and the online competitors continue to grow, continue to put pressure on bricks-and-mortar retailers, on our downtown cores, on shopping malls, what are the social and cultural implications of this juggernaut?
A: I actually think that retail in the year 2013 is showing lots of signs of adjusting to the Amazon threat. Independent bookstores are doubling down on a unique experience and bringing in events and having a coffee lounge, or malls creating entertainment, or companies like Nordstrom's, which are doing very well right now because they do a great job with customer service--or Best Buy, even though they're selling a commodity product, are figuring out that they've got a price match and they can offer a service advantage that Amazon can't. So, in some ways, we might see some kind of downtown retail restored, because small shops can offer something that Amazon can't, or that e-tailers can't, which is Personalized service, a friendly face, a curated experience, something a little different. I think it's the big box stores that ultimately suffer the most. Every major retailer over the last century has changed the character of our local community, from the A&P grocery store to Woolworth to Sears and now, Wal-Mart. I don't think we yet know--because it's probably not big enough--what exactly Amazon does to our cities, but whatever it is, I don't anticipate retail wastelands. If anything, it's maybe a wake-up call to retailers that they just have to offer something meaningful to customers.
Q: Howard Schultz, the Starbucks founder, is quoted in the book as advising Bezos at some point to open up bricks-and-mortar stores, and he decided at the time not to do that. Do you think there's ever a stage at which we do go shop at an Amazon store?
A: Yeah, and I actually think it's coming soon, but I'll qualify it and say that what Amazon's going to do is more in the way of showrooms to showcase all the digital products. So, it has e-readers and tablets and, pretty soon, it'll have phones and set-top boxes, and the ante in that game--as we've seen from Apple and Microsoft, and even Samsung and Sony--is to have places where customers can come and try out the devices and kind of have their hands held as they walk through these products. I think we're going to see Amazon showrooms pretty soon. They could add a kiosk for customers to go shop online, and they could put their lockers in a showroom so that people can use them as a pickup point for the things they buy online. Amazon--unlike any of those other technology companies--could show off the top 100 bestselling books or DVDs. They can do things with the product selection that other companies can't. I am rambling now, but I think the day is coming when we see an Amazon physical location.
Chris Sorensen explores why the online retail boom still needs to go that 'extra mile' on p.32
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