Amazon is not a tech company
Try going to this url.
No, I did not embed the wrong url into the link. Try typing it into your browser yourself.
It leads to Amazon.com because Relentless.com was the original name for the company Jeff Bezos conceived. In the book The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone, he details the story of Amazon’s origins.
Relentless is perhaps the most apt word to describe the company that has completely changed the way we buy things. Amazon is a disruptive tech company which has revolutionized retail.
But is it really a ‘tech company’?
Let’s take a look at the headquarters of some tech companies.
Microsoft HQ is angular, metallic, and the irregular pillars imply a willingness to bend the rules. Googleplex assaults the senses with the primary colors, and an eclectic mix of curves and right angles. Facebook’s gigantic thumbs up sign forces you to notice it as you drive by it into its Menlo Park campus.
The peculiar, quirky architectural features of these tech companies are all statements of identity. Their facades scream “WE ARE THE FUTURE”.
What about Amazon?
If you weren’t paying attention, you’d completely miss it.
The Amazon office doesn’t even say “Amazon” at the entrance.
Actually, even if you were paying attention, without prior knowledge or the aid of an app, you would still miss it. The Amazon office doesn’t even say “Amazon” at the entrance.
Google HQ is called the Googleplex. Microsoft calls its office a campus, as does Facebook. Amazon’s office is called… an office. In corporate culture, words are not just words. Like the architecture of a company’s headquarters, they are a mirror to the soul of a business.
Listen to the Amazon doctrine, the guiding principle as to how Amazon conducts its business:
Above all else, align with customers.
Win when they win.
Win only when they win.
Again, let’s compare this to other tech companies’ missions.
Facebook’s mission is to give people the power to share and make the world more open and connected.
Microsoft aims empower every person and every organization on the planet to achieve more.
Google’s mission is to organize the world’s information and make it universally accessible and useful.
There is a sense of moral weight to these mission statements. Google went so far as to include in its initial IPO, the now famous motto: “Don’t be evil”. This has evolved to Alphabet’s new adage in its corporate code of conduct:
Do the right thing — follow the law, act honorably, and treat each other with respect.
Amazon professes to no morality. Its guiding principle is not some idealistic sense of improving the world, or empowering people. Its ‘God’ is the consumer.
It’s a profoundly different creature than the tech companies we think of. This is why when the New York Times broke its story of the ultra-competitive and unforgiving Amazon corporate culture, it produced shockwaves. “Tech companies aren’t supposed to act this way!”
Amazon uses tech to achieves its goals. But it isn’t a ‘tech company’ as we tend to conceive them.
What is it then?
In the tech world, Amazon stands out for three reasons:
- Frugality. Amazon frequently reuses rejected customer purchases to furnish its offices. Amazon executives fly economy class, and if they want an upgrade, have to pay it out of pocket.
- Price. Again and again, Amazon competes on pricing. It entered a massive battle with book publisher Hatchette because Amazon wanted to price e-books below $10. Often, this means incurring losses to themselves to bring the customer ever more bang for buck.
- Consumer sovereignty. As expressed in the Amazon doctrine, the customer is always king. If this means coming into conflict with warehouse workers, suppliers, or third party sellers on Amazon Marketplace, so be it. If this means Amazon is going to take more than 20 years to start earning a profit, then so be it.
In the past year, Amazon’s preoccupation with price points, cutting costs, and worshipping the customer, while hugely benefiting consumers, has led it into disputes with disgruntled workers and suppliers. It also has a culture of secrecy that forbids suppliers to speaking with the press. In a telling incident, employee Nick Ciubatario who wrote a defense of Amazon’s corporate culture after the New York Times piece, suggested that he may have been violating company policy by speaking out.
Relentless is the most apt word…
Frugality. Competing on price. Consumer sovereignty. Conflicts with suppliers and workers. A culture of secrecy. Calls its workers ‘associates’. Ring any bells?
Amazon’s estranged sibling is not Google, Facebook, or Microsoft. It’s Walmart. Like Amazon, it’s about “everyday low prices”. Like Amazon, it operates on frugality. Like Amazon, it’s willing to battle suppliers and workers in its quest to provide the best value proposition to consumers.
Hold up, you might say. What about Amazon’s focus on big data? Ray Wang of Constellation Research pointed out that Amazon’s obsessive tracking of consumer habits signal that it is not a commerce company. I would agree. Amazon is not trying to be a commerce company. It is trying to be THE commerce company. Walmart has long been meticulously recording consumer data, with 460 terabytes of data at its Bentonville Headquarters. The maximum memory size of an Excel data sheet in a 32-bit system with 1,048,576 rows by 16,384 columns is approximately 2 gigabytes. That’s potentially at least 230,000 Excel sheets of more than 1 million items in each sheet. I can’t even imagine that.
Amazon is not trying to be a commerce company. It is trying to be THE commerce company.
And what about Amazon’s gadgets? The Kindle, or Amazon’s new line of Fire tablets for instance. Surely there’s some technological innovation there.
Amazon does not make money on the Kindle, which is sold at cost price. It makes even less on the Fire, which is sold at a loss. Why do they sell it then?
The Kindle and Fire are gateways. They open portals into Amazon’s ever tantalizing One Click Purchase retail haven. In a 2012 poll from RBC Capital, Amazon made more than $100 off each Kindle Fire sold in media purchases. Everything done is to feed into the primal urge to acquire more stuff from Amazon: buy, buy, buy.
Fortune put it best in its review of the amazingly cheap $50 Fire Tablet:
In fact, it’s a downright impressive device for consuming media, which is ultimately the tablet’s raison d’etre. Amazon wants all Fire owners to subscribe to its Prime service that for $99 annually serves up a wealth of content: movies, music, TV shows, and books, plus added perks like free two-day shipping and unlimited cloud storage for your photos.
The Fire can do plenty on its own, but its real value lies as a conduit to the Amazon ecosystem.
Amazon Web Services competes on similar principles. Price, cost cutting, and consumer sovereignty but applied to cloud computing. Already its cheap and quick services have gained a clientele of the likes of Airbnb, Expedia, Netflix, Yelp, and more. It’s simply the best cloud computing service at the best prices.
One might say Amazon is Walmartifying the tech industry.
Amazon defeated its early rival, ebay, by consolidating its supply chain: taking warehouse management into its own hands, partnering with UPS, and guaranteeing on time delivery. This willingness to get into supply chain management marks Amazon as first and foremost, a retail company and not a tech company.
Amazon is Walmartifying the tech industry.
It’s no surprise that Walmart is now seeking to test drone delivery services. It’s realized it has to compete against its challenger. Already, Amazon’s market value has surpassed Walmart. In the past few months, Amazon has branched into handcrafted goods, piloted one hour delivery services, and is purported launching its own clothing line.
Looking forward, what can we expect from the company? To answer the question, I think we can return to the question of names.
Why did Jeff Bezos decide to adopt the name ‘Amazon’ in the end? He named it so because the Amazon river was the biggest in the world, and he wanted Amazon to become the biggest store in the world.
Amazon’s ambitions leave consumers giddy with excitement and suppliers trembling in anxiety. Whether this relentless momentum becomes a flood, or dries out, one thing is for sure: like the river, Amazon will shape the landscape that we live in.
