In the wake of Jeff Bezos’ announcement that he will be stepping down as the CEO of Amazon, it is a good time to look at what Amazon has become.
In this post about Amazon’s growth, Jonathan Van Last points out that books were just a way to get the ball rolling:
Amazon is—hands down—the most consequential business of its generation. It went from birth to global dominance in 25 years. It began by selling books not because Jeff Bezos was a book lover, but because he wanted to build an e-commerce behemoth and saw that books were the perfect category for e-commerce. Why? Because books are:
- Easily catalogue-able and searchable
- Roughly uniform size and weight and so easy to warehouse and ship
- Long product life and not breakable
- Highly resistant to returns, since buyers know what they’re getting
- The existing retail structure for books was highly constrained by physical space for inventory, giving an internet retailer an enormous competitive advantage
Bezos turned domination of the book market into domination for nearly all retail. Over the last few years he’s attacked grocery, which was the last remaining hold-out for brick-and-mortar. (That’s the reason why just about every Wal-Mart in America has added a grocery section over the last decade: As an attempt to hold off Amazon.)
And on top of it all, Amazon has created a cloud infrastructure behemoth – Amazon Web Services (AWS) – that is larger than its next four competitors combined. Its revenues are bigger than McDonalds, Ratheon, Starbucks and Visa, and though many of the apps they use are AWS-hosted, most consumers probably aren’t even aware it exists.
We all have “hot takes” on this or that topic which turn out to be wrong as the future unfolds. I think my worst business opinion ever was offered to a few unfortunate people within earshot of me when Amazon announced they were moving beyond books into other categories of commerce. I thought they were drifting away from their core business and the business would suffer due to a lack of focus. (Survey says…..wrong!).
One of the aspects of Bezos’ leadership I most admire is when he annoyed his shareholders by saying he often doesn’t look at the Amazon stock price on a daily basis because “it doesn’t tell me anything interesting”. In a world of short-term thinking, that simple act of rebellion was a powerful one.
No story like this is complete without considering the costs, of course.
The evisceration of local shopping, and the jobs and community connections they sustained, maybe wasn’t caused by Amazon – if you assume the e-commerce juggernaut was coming eventually anyhow – but it certainly was accelerated and amplified by Amazon.
The innovation upshot here is that the era of digital change is not complete. You might think your industry has completely changed (and it probably has). But it might just be in the “books” phase of a longer path of disruption and, ultimately, value creation.
Finding that path is the key for every industry.