Fears to Cheers: Why I changed my sentiments towards Amazon

Fears to Cheers: Why I changed my sentiments towards Amazon

It was 1998 and I was in Lund, Sweden. I was doing an exchange program for my 3rd year of University. Apparently, in Sweden, they teach in Swedish; imagine that! :)

Given that all of my courses were only offered in Swedish and I didn’t speak Swedish, I needed the English versions of my course books. So, I started searching on the internet (on AltaVista, if I recall, as Google was just a name in a garage at this time). It was frustrating because you’d search and work your way down the list of results, clicking on the links and hitting the "back button". It struck me because every single result was for this obscure website: www.amazon.com.

This was my first memory of Amazon.

Honestly, I can’t say that the story is 100% factual, but the emotional memory is strong with the thinking “What is this amazon.com that has every book listing on the web?”. [Aside: I won’t digress into the fallacies of human memory here, nor my inability to recognize value at the time]

Amazon certainly has come a long way since then. In recent times, I have felt apprehension towards Amazon. I feared that they were getting too big and too dominant. Apparently they are now 49.1 percent of all online retail spend in the US, and 5 percent of all retail sales; and growing! Plus, a lot of the headlines talk about the Retail Apocalypse and the “Amazon Effect”. But read beyond the headlines and many of those were simply poorly run businesses (and strong note, "run" implies leadership and inspiration; more on this below).

Anyhow, I continued to buy things from Amazon despite this apprehension. Let’s face it, as a consumer, Amazon most often offers the best option (all things considered). I reflected upon this over the weekend and I decided to change my tune. It's time to quit fearing Amazon, but rather cheer for it.

Amazon should be celebrated

Amazon’s mission is to become “Earth’s most customer-centric company.” I, the consumer, am the primary focus, not profits. This priority is key to they're success. They’ve never made profits a priority and they’ve never paid shareholders back through a dividend or buybacks (except a measly buyback program, simply to manage the dilution caused by stock-based compensation).

Now, you’d think profits are the key to business success, but apparently not. Recall that I mentioned running a business means leadership and inspiration, amongst other things. See https://www.forbes.com/sites/jonmarkman/2017/05/23/the-amazon-era-no-profits-no-problem/#576d1d59437a

It’s been said that Amazon snubs Wall Street. Bezos told shareholders that the goal is to “experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight.” 

Amazon certainly has delighted me over the years.They continue to earn my business by providing the best overall value (all things considered).

I would rather see other companies forced to step up their games to compete, than see Amazon's game broken up.

Now, don’t get me wrong. I love the little guys. I’ve caveated value with all things considered. There are advantages to being little; trust me, I’m a little guy and I recognize these advantages whenever I fly coach. Little guys can be nimbler and they can be much more personable and there is a certainly a premium that can be assigned to that.

Am I being naive? Am I being suckered in to a trap, like a drug dealer that offers your “first hit for free”? Certainly there are some interesting perspectives, as pointed out in this article: https://www.thenation.com/article/amazon-doesnt-just-want-to-dominate-the-market-it-wants-to-become-the-market/

Monopolies are feared because the lack of competition gives too much pricing power to the monopolist and this causes prices to rise. But Amazon being the marketplace is actually deflationary as more sellers compete on the platform. The platform is monopolistic, but that doesn’t translate to higher prices for the consumer, in fact it’s only led to lower prices. Amazon is the ultimate deflationary element. Consumers should celebrate their entry into any industry.

Amazon is seemingly moving into EVERYTHING and that's a good thing for consumers. If they aren’t in your industry today, then they're haunting you in your nightmares, because how long do you have until they are upon you? If Amazon enters your market, that means that they see excess margin. That means you might have to sacrifice your profits (and your salary) or figure out a way to provide better value to your customers. Sorry, but that’s a win for consumers.

We’re in a special time. The internet is the biggest deflationary factor that the world has ever seen. Amazon is a major facilitator to this.

I’m in tech, so this is very likely a biased statement, as I don’t have all the facts. BUT, I can imagine that Amazon has been a net positive to the economy because of its marketplace and AWS.

The marketplace allows an individual to start very small and build a business that one can make a living on.

The impact of AWS on the software world cannot be understated. A software start-up that once required $100s-of-thousands in server and infrastructure costs can now be started with a few Benjamin Franklin’s. Amazon created the market and literally changed the game.

So, Go Amazon!

Disrupt away. Push others to be better. Move the market so that we can further enhance our lives by providing us with more for less.

Steve Logan

Regional Sales Manager at Emerson | Test & Measurement BU

6 年

Kerry, great article. You make a ton of good points. I agree that the beauty of capitalism is that others get the chance to step up their games. And you make a great point about them being a monopoly vs not.

-Gilberto Ortiz Mu?iz

director general en Gilberto Ortiz y Asociados S.C. Consultores de Negocios

6 年

SU RáPIDO CRECIMIENTO Y CREDIBILIDAD HABLA BIEN DE SU ACTITUD Y PROFESIONALISMO.

Great views. Then again, I’m biased :)

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