Advertisement

Books of The Times

Selling as Hard as He Can

Image
Processing orders at an Amazon distribution center in Wales. In 2012, Amazon had $61 billion in sales.CreditCreditMatt Cardy/Getty Images

Amazon.com was named after the Amazon River, the largest river on the planet (by volume). According to Brad Stone’s absorbing new book, “The Everything Store,” some of the other names its founder, Jeff Bezos, initially considered were “MakeItSo.com” (after the command used by Captain Picard on “Star Trek: The Next Generation”), “Awake.com,” “Browse.com,” “Bookmall.com” and “Relentless.com.”

“Relentless” is certainly the perfect adjective to describe the company’s growth, and the tenacity with which Mr. Bezos has executed his vision: to use the web’s infinite shelf space to create what Mr. Stone calls “the merchandiser’s dream of the everything store — a store with infinite selection.”

Amazon started out modestly as a Seattle-based online bookseller in 1995: It was so small that every time someone made a purchase, Mr. Stone writes, “a bell would ring on Amazon’s computers, and everyone in the office would gather around to see if anyone knew the customer.” In 2012, its 17th year of operation, Mr. Stone reports, the company “cleared $61 billion in sales,” and it will probably become “the fastest retailer in history to surpass $100 billion.”

Amazon survived early prophecies of doom; branched out into selling music, movies, electronics and toys during the dot-com boom of the late 1990s; and made it through the dot-com bust of 2000 and 2001. After mastering “the physics of its own complex distribution network,” Mr. Stone notes, it expanded into selling jewelry, clothes, sporting goods, automotive parts and just about everything else, becoming the Internet’s top retailer and a leading platform for third-party sellers. The company would go on to revolutionize bookselling with its Kindle e-reader, even as it also positioned itself as a cutting-edge technology business, selling basic computer infrastructure like storage, databases and raw computing power; according to Mr. Stone, customers of Amazon Web Services include start-ups like Pinterest and Instagram, larger companies like Netflix, and divisions of the United States government, including NASA and the C.I.A.

Image
Brad StoneCreditCynthia E. Wood

Mr. Stone, a senior writer for Bloomberg Businessweek and a former reporter for The New York Times, tells this story of disruptive innovation with authority and verve, and lots of well-informed reporting. Although “The Everything Store” retraces early ground covered by Robert Spector’s 2000 book, “Amazon.com: Get Big Fast,” Mr. Stone has conducted more than 300 interviews with current and former Amazon executives and employees, including conversations, over the years, with Mr. Bezos, who “in the end was supportive of this project even though he judged that it was ‘too early’ for a reflective look” at the company.

“The Everything Store” does not examine in detail the fallout that Amazon’s rise has had on book publishing and on independent bookstores, but Mr. Stone does a nimble job of situating the company’s evolution within the wider retail landscape and within the technological revolution that was remaking the world at the turn of the millennium. He gives the lay reader an understanding of how Amazon was able to outmaneuver the already established book chain Barnes & Noble, and how it’s been able to grow and mutate and take on Internet giants like eBay and Apple.

Mr. Stone also provides a dynamic portrait of the driven and demanding Mr. Bezos, going so far as to track down his biological father, Ted Jorgensen, a former circus performer and unicyclist, whom Mr. Bezos hadn’t been in contact with for decades.

Two of Mr. Bezos’s basic principles are putting the customer first and thinking for the long term. Mr. Bezos and his lieutenants reasoned, Mr. Stone writes, that “lower prices led to more customer visits. More customers increased the volume of sales and attracted more commission-paying third-party sellers to the site,” which “allowed Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website,” which, in turn, led to greater efficiency and the possibility of lowering prices even further. At the same time, improving the customer experience — whether through deep discounts or free shipping — would lead to word of mouth, which would take the place of costly advertising.

One-click ordering allowed customers to purchase things with the single press of a button. Other initiatives, like offering a 40 percent discount on “Harry Potter and the Goblet of Fire” and express delivery, cost the company money, but, as Mr. Bezos saw it, helped to build customer loyalty. The introduction of Prime membership — which cost $79 per year, and provided free two-day shipping — similarly seemed to make little sense in terms of the immediate balance sheet, Mr. Stone says, but eventually justified its existence, turning “customers into Amazon addicts who gorged on the almost instant gratification of having purchases reliably appear two days after they ordered them.”

Image

But if Amazon aspired to reduce friction for customers, Mr. Stone suggests that it remained a high-friction place to work. He describes the in-house culture as “notoriously confrontational,” and writes that because managers in departments of 50 or more people are required to “top-grade” their subordinates along a curve (and dismiss the least effective performers), “many Amazon employees live in perpetual fear” of termination.

Whereas other Silicon Valley companies like Google offer their employees lavish perks like free food, office gyms and day care, Amazon was known for its extreme frugality. In the late 1990s, Mr. Stone reports, a new executive “cut a rare office perk, free Advil, which he viewed as an unnecessary expense,” setting off “a near insurrection among employees.”

Manufacturers and retail rivals also became well acquainted with the sort of hardball that Amazon played. Small publishers dependent on Amazon sales of their back catalogs — and called, perhaps jokingly, sickly gazelles to Amazon’s cheetah — were pressured for better terms, Mr. Stone reports, while shoe brands like Nike and Merrell worried that Amazon was a “dangerous discounter” that would “very likely consign their new in-season products to the bargain bin in an effort to garner new customers and gain market share.”

As for rival e-commerce sites, some found themselves struggling to survive in the face of Amazon’s ferocious price-cutting. A New Jersey company named Quidsi, known for its website Diapers.com, Mr. Stone writes, was essentially forced into selling itself to Amazon after the introduction of a new service called “Amazon Mom,” with a “Subscribe and Save” program that drastically discounted diapers — at a huge immediate loss for Amazon, but with the achieved goal of “neutralizing an incipient competitor.”

What lies ahead for Amazon? Mr. Stone says he thinks that it’s likely that antitrust authorities will eventually “come to scrutinize Amazon and its market power,” but adds that the company has become “a masterly navigator of the law and is careful to stay on the right side of it.” He also predicts that Amazon might one day use 3-D printing (an evolving technology “in which microwave-size machines extrude plastic material to create objects based on digital models”) to print merchandise in its fulfillment centers, and that it will most likely introduce a mobile phone or an Internet-connected television set-top box soon, so that it can offer its services on all the connected devices its customers use.

The relentless Mr. Bezos, this book concludes, is not content simply to make Amazon an “everything store” but ultimately envisions “an everything company.”

THE EVERYTHING STORE

Jeff Bezos and the Age of Amazon

By Brad Stone

Illustrated. 372 pages. Little, Brown and Company. $28.

A version of this article appears in print on , on Page C1 of the New York edition with the headline: Selling As Hard As He Can. Order Reprints | Today’s Paper | Subscribe

Advertisement