In the past few months there are few businesses that have come in for such vilification as Amazon.com – including in many of the stories and blogs here at artsjournal.com – and so Brad Stone’s book, subtitled ‘Jeff Bezos and the Age of Amazon’, is timely, to say the least. It has been the subject of deep reviews by George Packer at The New Yorker, and Steve Coll in The New York Review of Books, and I recommend each of those.
It is hard in this case to separate a review of the book and a review of Amazon itself (I don’t think I’m the only reviewer who has had this challenge), but I will give it a try.
First, the book:
Stone has done a great job of in-the-weeds, hundreds-of-filled-notebooks reporting, and for that we ought to be grateful. It does, at times, drag – we get a little background on each of the cast of hundreds who have worked under Bezos at one time or another, and the sections on Bezos’ family background seem misplaced and unnecessary (Bezos as a child was intelligent and driven – who would have guessed?) – but it was valuable to have a detailed history of the company, its successes and (surprisingly many) failures. There is so much material to cover about Amazon itself that at times I hoped for a little more of what the subtitle promised about the ‘age of Amazon’, as it is only in a few sections that we really get a big-picture sense of developments over the past twenty years in retailing and information technology.
What I learned:
- Michael Porter’s 1979 paper ‘How competitive forces shape strategy‘ remains very relevant as a framework for analyzing how firms gain secure market power – I will continue to have students in my cultural economics class read it.
- Big firms are difficult to manage, and this inevitably puts limits on the scope and scale of the firm. The book contains one episode after another about problems in communication and coordination within the company. At one point Bezos takes the provocative stance that he doesn’t want his division managers to have to communicate with one another, since it suggests a coordination failure in the system.
- There might be something to the ‘disruption’ thesis after all: Bezos had the Kindle reader developed in a unit quite independent of Amazon’s basic business, since the very purpose of the reader was to disrupt what had become Amazon’s bread-and-butter business of delivering books on paper. And the Kindle has been a huge success for the company, a technology other book sellers were far too slow to adopt, and that publishers, until it was actually unveiled, believed was simply mythical.
- It is tough to become the dominant firm everywhere. Amazon tried but failed to dislodge eBay as the leading firm for online auctions (although in the past few years fixed-price selling is gaining relative to online auctions anyway); it tried to race Google for developing the most effective search engines, and did not succeed; it lost to Apple in the online delivery of music (Stone suggests one possible reason: Bezos loves to read, but has never had much personal interest in music).
- While there has been a lot of text devoted to the plight of independent bookstores recently, in fact their position has been precarious for decades: the number of stores and their percentage of total book sales took a huge hit in the 1990s from big-box retailers, before Amazon ever really had a foothold, and electronic readers will only make it harder. They could blame Amazon’s Kindle, but if not the Kindle, some other reader would have become dominant, and cut into sales of books on paper.
- ‘The Everything Store’ is a good title, since that was Bezos’ conception from the start – how could consumers more easily shop for everything online? To say that Amazon has ‘branched’ into other products besides books is not quite right; the better analogy is a child’s color-by-numbers picture, where ‘books’ was the first space Amazon filled in – they were easy to pack and ship, and constant in quality (my copy of ‘The Interestings’ is just the same as yours). It wasn’t even the first online bookseller – indeed Bezos and his associates tried buying from other online booksellers at the start to find out what it was like as a consumer experience. But the originating concept was about consumers and shopping.
- That said, all our attention is on the relationship between Amazon and books (nobody is writing blog posts about the lawn mower parts I can buy on Amazon.com). Books and songs have proven to be so amenable to online delivery because there are a million published books and songs from which to choose, and no brick-and-mortar store – even the biggest big-box – can possibly hold an inventory that begins to compare to what can be found online. In the city where I live, if I go to Lowe’s to find something I need for home repair, I go with confidence it will be there, because there are only so many useful household tools out there. If I went on a tour of every book store in town to look for a particular title not on the best-seller list, it remains a hit-or-a-miss. Stories about the wonders of brick-and-mortar stores, from patronizing articles about how much better the French do it, or risible fantasies about the booke shoppe around the corner, avoid this critical fact.
- Amazon’s biggest competition is not for customers, nor is its biggest rivalry with publishers. Throughout the book, we see that where Amazon really faces tough, ongoing competition is in the hiring of talent. Creative, tech- and business-savvy talent is very scarce, especially at the highest levels. Working in academia, government, and the nonprofit arts had given me this lesson – the major constraint often faced by organizations is not the problem of insufficient funds, but how to attract and keep top people. Bezos’ management style – mercurial, to say the least – has not always served Amazon well in this regard.
And as for Amazon the company? The firm’s stated ethos is to always put the customer first, but it has let battles with publishers affect the customer experience, with titles held back for release, and this seems to me extremely counterproductive for the company – it has sorely misjudged how to maintain customer loyalty, as it goes through what they must surely now realize is a public relations disaster. It seems hard to fathom how a true management team could have let this happen, although easier to imagine as the result of a single, headstrong boss, unaware of his blind spots.
And yet …
I buy from Amazon. Why? It has virtually unlimited inventory, great search mechanisms, the option to buy used books (which I do most frequently), the best prices, and fast and very dependable delivery. When I received a defective copy of a book a few weeks ago, customer service relating to returns was superb. I don’t use a Kindle (though my daughter does, and loves it), and it dominates electronic readers because it is the best. Readers of books on paper and electronic books gain massive amounts of consumer surplus from the research and development that has occurred at Amazon and been put to use for readers. George Packer asks whether Amazon has been good for books. It has been fantastic for readers, on choice, access and price. And that’s who books are for.Related