How far can Amazon go? It has upended industries and changed the way the world shops. But it should beware of abusing its power
Posted in: Miscellaneous at 22/06/2014 17:55
When Jeff Bezos left his job in finance and moved to Seattle 20 years ago to start a new firm, he rented a house with a garage, as that was where the likes of Apple and HP had been born. Although he started selling books, he called the firm Amazon because a giant river reflected the scale of his ambitions. This week the world's leading e-commerce company unveiled its first smartphone, which Amazon treats less as a communication device than an ingenious shopping platform and a way of gathering data about people in order to make even more accurate product recommendations.
The smartphone is typical of Amazon. There is the remorseless expansion: if you can deliver books and washing machines, why not a phone? There is the ability to switch between the real world of atoms and the digital world of bits: Amazon has one of the world's most impressive physical distribution systems, even as it has branched out into cloud computing, e-books, video streaming and music downloads. There is the drive for market share over immediate profits. And there is the slightly creepy feeling that Amazon knows too much about its users already. So far its insatiable appetite has helped consumers; but as it grows in size and power the danger is that it will go too far.
Relentless.com: At 20 Amazon is bulking up. It is not -- yet -- slowing down
High-tech creation myths are expected to start with a garage. Amazon, impatient with ordinary from the outset, began with a road trip. In the summer of 1994 Jeff Bezos quit his job on Wall Street, flew to Fort Worth, Texas, with his wife MacKenzie and hired a car. While MacKenzie drove them towards the Pacific Northwest, Jeff sketched out a plan to set up a catalogue retailing business that would exploit the infant internet. The garage came later, in a suburb of Seattle, where he set up an office furnished with desks made from wooden doors. About a year later, Amazon sold its first book.
The world saw a website selling books and assumed that Amazon was, and always would be, an online bookshop. Mr Bezos, though, had bigger plans. Books were a good way into online retailing: once people learned to buy books online they would buy more and more other stuff, too. The website would be able to capture much more data about what they looked at and thus might want than any normal shop; if they reviewed things, that would enrich the experience for other shoppers. He saw a virtuous circle whereby low prices pulled in customers and merchants, which boosted volumes, which led to ever lower prices -- a "flywheel" that would generate growth for as long as the company put the interests of the customers first. Early on, Mr Bezos registered "relentless.com" as a possible name; if it was a little lacking in touchy-feeliness, it captured the ambition nicely.