INSIDE AMAZON
When I picked up Brad Stone’s biography of Jeff Bezos in the early Autumn of 2019, I was unaware of what an incredible giant Amazon really was. After having read it however, I was sure that the Amazon business model was the future — so much so that on a cold November Monday, I travelled all the way to Tilbury in Essex to tour their immense ‘fulfilment centre’ (FC), the second largest one in the world! Upon arrival, it felt like I had teleported to the year 2100.
To understand how Amazon got so big, one must only look back 25 years to 1994, where Jeff Bezos, currently the richest man on Earth, quit his Wall Street job to create the start-up we now know as Amazon. This was a time where the internet was a very niche thing: in a survey conducted by the International Telecommunications Union, only 4% of Americans reported having used the internet at that period. It may be precisely because Bezos got in so early, and hence had a first mover advantage, that Amazon is what it is today while thousands of other companies went bankrupt in the dot-com crash of the early 2000s. From there on, it was all growth. Whilst at first, the company was focused solely on selling books, it quickly expanded into new markets such as video and DVD, CDs, toys, and more. Today, Amazon sells almost every product imaginable. What makes Amazon so remarkable is the efficiency that it applies in every area of its business. Love it or hate it, that is how the firm is able to undercut its competitors, and is what has allowed the firm to negotiate such large economies of scale. The FC that I visited had over 10,000 robots operating in it, with clever algorithms moving the millions of items right where they need to be for an employee to pick and package them. What is surprising is that, while you may expect these robots to be taking the jobs of humans, the fulfilment centres that are automated actually require more staff, due to the FC being three times more efficient. At Amazon’s FC in Tilbury, there were almost 5000 members of staff. It is this innovation, frugality, and efficiency that has led Amazon to dominate online, and increasingly offline shopping. Whilst many may complain that Amazon is causing smaller shops to close-down, what we are actually witnessing are the inner-workings of Capitalism. The saying ‘adapt or die’ could not be more relevant. Whilst it is easy to complain about ‘large’ and ‘impersonal’ corporations, Amazon’s mission is clear: the consumer comes first. This has inevitably led to shops with bad customer service or excessive prices losing business, and rightly so! Where businesses have not gone bankrupt, they have had to adapt. Bookshops have had to cut their bloated profit margins (the other day, a book I was interested in was on sale for £25 at Waterstones, and only £12 on Amazon! It’s clear where I bought it from), or improve their service significantly to compete. This here demonstrates that Amazon’s innovation has benefited even the customers which have never shopped at Amazon!
You may or may not know this, but Amazon truly is immense. Not only does it operate in over 16 countries worldwide, it also purchased the supermarket chain Wholefoods in an attempt to enter the physical grocery market. Its physical stores are by no means limited to Wholefoods though — the company has been experimenting with a new concept store known as Amazon Go — famous for having no check-outs and enabling customers to ‘just walk out’ with their purchases. This is made possible using thousands of lasers, weight detectors on the shelf, and the use of Artificial Intelligence. The company has been expanding rapidly, with 18 already in operation, and there are plans to open over 3000 locations in the US and United Kingdom. Not only is Amazon a giant in retail, it also has a huge presence in the Cloud-Computing sector with AWS, the thing that powers Netflix, parts of the CIA, Adobe, and more. It is estimated that 5% of the web runs on AWS alone. Whilst the media loves to mock Amazon for its ‘appalling’ working conditions, the reality is not what you would expect. From what I could see (it’s possible, though I would argue unlikely, that Amazon gave me a tour similar to that seen in the film ‘The Interview’, where the protagonists travelling to North Korea were shown what was effectively a movie set), all employees were treated well, with their wages set at £11 an hour and doubling to £22 an hour for overtime and night shifts. They are treated to private healthcare, private dental treatment, and I’m sure that they also receive a nice discount on Amazon’s products. While the job may be boring at times, it is hardly the back-breaking labour and terrible conditions described in Orwell’s ‘ Road to Wigan Pier’. If this is what the future of blue collar work looks like, then we’ve honestly come a very long way.
Overall, I thoroughly enjoyed being invited to tour Amazon’s Fulfilment centre, and it was captivating to see the workings behind the Western World’s largest e-commerce business. From both Brad Stone’s biography of Bezos, ‘The Everything Store’, and the tour of the FC, I was left with the impression that the firm truly was at the forefront of innovation, and was open to taking risks in things such as AI and hierarchical structures. This is why Amazon dominates the many industries it operates in, for now at least.
Note: I am in no way affiliated with Amazon, and this was an honest, independent review.
Originally published at http://www.adamlehodey.com.
