AMZN – Customers, Markets, Resources

Amazon is different than other companies. From the outside, this difference can appear as anomolies, odd things that stand out. I belive that there is a fundamental way of understanding the current state and dynamo of change within Amazon.

Customer Centrism

Amazon is meant to be the most customer-centric company on Earth. Likely when we get to Mars, Amazon will need to change that to the Solar System. However, it is not customer-centric in all ways. User interfaces and documentation are a huge challenge that many competitors excel.

Even on the issue of price, there are various options that are generally cheaper, or as cheap, such as ebay. This is where things like free shipping and very fast delivery come into play.

Bundling digital and physical goods (to sell more physical goods) is a good tactic, as digital goods have low incremental cost of sales. If this locks in a customer who will pay in excess of the margin on digital goods, that is an increase in profit, a happier customer, and an increase in trust and mindshare.

But in some cases prices are still poor in relation to the competition. In these cases, it seems clear that (unless we are talking about overlooked anomolies) there are other factors at work.

Resource Centrism

Most organizations have fewer resources than they could use (though that is not correct unless there are appropriate mechanisms for management and leadership). Customer centrism can always be a focus, but of course it will be constrained in terms of resources available. In order to understand customer centrism, there should be two aspects: improvement (which might be called innovation) and listening/understanding (which might be called communication, more generally).

Since communication actually informs improvement/innovation, that part is primary (and we see that in the generally lightning-fast reaction times to customer requests. However, this can be somewhat annoying as small things require a request to customer service, rather than being fixed in the interface. However, again, this is brilliant management as those issues which generate the most support calls, or have a greater impact on sales and customer satisfaction, will get the priority for engineering resources. Given enough computing power and good data, prioritization of product development and maintenance could potentially be done by the Amazon computer brain.

Market Centrism

This idea of markets as driving optimal resource allocation is rife throughout the company, and the ability to participate in these markets externally (essentially the core of ecommerce) is invigorating. Some examples:

Amazon Vendor Programs

Amazon has multiple vendor programs, from the original affiliate program and the amazon advantage (for media companies) to the Amazon Seller Central program, there are many ways to interact in the Amazon marketplace.

Shipping/delivery is an area that has become increasingly varied with options for vendor fulfillment, fulfillment by Amazon, and in some cases Amazon Prime fulfillment by the vendor.

Amazon Web Services

AWS has itself also evolved over the years, and the fundamental resource of computing, storage, and networking has become sliced and diced into a variety of offerings. EC2 is the basic VPS options with some levels of resiliency. Next came the Elastic Beanstalk, which takes care of much of the provisioning in dealing with scaling stateless services. Third is Lambda which is serverless computing (it simply executes the code without any server management/configuration).

Amazon Hardware - Kindle, Fire

Amazon hardware has also gone through many iterations and includes variety in the offerings. This is akin to a normal product line, and line extensions, though sometimes the level of innovative is category-defining. The Kindle ebook reader, while certainly not the first, has become dominant for good reason. The Fire TV and Fire TV Stick has largely beaten out the Chromecast. And most recently Alexa on the Echo and Echo View.

Software + Hardware + Logistics

The fundamental skills underlying Amazon are several, but building and maintaining software, designing and managing hardware (different kinds, from a handheld device to server farms), and logistics, especially distribution/shipping/delivery.

Expect innovation around each of these fairly complex, and difficult alignment of the two sets of three pillars of expertise and practical, valuable knowledge.