Book Review: The power of Amazon and what businesses can learn from the e-commerce giant

This book superbly maps out the size and implications of being the world-striding giant called Amazon, and tells us why we should care to read about the company. Amazon has infiltrated our daily lives -- whether through Alexa-capable devices, Kindle ebooks, or simply through its efficient and ever-learning web business that gives us cheap goods in double-quick time.

Like other tech companies, Amazon uses our data to learn what we want, and figures out how best to give it to us, becoming so efficient and cost-effective that it keeps us coming back to it by compulsion. The author of the book quotes an Amazon executive as saying the company is becoming “an operating system for your life”. Does this sound like an episode of Black Mirror? It does to me.

The author of the book, Brian Dumaine, writes, “When Amazon offers perks to its Prime members... it brings more customers to its site. More customers attract more third-party sellers to Amazon.com because they want to reach this large pool of potential customers... Attracting more sellers increases Amazon’s revenues and creates more economics of scale that allow it to lower prices on its site and offer more benefits.

That attracts customers... [and] more sellers... the flywheel [keeps] turning faster and faster and faster...” Such clear language that explains Amazon’s game plan to us in an accessible way is one of the great merits of this remarkable book.

Dumaine is no stranger to clear, crystalline writing. He is “an award-winning journalist and a contributing editor at Fortune magazine”, according to the biographical note in the book. This is the second book he has authored by himself.

Jeff Bezos is the brain with throbbing veins at the centre of the Amazon cyborg. Dumaine gives us a breezy biographical profile of Bezos, retaining the contradictions and nuances that characterize Bezos.

Bezos’s upbringing, we are told, shaped his current decisions, such as his pro-government stance and “positive attitude towards the military industrial complex”, also his resourcefulness and initiative, his ability to face cold hard facts, his absolute disregard for yes-men, his ruthlessness towards his employees in his relentless pursuit of his objectives, and his “confrontational” management style that has made Amazon a tough place to work at.

According to the New York Times, “...it wasn’t uncommon to see workers weeping at their desks”. In 2019, Jeff Bezos was the richest man in the world with a “net worth of $160 billion. Amazon accounted for “nearly 40 percent of all online retailing in the US and is one of the largest e-tailers in Europe.

The company is active in 17 countries, and it has signed up over 150 million people around the world. Amazon Web Services is “the world’s largest cloud computing company”. Amazon is profitable -- it “grew at an average rate of 25 percent a year”, and in 2018 “had $233 billion in annual revenues”.

Dumaine explains with wonderful clarity that as Amazon grows and grows, it may change society itself. Dumaine imagines a future where most shopping is done online. “For many, feelings of serial isolation will increase,” writes Dumaine. People might not go to movie theatres (because of Prime Video); libraries (Amazon Kindle); or grocery stores (Amazon Pantry).

Dumaine writes that in Australia drones are delivering hot coffee to your home. And we might end up speaking to smart devices more than humans. Naturally, data collection by smart devices from Amazon, Google and others have given rise to worries that “these corporations will be able to eavesdrop on our conversations at home, in the car, and in the office”.

Meanwhile, says Dumaine, the introduction of AI-driven robots by Amazon and others might take away many blue collar jobs for humans. (Such is the price that the poor might pay so we can order cheap goods from the comfort of our homes.) Dumaine writes, “The consulting firm McKinsey estimates that, under a worst-case scenario, automation will replace 800 million workers -- some 30 percent of the global workforce -- by 2030”. Not that Amazon workers today are happy in their jobs, Dumaine writes. “Full-time associates (in one Amazon warehouse in the US) toil ten hours a day, four days a week, with a half-hour lunch break and two fifteen-minute breaks. Some workers have complained that they don’t have adequate time to take bathroom breaks and that the pace of the work is relentless... Amazon... is squeezing the lowest rungs of society to get one’s package delivered cheaply and quickly”.

A Murky World

Dumaine also takes us into the intriguing and often shady world of being a third-party seller on Amazon -- with hacking attempts, impersonation of other sellers, and leaving fake reviews to boost your page or tank someone else’s. About that -- Dumaine writes that according to a businessman who identifies (likely) fake reviews on Amazon, “about 30 percent of the reviews on Amazon are suspect”.

Another merit of this book is that it goes beyond Amazon, describing how other companies are adopting what Dumaine calls “Bezonomics”: “Simply put, the foundational principles of the Bezonomics philosophy are customer obsession, extreme innovation, and long-term management”. Walmart, adopting Bezonomics mode, has entered the e-tailing arena, as have other giants.

Dumaine even mentions how to create “Amazon-proof” businesses; he says, “... the future is bright for those who, instead of trying to confront Amazon head-on, figure out how to outflank it”, using “strategies that Amazon would be hard-put to match”. These I won’t mention, because I want to avoid spoilers. Dumaine gives us multiple case studies of online sellers who are successfully holding their own against Amazon; I found these case studies quite illuminating. Dumaine also points out industries that are Amazon-proof at this time.

Fast Goods

In Dumaine’s view, Amazon is a beneficial force because it provides cheap goods quickly. But Dumaine, displaying a fine even-handedness, also chronicles attempts in the US and Europe to investigate Amazon under antitrust laws. In this connection, Dumaine mentions the influential views of Lina Khan, who “believes that if companies become too big and too powerful, that can take away Americans’ basic freedoms by lobbying to change regulations in their favour, winning huge tax breaks from state governments that take funds away from education and welfare, and bulldozing neighbourhoods”.

In my opinion -- and yours may vary from mine -- where Dumaine goes overboard just a tad bit is in propounding the view that anti-Amazon action will “stifle innovation”. I don’t believe it. Moreover, Dumaine leaves room to say that all innovation is good for society, which is not true. Curbing Amazon, in my opinion, might even foster innovation towards a more humane society that doesn’t privilege privacy-invading companies who want us to buy more and more. Aren’t we more than consumers?

While I disagree with one of Dumaine’s many conclusions, I recommend the book for its wealth of information about how Amazon works, how Bezos thinks, what the future might hold for Amazon’s competitors and for us consumers and workers, and strategies to counter Amazon. Apart from empowering the general reader with information, this book will be of special interest to government officials and politicians interested in retail policy, activists, journalists, and entrepreneurs who want to launch online businesses.

Suhit Kelkar is a freelance Journalist. He is the author of the poetry chapbook named The Centaur Chronicles. Views are personal.