The Everything Store: Jeff Bezos and the Age of Amazon by Stone Brad

Author:Stone, Brad [Stone, Brad]
Language: eng
Format: epub, mobi
ISBN: 9780316219259
Publisher: Little, Brown and Company
Published: 2013-10-14T16:00:00+00:00

In 2003, Jeff Bezos came up with yet another way to frame his concept of Amazon. This time, it was for a group of buyers who were leading the company’s charge into the new hard-lines categories, a group of products that included hardware, sporting goods, and electronics. Amazon, Bezos said, was the unstore.

At the time, Bezos had selected jewelry as the company’s next big opportunity. It was a tempting target: the products were small, the prices were high, and shipping was relatively cheap. He tapped retail managers Eric Broussard and Randy Miller to lead the effort. As usual, the executives Bezos chose to head the product’s sales had no prior experience selling that product.

Though it seemed alluring, selling jewelry posed some challenges. Expensive baubles were difficult to display in full detail online; also, the products were valuable and tempting to pilfering workers in the company’s fulfillment centers. Another issue arose with pricing: The jewelry industry had a simplistic pricing model with generous margins. Retail markup was significant; stores doubled the wholesale cost (a practice known as keystone pricing) or even tripled it (known as triple-keystone pricing). Jewelry manufacturers and retailers clung tightly to that custom, which didn’t fit well with Bezos’s newly adamant resolve to offer the lowest prices anywhere.

The Amazon jewelry executives decided on an approach similar to the one the company had recently used for its cautious first foray into apparel. They would let other, more experienced retailers sell everything on the site via Amazon’s Marketplace, and Amazon would take a commission. Meanwhile, the company could watch and learn. “That was something we did quite well,” says Randy Miller. “If you don’t know anything about the business, launch it through the Marketplace, bring retailers in, watch what they do and what they sell, understand it, and then get into it.”

Bezos seemed amenable to that plan, at least at first. And then one day, in a meeting with the S Team and the hard-lines group, something set him off. They were discussing the margins in the jewelry business, and one of Randy Miller’s colleagues mentioned how the jewelry industry conducted business in the “traditional way.” “You’re not thinking about this right,” Bezos said, and he excused himself to get something from his office. He was gone a few minutes, then returned with a stack of photocopied documents and handed a page to everyone in the meeting. It had only one paragraph, about ten sentences long. It began with the words We are the “Unstore.”

The document, as Miller and other executives who were there remember it, defined how Bezos saw his own company—and explains why, even years later, so many businesses are unsettled by Amazon’s entrance into their markets.

Being an unstore meant, in Bezos’s view, that Amazon was not bound by the traditional rules of retail. It had limitless shelf space and personalized itself for every customer. It allowed negative reviews in addition to positive ones, and it placed used products directly next to new ones so that customers could make informed choices.

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