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Bezonomics: How Amazon Is Changing Our Lives

Brian Dumaine

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1994 Jeff Bezos left a lucrative Wall St job to start Amazon. 20 years later he's richest man in the world.

He's splashed out - a $60 million Gulfstream private jet, 400,000 acres of land in Texas, and a 17,000 sq ft Fifth Avenue Manhattan apartment on three floors including penthouse that cost $80 million.

His birth name wasn't Bezos, but Jorgenson, the high school sweetheart his mother married as a pregnant 17 yo. When Jeff was three, father disappeared and his mother married a Cuban refugee named Mike Bezos, who adopted the boy.

Amazon siphons off 2% of American household spending - bc it saves people time and hassle of chasing down stuff they need.

Walmart stocks around 120,000 items in it's stores, and another 70,000 online. They are No 2. Amazon site offers 600,000 items.

Because Amazon has access to huge amounts of data, they can cannibalise any high seller - thery just subcontract another manufacturer to make their own label version.

Has its own fleet of container ships to bring stock from China: 70 freight jets to move stuff around US, with it's own hub at Fort Worth. To maximise quick delivery, it has over 200 warehouses, and repurposes ex-malls more more distribution centres.

AI voice assistant, Alexa, is named after the ancient Egyptian library at Alexandria.

Constantly moving into new fields. Built huge computing capacity to better run its own business, but then used that to create AWS cloud computing service. In 2018 partnered with Warren Buffett's Berkshire Hathaway and JPMorgan Chase to reinvent health care for the 1.2 million employees of the three companies. Run by Awal Gawande. And also in 2018 acquired Pillpack, the online pharmacy.

Three characteristics differ him from other entrepreneurs: he belives resoursefulness is hte most impt virtue; he believes have to face facts, no matter how distasteful, and he plans in terms of decades, not quarters.

1997 promo to accelerate awarewness: "The Greatest Tale Ever Told", where Amazon customers cd interact with a famous writer. Got John Updike to write the first paragraph of a murder mystery, then Amazon customers were invited to write a new para every day for 44 days, with best chosen by editorial staff. Each day's winner got $1000, and Updike paid $5000 to write concluding para. A PR hit - the promo attracted 380,000 submissions, and the contest was mentioned in 300 news stories.

Bezos has pledged to sell a billion dollars of stock a year to fund space rockets. If we cd live on other planets or on space stations, we could support a population of a trillion. And if we had a trillion people, how many Mozarts and Einsteins would we produce?

Employees know that their job is to improve lives of their customers. So lowwer costs, which brings in more vendors, which attracts more clients, and so on.

Amazon, like Google, AliExpress and Facebook have AI programs running their demand systems - orders, recommendations - based on firehoses of data. This is a huge barrier to entry for any new company - they cannot beat the standard of service bc don't have enough data.

Woman tried to go a week without using Amazon. Avoided AWS, then found cdn't access Netflix, AirBnb or her Slack work acct. tried ordering stuff from eBay, and found it arrived stickered "Fulfilment by Amazon".

Amazon Prime - customers pay $119 a year for privelege and are stunningly loyal. By far most common reason for dropping membership is when couple get married and only need one account. When it was introduced, many thought it wd cannibalise Amazon's most profitable customers - those attracted to the 'free shipping on goods over $25'. But turned out that it fundamentally changed the habits from occasional buyers to addicted 'buy everything through Amazon to make most of my Prime investment'. Amazon customers get so addicted to ease of one-click buying and free shipping that they stop browsing other ecommerce sites. As well as free shipping they get free movies, free streaming of 2 million songs, free book downloads to Kindle and free photo storage on Amazon cloud. Prime customers spend average $1300 a year on Amazon, vs $700 for non-prime members.

Amazon monitors 'touch points' - how many times each customer uses any part of Amazon's services. If number drops, or rate of increase slows, it's a signal that need to do more to improve service.

For example, Amazon spends $7 billion on Prime Video, providing movies and docos. In 2019 paid $250 million just for the rights to a prequel to LOTR. Actually producing it budgeted at another half billion. Amazon spent $72 million producing and marketing The Man In The High Castle. 1.5 million people were new customers who signed up bc they wanted to watch the series. That means a recruitment cost of $63 per membership. Since Prime customers spend $1300 a year vs $700 for non-Prime members, it was a no-brainer.

Amazon warehouses all run conveyer belts at dizzying speed, reminiscent of Lucille I Love Lucy Ball episode where she tries to keep pace with a conveyer of choc bonbons, eventually filling her pockets and her hat. Amazon pickers tracked on nationwide database, where each eprson can see his rank compared to all others ("I'm 26th fastest in America").

If you can stick out your warehouse job for a year, Amazon will pay 95% of cost for you to train for a new job, even outside A, such as nursing or truck driving (only condition is that is has to be an in-demand job).

One of China's largest on-line retailers,, with 310 million customers, has a huge warehouse outside Shanghai that ships 200,000 packages a day. It has 4 workers.

In the past, you cd design a new product, get it made in China, then sell it on Amazon. But Chinese manufacturers have long since woken up to that, and are cutting out the middle man, selling direct on Amazon.

Walmart is not justthe largest retailer in the world (with 4000 US stores and another 6000 worldwide), but it is the largest business in the world, with sales of $500 billion in 2018. But Wall St doubts that it can keep that lead in cyberspace - Walmart is valued at less than half what Amazon is on the stock market.

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