retail

Amazon Chief Holds Court In Yonkers

Jeff-Bezos

Jeff Bezos, president, CEO and chairman of the board at Amazon, held forth before a full house at the Yonkers, N.Y., headquarters of Consumer Reports during its ShopSmart symposium this week. He spoke on everything from feedback-abuse to the future of online marketing and the importance of a corporate vision that transcends Amazon.com.

The largest online retailer made $9 billion in the first quarter this year alone. The company, whose first edition of Kindle sold out in five hours, has done something new with the latest version: a cost structure partly offset by ads. The company is also moving into cloud computing with its Cloud Music business.

Bezos said the most interesting trend in online retail is mobile. "You will see more and more over time that people will buy from tablet computers. That's very exciting for us. It gives us a new environment to experiment and invent in."

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He said the company's Windowshop for iPad represents the company's efforts to create a shopping channel for devices one can hold with two hands and use on the go. One element of Windowshop is a virtual directional controller on the lower right side of the tablet pane allowing one's thumb to skate across a matrix of product offerings. "It will become a very good shopping tool," says Bezos. "The key is that as we continue to move to a better bandwidth [on mobile devices], as processors get faster, the apps can become more and more snappy. We will be innovating in that area."

An editor from Consumer Reports noted that people have criticized the Amazon customer service experience for its difficulty in reaching a live person. "Are they valid criticisms," he asked. "And what is Amazon doing?"

Bezos responded that the best customer service is that the customer never need call you. "The best customer service is when it just works. And that is one of the primary metrics that we follow and have improved every year since we have been in business," he said. "Customer contacts per units sold -- we endeavor to drive that down everywhere we can. The number-one contact has always been, 'Where's my stuff?' We have driven that way down."

Bezos said he has been influenced in at least a couple of ways by what Japanese corporations have done. He said, for example, that the company has improved service by doing its own version of Toyota's operating philosophy of kaizen, or continuous improvement. "It's a bunch of different things, not one big panacea. We find a defect, and find the cause. We use Toyota's five Y's: we ask 'why did it happen' five times as a heuristic to get back to the root cause. Really, the only contact we have should be, 'I just thought I should thank you guys."

The company CEO's other role model from Japan is Sony's founder, because of the larger vision he set for the company, which helped transform not only Sony but the Japanese consumer-product industry. "My role model is the guy who founded Sony right after World War II, Akio Morita. He said, 'We are going to make Japan known for quality.'"

Amazon's larger goal? "We want to raise the entire bar on customer experience, not just customer service. Customer service means it's already too late," he said.

Amazon, Bezos said, has a program in which every employee has to spend two days in the customer service trenches, which he said is excruciating because it involves dealing with problems that are tangled within other problems, so that by solving the first you create a second one. "Since we have eliminated most of the problems that make easy contacts, the ones that remain are excruciating. There is a special kind of hell called snowball contacts where we mess up something and in the process of fixing it we mess of up the fix. You have to hire a very special person to do that job day in and day out."

To succeed long term, companies -- Amazon included -- must have a willingness to invent, according to Bezos. He said that such a drive also implies a willingness to fail and be misunderstood, perhaps for a long period of time, "Even if you actually succeed," he said, adding that criticism is to be expected "both sincere and from those with a vested interest in 'the old way.'"

As for trends, he said he's generally way more focused on what's not going to change than on trying to discern what will, "because we can build plans around that. Things that don't change rapidly are customer needs. I know 10 years from now customers will want low prices, fast delivery, selection and choice. We can build a strategy around that. We can build a flywheel: a low-cost structure, finding the root cause of defects and eliminating them. If I say, 'We want to build a low-price model 10 years from now,' we can work on that."

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