Amazon's Retail Revolution Business start 2014

Amazon's Retail Revolution Business start 2014
 
  you to our website the British do more
 
  of their shopping online than any other
 
  nation last year tens of millions of
 
  British customers used Amazon to buy
 
  four and a half billion pounds worth of
 
  goods
 
  it's the instant gratification part of
 
  it that is so attractive to me in a
 
  little bit ominous Amazon is accused of
 
  changing the book business from this
 
  it's not only through couple pages
 
  anything to this
 
 
  Amazon's ambitions now stretch way
 
  beyond books into the world of media
 
  introducing Amazon fire TV its drive to
 
  cut prices puts the squeeze on
 
  competitors is really designed from
 
  the ground up to be a shark like it's
 
  designed to dissolve and destroy other
 
  businesses but Amazon is also creating
 
  new jobs in Britain it gives us an
 
  opportunity to access a marketplace that
 
  we would never otherwise be able to
 
  access start with the customer and work
 
  backwards Amazon's amazing story from
 
  startup to global Titan is also the
 
  story of its founder Jeff Bezos he
 
  really is a tough boss he is driven that
 
  company and drives those people very
 
  very hard we asked what Amazon's
 
  ever-growing business is doing to our
 
  economy and our lives and we examine how
 
  Jeff Bezos is formula for success shapes
 
  Amazon's culture and has made him such a
 
  happy billionaire
 
    
  there aren't many places where Amazon
 
  doesn't reach these days in fact the
 
  more remotes the spot the more
 
  difference it's made to people's lives
 
  online retailing we opens up the world
 
  to us
 
  you can't buy a rowing machine in John
 
  O'Groats but Fred thermals arrive the
 
  day after he ordered it on Amazon we'll
 
  be live in quite a remote area we still
 
  have the same choice as someone walking
 
  down the walking down Oxford Street in
 
  London across town at the hotel the
 
  darts team shirts also came from Amazon
 
  ordered by the manager Andrew mullet
 
    
  before companies like Amazon or even
 
  Internet it was a lot more difficult for
 
  us to to get things here we know we do a
 
  Inverness John O'Groats has one shop the
 
  locals still use it but it's never going
 
  to have all the things they can find
 
  when they're back home looking online
 
  what's a chap to do if he needs a fancy
 
  dress costume
 
  oh yes or even a special kind of mop for
 
  the family furry business the
 
  conveniences are accessible gonna click
 
  of a button you can buy it and basically
 
  it's here the next day
 
  you don't have to live in John O'Groats
 
  to feel the lure of Amazon we asked
 
  teacher Melanie Collins to run an
 
  experiment with her London class yes 6
 
  I'm going to write a word on the board
 
  and I want you to think about the first
 
  thing that pops into your head what does
 
  just one answer I'm going to show you
 
  two pictures up on the board and you're
 
  going to put your counters underneath
 
  what you thought of first okay
 
  Moustafa can you please come up and
 
  count how many people thought of the
 
  river each eight people okay thank you
 
  the mighty river never really stood a
 
  chance
 
  14 people okay have a seat please most
 
  businesses would happily give their
 
  annual profits for that level of
 
  customer awareness Amazon's ability to
 
  get into our heads is the product of a
 
  unique company culture its engineers in
 
  London are working on its growing film
 
  and TV service the British business is
 
  run by Christopher North an American who
 
  everyone's kept in tune with the ideas
 
  of founder Jeff Bezos through a kind of
 
  Amazon think they're all expected to
 
  sign up to we have 14 leadership
 
  principles at Amazon and these are a set
 
  of principles that describe to us the
 
  characteristics you need to exhibit to
 
  be a successful Amazonian and I think we
 
  found that they are a kind of glue that
 
  Nets us together as a company even now
 
  today that we're 97 thousand employees
 
  at Amazon the principles are on the
 
  website for anyone to see and if you
 
  work at Amazon you'll never forget them
 
  it would be the equivalent of you know
 
  how the the Ten Commandments influenced
 
  Christianity they're not just words I
 
  mean you you have to be able to embody
 
  these things on a day-in and day-out
 
  basis otherwise you won't you just won't
 
  survive at Amazon
 
  staff don't have to learn the leadership
 
  principles by heart but there's one idea
 
  that's drummed into them every day
 
  although leaders pay attention to
 
  competitors they obsess over customers
 
  customer obsession is the single most
 
  important thing to Amazon economist the
 
  thing we focused on from the very
 
  beginning
 
  Amazon executives and and Jeff Bezos in
 
  particular will tell you until you you
 
  know cannot stand hearing it any longer
 
  that they start with the customer and
 
  work backwards start with the customer
 
  and work backwards I don't think you
 
  should make any bones about it there's
 
  no know socially wonderful thing about
 
  working from the customer backwards it's
 
  smart business you only have to visit
 
  your local Royal Mail sorting office to
 
  see the impact of online retail email
 
  has meant we're sending fewer letters
 
  but that's more than made up for by all
 
  the extra parcel deliveries last year
 
  Amazon alone sold an average of more
 
  man woman and child in Britain that's
 
  more than half of all online retail
 
  sales Amazon account for a large amount
 
  of our traffic the difference in volume
 
  yeah massive contribute to the amount of
 
  traffic we pick up now Amazon's business
 
  is good news for some but bad for others
 
  across Britain book shops have been
 
  closing at the rate of more than one a
 
  week see you said I'll give you a call
 
  later mr. Carrington ok in banstead'
 
  sorry Linda Jones is ready to name the
 
  culprit I've actually had people coming
 
  in and taking photos of books on their
 
  phones and looking and saying you know
 
  they'll look at the back and they will
 
  be there for some time
 
  and then they will leave and I know
 
  exactly what they're doing they are
 
  going to Amazon to order that book
 
  because they can get it a lot cheaper
 
  Linda says Amazon's prices can make
 
  trading impossible for her for instance
 
  David Walliams new book demon dentist on
 
  Amazon 5 pounds we have to retail it at
 
  so it costs us to buy $8.99 Amazon
 
  admits it sells some books at a loss I
 
  think you'd find a cross across many
 
  retail businesses it's very common for
 
  best-selling products to be sold at a
 
  very little margin or reasons even
 
  sometimes at a loss but ultimately we
 
  have to figure out how to make it all
 
  month just to break even that hasn't
 
  been happening and for the past year
 
  she's been using her own savings to keep
 
  the shop open I love books and I love
 
  book shops and it's all well and good
 
  having that passion thank you but I just
 
  can't afford to keep putting money into
 
  the business for Amazon's founder book
 
  shops are just on the wrong side of
 
  history complaining is not a strategy
 
  Amazon is not happening to book selling
 
  the future is happening to book selling
 
  Amazon didn't invent the idea of
 
  shopping from home mail-order catalogs
 
  had offered it for decades but this kind
 
  of thing started to feel distinctly
 
  low-tech when a new vision appeared in
 
  word ever written every picture of a
 
  painting and every film ever shot could
 
  be viewed instantly in your home by an
 
  information superhighway ordinary
 
  domestic phone lines offered access to
 
  an exciting future it all comes down to
 
  computers communicating and in fact
 
  that's already happening on something
 
  called the Internet
 
    
  the internet was already a hot topic in
 
  the attention of a young Jeff Bezos the
 
  wake-up call was seeing web usage grow
 
  was a bright twenty-something computer
 
  science graduate rising through the
 
  ranks of a Wall Street firm which was
 
  pioneering computer based trading there
 
  was plenty of talk about what the
 
  internet might mean for business in 1994
 
  there was this idea that maybe the
 
  Internet's going to be powerful enough
 
  that you can use it to create a kind of
 
  intermediary between customers shoppers
 
  and manufacturers well that was a very
 
  vague idea but Jeff had this notion that
 
  maybe if you focused it in one product
 
  category on the internet you can offer
 
  everything the question was what's the
 
  first best product to sell online I made
 
  of force rank them according to several
 
  different criteria and ultimately picked
 
  books Bezos was already married
 
  to McKenzie Tuttle who he'd met at work
 
  but their domestic routine was about to
 
  be disrupted
 
    
  she wanted to break away from the
 
  investment firm roll up his sleeves and
 
  build a business
 
  the bezos's packed up their apartment
 
  and left New York behind he was in such
 
  a hurry that he hired a removal truck he
 
  told them to drive west and that he
 
  would get started and call him in a
 
  couple of days and tell them where
 
  exactly on the West Coast they should go
 
  once young men were told to go west in
 
  they went west in search of geeks Bill
 
  Gates is Microsoft dominated the new
 
  world of personal computers from his
 
  hometown of Seattle Washington so there
 
  was plenty of tech talent around and
 
  Bezos sent the removal truck they're
 
    
  also heading to Seattle
 
  from California was an experienced
 
  programmer shel Katherine Allison's
 
  first employee first we had to buy some
 
  computers and software we couldn't
 
  afford very big computers or very many
 
  computers or we did have to be frugal
 
  because there was a not a huge amount of
 
  investment the garage at Jeff and
 
  Mackenzie's rented house became the
 
  office Bezos insisted on getting desks
 
  made from doors to save money it's
 
  become part of Amazon mythology the
 
  original example of a mother of those
 
  leadership principles frugality we try
 
  not to spend money on things that don't
 
  matter to customers but employee number
 
  one always had his doubts about the desk
 
  doors if you ask the people building
 
  them you'll learn that they were
 
  actually more expensive than just buying
 
  a cheap desk looks frugal that it isn't
 
  really frugal I think frugality is in
 
  some ways a much misunderstood
 
  leadership principle frugality doesn't
 
  mean cheapness it doesn't mean
 
  penny-pinching it means making efficient
 
  use of scarce resources and I think
 
  within the door desk idea the idea that
 
  you would improvise a desk out of the
 
  materials at hand you also have the idea
 
  of a kind of of a scrappiness of a kind
 
  of making do with what you have to have
 
  after months of coding on the doors
 
  bezos's new business was launched
 
  ww Amazon comm takes you to our website
 
  Amazon's 8th employee told Nelson had
 
  been working as a waiter before he got
 
  the job that changed his life they had
 
  actually started shipping books and
 
  Jeff's garage then they moved to this
 
  small warehouse Todd started working
 
  here ordering and dispatching books he
 
  and his colleagues responded to a
 
  computer linked to Amazon's website they
 
  had a bell but whenever a customer or a
 
  book there'd be a little ding ding you
 
  know and ever gonna cheer so he made
 
  another sale and within the first few
 
  days it was ding ding ding ding ding
 
  ding ding ding ding ding and I had to
 
  turn it off because you know it was
 
  annoying by listing any book that could
 
  be ordered from distributors basil's his
 
  small business would claim the title
 
  Earth's biggest bookstore over some
 
  large number of years I think Internet
 
  book selling is gonna become a very
 
  large business at the end of each day
 
  work in Amazon's office is stopped and
 
  everyone including Jeff and McKenzie
 
  went down to the basement to help get
 
  all the orders into the last post there
 
  is this feeling you just couldn't do
 
  enough I was working you know 12 16-hour
 
  days working most weekends I didn't
 
  think of vacation for the first 2 3
 
  years but it's what I wanted to do I
 
  mean I was excited by my work is the
 
  most fulfilling work I've ever done that
 
  first tiny basement warehouse in Seattle
 
  is a world away from what Amazon now
 
  calls its fulfillment centers with more
 
  than a hundred million items for sale on
 
  the website keeping tabs on them across
 
  the network of warehouses is so complex
 
  but only the central computer really
 
  knows where things are amazon has such
 
  faith in it that any item can be stowed
 
  on any shelf the product is stored
 
  completely randomly around the building
 
  and so the store is allowed to pick any
 
  location that they want
 
  to in order to put that product away the
 
  random arrangement is actually efficient
 
  because it reduces the chance of a
 
  worker picking the wrong item which
 
  might happen if similar items were
 
  stored side-by-side a custom will come
 
  onto the website order the product and
 
  the computer system will decide the best
 
  fulfillment center in which to to pick
 
  that product and we have Pickers and the
 
  computer system will send to their
 
  handheld scanner that order that says go
 
  pick Downton Abbey series two and it
 
  will also tell them where that product
 
  is the ordering process is almost
 
  completely automated but only a human
 
  being can walk down an aisle and tell
 
  the difference between an icing bag and
 
  a cuddly toy they will scan the product
 
  and then the computer system knows that
 
  that product has moved from the shelf
 
  into the text because the computer knows
 
  how big things are it even tells the
 
  packers what size box to use for each
 
  item
 
    
  then only at the final stage the item is
 
  matched up with the customers name and
 
  address it goes on to our outbound dock
 
  and it will get put onto one of our many
 
  carriers vehicles for onward delivery
 
    
  back in John O'Groats there's a new van
 
  load of online purchases
 
    
  Sunday ghosts appear Fred firmer runs
 
  the ferry to Orkney out of season
 
  there's time to get things shipshape
 
    
  and Andrew mowett knows it's always
 
  easier to get the party started with a
 
  Captain America costume
 
    
  Bezos was picky about who joined Amazon
 
  he originally interviewed everyone
 
  personally James Marcus passed the test
 
  we didn't overwhelm you in a sort of
 
  showbizzy tight in a business way but he
 
  had a lot of brain power and a lot of
 
  minutes of talking to the guy a certain
 
  kind of magnetism came into play which
 
  was not traditional and was that much
 
  more persuasive I think because of it
 
  Allison was soon too big for everyone to
 
  meet Bezos but new recruits were fired
 
  up in sessions about him and the company
 
  history even in the initial training you
 
  talk about things that Jeff would like
 
  and things that Jeff wouldn't like you
 
  learn his story driving out in the sedan
 
  meaning the garage and like founding the
 
  company people love a winner and she'd
 
  just being on that team felt like
 
  something was it was the kind of job you
 
  could tell your future wife's relatives
 
  about and they would be impressed at
 
  Christmas the office staff were expected
 
  to help pack books at the warehouse it
 
  gave them a rare insight into those
 
  much-discussed customers you would pick
 
  the weirdest things there was a lot of
 
  porn there was a lot of scientific
 
  literature and I would gift-wrap wants a
 
  copy of mine comp of course I was hoping
 
  that whoever was sending it to someone
 
  for a Christmas gift was sending it as a
 
  kind of cautionary tale about man's
 
  inhumanity to man or see how far we can
 
  fall but sadly the card that went inside
 
  the thing simply said Merry Christmas
 
  buzzing with dot-com startups
 
  reinventing business and office life
 
  company is like pets calm were famous
 
  for spending their investors money with
 
  no sign of profits Amazon too was losing
 
  hundreds of millions while moving to
 
  ever bigger offices but in the dot-com
 
  boom new rules applied Wall Street gave
 
  companies a pass they said okay we don't
 
  care if you make money yet you're gonna
 
  someday but for now just grow take that
 
  money reinvest it in servers and
 
  marketing whatever just grow until you
 
  know you hit the sky and and we'll be
 
  there as loyal investors behind you
 
  Bezos and his staff think about Amazon's
 
  growth that's what they call the
 
  flywheel effect it works like this if a
 
  customer's pleased with their Amazon
 
  purchase they buy more and tell their
 
  friends so Amazon gets more traffic that
 
  means it can offer more products at
 
  lower prices which in turn attracts more
 
  customers the flywheel builds momentum
 
  and becomes unstoppable it seemed at
 
  that point like there was nothing amazon
 
  couldn't conquer in 1997 Amazon floated
 
  on a rising stock market only two years
 
  after it had opened for business it was
 
  heady days for the internet and the
 
  stock price did nothing but go up up up
 
  Amazon's hard-working staff had all been
 
  given stock options when they joined one
 
  of the greatest absurdities at Amazon
 
  was that the reason everyone was killing
 
  themselves was because of the
 
  possibility that they would become
 
  hideously unspeakably rich at the same
 
  time no one ever talked about this you
 
  know it was very gauche to talk about it
 
  everyone had to like pretend as though
 
  it was some sort of communist state that
 
  everyone's just working because they
 
  just loved working crazy crazy hard but
 
  the reality of course underlying
 
  everything is that there was this hope
 
  of some sort of enormous payoff and for
 
  a while it looked like that dream had
 
  come true
 
  did you read the time this morning yes
 
  all the times this morning at one point
 
  on Friday
 
  amazon.com total stock market value
 
  surged past thirty billion dollars
 
  making it worth more than a major
 
  industrial company like Texaco according
 
  to my calculations you yourself are
 
  worth somewhere in the vicinity of nine
 
  or ten billion dollars today I only say
 
  that because I've got a follow-up
 
  question okay what's with the Honda this
 
  is a perfectly good car the image of
 
  Jeff is one of sort of a brilliant
 
  strategic financial mind and a delighted
 
  child you know and that laughs I mean
 
  really really
 
  Jeff's laugh is is memorable you know
 
  when you talk to him if you're in a
 
  meeting with him it's it's the thing
 
  that you emerge talking about I loved
 
  the challenge of it when I was there
 
  especially at the beginning and and I
 
  frankly I loved Jeff too but working
 
  down the hallway from his laughs after a
 
  while it can you know get too great on
 
  one thanks very much indeed thank you in
 
  1997 the internet was still a novelty
 
  for British business photons have set up
 
  what's called a website back then the
 
  new technology was much hyped but didn't
 
  always deliver the web promised
 
  universal access to information but then
 
  in the early days it involves unplugging
 
  the telephone to use your dial-up modem
 
  and then have to wait many many minutes
 
  before every page loaded but it was
 
  still pretty exciting
 
  most big retailers didn't even have a
 
  website but there were already other
 
  online booksellers competing with Amazon
 
  Simon Murdoch was running a British site
 
  called book pages when he got a call
 
  from Seattle Jeff Bezos got in touch and
 
  arranged to come to London I think he
 
  talked to several businesses he met us
 
  in a hotel in central London Bezos said
 
  his staff in Seattle were already
 
  working on a UK version of Amazon but
 
  Murdoch's book business created another
 
  possibility
 
  the first discussions were coming here
 
  anyway would you like to be part of it
 
  or would you like us to compete with you
 
  quite aggressive yes a deal was done for
 
  Amazon to buy Murdoch's business and for
 
  Murdoch to become head of Amazon's UK
 
  operation amazon.com at UK is going to
 
  revolutionize book selling because we're
 
  making a very large number of books
 
  available to people very easily
 
  initially people are pretty nervous
 
  about online shopping I think the idea
 
  of putting your credit card details into
 
  little box on screen was worrying at
 
  first
 
  Amazon set up call centres to take down
 
  the credit card details of timid
 
  customers but most soon got used to the
 
  online routine Amazon helps encourage
 
  people to trust the actual process of
 
  just buying something online
 
  satisfied customers were persuaded to
 
  move from books to toys CDs videos and
 
  more as Amazon expanded its range we're
 
  trying to build a place where people can
 
  come to find and discover anything with
 
  a capital a that they might want to buy
 
  online but anything anything Amazon was
 
  becoming a giant retailer but Bezos
 
  decided it could be a marketplace at the
 
  same time that would be a way to spin
 
  Amazon's flywheel even faster Bezos
 
  would get more value from both Amazon's
 
  website and its warehouses by offering
 
  outsiders the chance to sell their
 
  products on the website and use the
 
  warehouses to store and dispatch them
 
  it's called Amazon Marketplace the
 
  fundamental innovation was inviting
 
  third-party sellers not only onto our
 
  site but actually compete with us
 
  directly on the very detail page that's
 
  been so successful that today more than
 
  worldwide are sold by third-party
 
  sellers and that's creating jobs even in
 
  this Nottingham sure village
 
  it's possible to make a living
 
  simply by spotting bargains in
 
  supermarkets to sell on Amazon as Mark
 
  reidman and Keith Whittle have
 
  discovered what do you reckon they were
 
  selling for 717 yes you really can and
 
  comb your local shops to find cheap
 
  stock to sell on Amazon Marketplace if
 
  you know what you're looking for the
 
  Sainsbury's or Tesco's or Argos and
 
  there are certain times of the year
 
  where they will do deals it sounds easy
 
  but like Amazon itself this is a tech
 
  business they track prices using
 
  software in August they bought a load of
 
  Star Wars mr. potato heads and have been
 
  watching their price ever since it's
 
  sort of dropped down at the end there as
 
  soon as we hit the November Christmas
 
  period it's starting to rise and we'll
 
  probably continue to rise it's a bit
 
  like trading on the stock market mark
 
  and Keith store their goods until it's
 
  the right moment to sell
 
  sometimes it means we have to sit on
 
  stock for six months so we're investing
 
  our capital but with a longer term aim
 
  that will make a profit on that
 
  sometimes it's a bit of a lottery but it
 
  normally pays off if you've got the
 
  space to keep hundreds of games gadgets
 
  and toys Keith and Mark say you can earn
 
  your keep like this if you're looking at
 
  between five to seven pounds a units
 
  profits then you've only got to be
 
  turning over save fifteen twenty units
 
  in a day and over a week over a month
 
  every year that hands up to be quite a
 
  decent salary that's about a hundred
 
  pounds profit a day or about thirty
 
  seven thousand pounds a year as long as
 
  you're open for business seven days a
 
  week
 
  we've been labeled as a nation of
 
  shopkeepers but actually Amazon sort of
 
  taken that for us a small retailers into
 
  the 21st century where we can actually
 
  all sell our goods and our wares but you
 
  know without the need of that physical
 
  pencil
 
  the Internet has been the most hyped
 
  industry of the century but now as
 
  shares collapse it could wreck the
 
  future for us all the stock market
 
  couldn't rise forever at the start of
 
  the new century nervous investors
 
  started to panic all good parties come
 
  to an end and so bank stocks would go
 
  from fifty to five in a month and that
 
  was the end
 
  Amazon staff who'd watched with
 
  amazement as the stock price rose now
 
  saw it lose 98% of its value
 
  I lost millions of dollars of paper
 
  worth and that's the way it goes you
 
  know there's just no way around that
 
  only the very earliest joiners had
 
  enough share options to enjoy the
 
  rewards that everyone had been hoping
 
  for
 
  yes yeah I retired when I was 37 for
 
  less fortunate staff there was a harsh
 
  new reality amazon.com this is layouts
 
  instead of hiring for the first time
 
  Bezos was forced to lay people off and
 
  he had to persuade those that remained
 
  that whatever Wall Street said Amazon
 
  would continue to grow and would one day
 
  make money top executives from that time
 
  say frankly that there was nobody inside
 
  Amazon who believed that this would one
 
  billion revenue company but they also
 
  say that Jeff never blamed once that he
 
  has ice water running through his veins
 
  and that he saw that internet shopping
 
  is convenient and prices can be lower
 
  when you centralize inventory and he
 
  just refused to blink alongside the
 
  customer-centric mantra there's a
 
  toughness in Amazon's corporate culture
 
  leaders do not compromise for the sake
 
  of social cohesion and leaders do not
 
  believe that their or their team's body
 
  odor smells of perfume hmm curious he
 
  really is a tough boss he has driven
 
  that company and drives those people
 
  very very hard and you either survive
 
  there because you buy into that culture
 
  and it's the culture that he has created
 
  or you leave because it's just nothing
 
  you have any desire to be around
 
  Dave Cotter left Amazon after four years
 
  to set up his own business it's a social
 
  network for families beginning with his
 
  own Amazon can be a very difficult place
 
  to work but I actually look back
 
  super-super fondly and kind of revere
 
  the intellectual challenge that it
 
  provided it still can be really hard on
 
  a day-in and day-out basis to have kind
 
  of everything that you do or everything
 
  that you're surrounded by kind of be
 
  open open for attack Nadya sure abura
 
  also left Amazon to launch a startup
 
  bringing online technology to shops it
 
  could hardly be more intense than her
 
  old job Amazon was really as a way of my
 
  life I lived at Amazon and I lived was
 
  in Amazon I was married at Amazon and
 
  every hour of my waking day I was
 
  thinking about Amazon here's one kind of
 
  crisis that all Amazon executives dread
 
  Bezos gets a customer complaint he
 
  forwards it to the person responsible
 
  with a single cryptic Edition you get an
 
  email message and there is just a
 
  question mark in it I got one for me at
 
  the time it was just kind of scary and
 
  terrifying only because I hadn't been at
 
  Amazon very long so immediate things
 
  sweaty palms panic anxiety gets just
 
  drop everything all hands on deck we got
 
  to address this what Jeff wants you to
 
  do is to go down and not only fix it but
 
  fix it forever have a mechanism in place
 
  that that screw up never ever happens
 
  again
 
  many companies might just say like okay
 
  this one customer had this one issue
 
  Jeff takes a very different perspective
 
  which is maybe there's a way to improve
 
  the system however long it takes you
 
  work away until that particular failure
 
  is impossible and then then you report
 
  back and you get a usually smiley face
 
  after that saying that yes thank you
 
  Amazon survived the dot-com crash just
 
  thanks to having borrowed enough
 
  millions to stay afloat but Bezos always
 
  had ambitions way beyond mere survival
 
  the big ideas in business are often very
 
  obvious but it's very hard to maintain a
 
  firm grasp of the obvious at all times
 
  on a new path using its existing assets
 
  to move beyond retail just as it had
 
  offered warehouse space to ad science
 
  sellers Amazon created a huge new
 
  business called Amazon Web Services
 
  which rents out its computing power to
 
  outsiders the company also drew on its
 
  techie expertise to create an e-reader
 
  Amazon's first consumer product selling
 
  it direct to its customers made the
 
  flywheel spin even faster
 
  the e-reader was created in a secretive
 
  Amazon lab in Silicon Valley Amazon's
 
  new direction was a response to the
 
  success of Apple's iTunes played through
 
  its iPod Jeff had seen what happened
 
  with music we were buying our iPods they
 
  were very pretty but then what we were
 
  really buying was the music that went on
 
  top of them the software and Jeff said
 
  well I'm not gonna let that happen to
 
  books books is our core business it's
 
  central to us I'm gonna get ahead of
 
  that and that's why he introduced the
 
  Kindle so we would begin to buy our
 
  books and now our movies and our other
 
  content on the Kindle the first version
 
  looking a bit like the poor relation of
 
  an Apple product but two years later
 
  there was a new model that Bezos went
 
  out to sell very few technologies have a
 
  has had a great run so that's it death
 
  of the physical I think there will
 
  always be books it's not death but if
 
  you look over you know some period of
 
  time it makes sense for it to continue
 
  to evolve so if you believe as I do that
 
  long-form reading is important then a
 
  device like Kindle is important because
 
  it makes that easier the Kindle doesn't
 
  only let Amazon sell books
 
  electronically it's created a publishing
 
  business too because anyone can use it
 
  to upload their own writing it's really
 
  democratizing the ability to start and
 
  grow a business as an author as and
 
  turning authors in a sense into
 
  entrepreneurs this couple have done well
 
  from Amazon's news self-publishing
 
  business Nick Spaulding worked as a
 
  press officer for the police but he'd
 
  always wanted to be a writer three years
 
  ago he gave himself a final chance I set
 
  myself the challenge to see if I could
 
  write an entire book
 
  so I sat down my Saturday morning
 
  and just started writing I had no idea
 
  at the end of it after a bit of editing
 
  Nick's book was ready for the world he
 
  uploaded it to Amazon for sale to Kindle
 
  owners if you've got all your ducks in a
 
  row before you sit down to do it it
 
  takes ten minutes you need to give your
 
  book a price if you keep it cheap you'll
 
  sell more and earn thirty five percent
 
  of the sales price at some higher prices
 
  click Save and publish and that is the
 
  end of the process initially I was a
 
  little bit skeptical not that I doubted
 
  his writing ability but as it was a new
 
  idea I just wasn't sure how it was gonna
 
  work you sell one you sell two and it's
 
  a thrill somebody you've never met
 
  somebody you'll never meet has bought
 
  your book and is potentially reading it
 
  right now he would spend a lot of time
 
  in the evening checking his sales
 
  figures on the laptop and I would be
 
  there sort of rolling my eyes as he
 
  could always sold another copy I've sold
 
  another copy Gemma had to change her
 
  tune when Nick followed up his first
 
  effort with a bawdy comic novel Danica
 
  was a goddess a blonde perfect golden
 
  skin creature of myth or Sweden as they
 
  apparently call it these days it started
 
  to sell and it started to sell more and
 
  more sean thought I'd be the perfect
 
  candidate given that he knew I was
 
  horrific Lee single and we're great to
 
  go up to thousands over the course of an
 
  afternoon was a head spinning to be
 
  quite honest with you that year Nick
 
  sold four hundred and thirty thousand
 
  books on Amazon
 
  and now he sold the books to a
 
  traditional publisher cashing in a
 
  second time yeah six-figure of Arts
 
  which which is a lot for a first-time
 
  author Nick resigned from the police to
 
  write full-time he and Gemma have
 
  already made use of his new earnings
 
  I love Amazon they've bought me a house
 
 
  if you look at the bestseller of us
 
  typically you'll find nowadays that
 
  about one in five of our kindle
 
  best-selling books are self-published
 
  books via the kindle direct publishing
 
  platform
 
  that's a worry for these publishers
 
  gathering in London to discuss the
 
  future of their business
 
  Amazon undoubtedly the most important
 
  player in the book world today where the
 
  ebooks or print books they really are
 
  the central platform around which the
 
  whole publishing industry is operating
 
  these days there's no shortage of
 
  speakers to offer views on the future of
 
  the business but none from Amazon itself
 
  Amazon is notoriously secretive we'd
 
  like to have Amazon speakers here but
 
  the way they operate they tend to not
 
  want to do things as part of an industry
 
  conversation or as part of a dialer
 
  which I think it's a shame despite the
 
  threat from self-publishing whether they
 
  like it or not for many of these
 
  publishers Amazon remains their top
 
  sales channel they're torn between
 
  gratitude and fear the general feeling
 
  is it is terrifying and wonderful in
 
  equal measure
 
  there's no escaping the fact that Amazon
 
  is a dominant force and monopoly is
 
  never good for business and certainly
 
  never good for the consumers they're not
 
  in business to support publishers
 
  they're in business to make Amazon's
 
  successful as possible
 
  and some of the things that they do in
 
  there's a contrary to the things that we
 
  would like say you fight back and that's
 
  what I'm doing with our four Collins and
 
  I think we're doing is a business very
 
  well and you know bring it on there's
 
  plenty of fighting talk to keep the
 
  spirits up we are an industry that has
 
  survived hundreds of years we are going
 
  to be here in hundreds of years at
 
  Amazon and its founder Jeff Bezos are
 
  never far from people's minds publishers
 
  think about Jeff Bezos sort of like they
 
  might think about God as a kind of very
 
  distant inaccessible figure who is
 
  all-powerful and all-knowing and God
 
  loves us
 
  yes but God is vengeful the Amazon
 
  universe keeps on expanding the new
 
  Kindle still download books they also
 
  play Amazon's new TV and film
 
  productions there's a new set-top box to
 
  watch them on TV we packed in loads of
 
  entertainment or play Amazon games
 
  and now in some American cities there
 
  are Amazon grocery deliveries from vans
 
  advertising Amazon productions Amazon
 
  Prime you get something truly amazing
 
  and there's Amazon Prime a subscription
 
  service for free delivery which cross
 
  promotes other Amazon businesses you'll
 
  get access to the Kindle owners lending
 
  library where Amazon Prime members can
 
  borrow best-selling books for free the
 
  corona family in Seattle live the
 
  complete Amazon lifestyle we ask mom did
 
  you order Amazon and chose yep it's on
 
  its way they're fed entertained and
 
  provided with literature toys and almost
 
  anything they might want to buy all by
 
  one company with our hectic schedules
 
  and the kids with different activities
 
  we always need things right away you're
 
  kind of on demand shopping it's just
 
  been really good service force the
 
  Corelli's are living proof of the
 
  flywheel effect every amazon service
 
  they use increases their use of the
 
  others i have to say the amazon fresh
 
  because i liked it so much it made me
 
  want to use amazon calm even more and
 
  the families media consumption centers
 
  on the membership of Amazon Prime so you
 
  can watch movies if you're a Prime
 
  member its streaming to your devices and
 
  also if you have a Kindle you get you
 
  can borrow books if you have a Prime
 
  membership you don't have to pay we do
 
  we have four well there's different
 
  types of Kindles like basic Kindle
 
  Kindle Fire which is basically like a
 
  mini iPad for the Amazon generation
 
  visiting shops is just a waste of time
 
  it's a pain in the neck you just go into
 
  your zone you have to look for
 
  everything Amazon you just search it up
 
  with the press of a button
 
  it's easier jeff bezos isn't finished
 
  yet oh man
 
  he recently revealed something on
 
  american TV that caught the imagination
 
  of the world these are effectively
 
  drones but there's no reason that they
 
  can't be used as delivery vehicles take
 
  a look up here so I could show you how
 
  it works we're talking about delivery
 
  here we're talking about delivery so
 
  there's an item going into the vehicle I
 
  [Music]
 
  know this looks like science fiction
 
  it's not Amazon isn't claiming it's
 
  drones will be operating anytime soon
 
  but it's eye-catching video just happens
 
  to be released ahead of Amazon's peak
 
  pre Christmas sales period of course
 
  this is a completely impractical way of
 
  actually delivering products but it
 
  meant that everyone was talking about
 
  Amazon and so people would go to the
 
  Amazon website and then buy stuff it's
 
  first book today the company's valued at
 
  a hundred and seventy billion dollars
 
  with an empire that caters for more and
 
  more of its customers needs but some of
 
  its early staff think it's getting too
 
  powerful they're gonna own the book
 
  they're gonna own the formation that
 
  goes in the book they're gonna own the
 
  shipping there I mean it's just they
 
  can't own it all no so I have mixed
 
  feelings sometimes about Amazon
 
  sometimes I feel like surely there are
 
  consumer items that I should simply go
 
  downstairs and buy from the store around
 
  the corner and not do the easy thing
 
  which just find the laundry bags on
 
  Amazon and hit one click you know
 
  there's an element of guilt in there do
 
  you think you're turning us into lazy
 
  and perhaps slightly guilty consumers no
 
  I don't think so at all I think that
 
  anything we can do to make consumers
 
  lives easier including in their the
 
  shopping they need to do is giving time
 
  and money back to consumers that they
 
  can spend doing something else you can't
 
  actually have the company that Amazon is
 
  and have it care about what it's doing
 
  the ecosystem because it's actually
 
  designed from the ground up to be a
 
  shark like it's designed to dissolve and
 
  destroy other businesses by like
 
  undercutting them
 
  [Music]
 
  whether because of how it works or
 
  because of its sheer scale Amazon's
 
  increasingly on the radar of politicians
 
  and regulators especially in France for
 
  decades French law has stopped books
 
  being discounted by more than 5% and
 
  that applies to Amazon to the novelist
 
  or le Philip Ettie has a second life as
 
  Frances Minister of Culture with a
 
  particular passion for protecting the
 
  nation's book shops for newsela gurantee
 
  de la protección de una palabra
 
  biodiversity Pascal elicits an ecosystem
 
  he an ecosystem fragile universe one
 
  could check my own de cette ecosystem
 
  support obeah beaucoup l'ensemble done
 
  we need to hurt you or it is well
 
  through his own government and
 
  opposition are united in believing the
 
  existing restriction on book discounting
 
  isn't enough to restrain Amazon quicker
 
  Amazon it - croissant pull a beauty
 
  versity now a new law will also restrict
 
  Amazon's free postage and packing offers
 
  but nobody in this Paris book shop
 
  seemed to mind
 
  release the video page release area the
 
  treaty the condition cava you can expect
 
  their own negotiate - to any buyer the
 
  Minister accuses Amazon of trying to
 
  eliminate competition in the book
 
  business the movement via Amazon fiends
 
  at eg the Kincaid de marche don't read
 
  if you're happy with some plant don't go
 
  I found you dumping so deeply and
 
  fanciful to them being so afraid poor no
 
  I'd certainly I certainly wouldn't
 
  accept that charge I don't think we're
 
  trying to eliminate the competition I
 
  think that UK customers if I focus on
 
  the UK which I know best have access to
 
  a lot of different choices and prices
 
  one dimension on which retailers compete
 
  but books are only one industry which
 
  has complaints about Amazon mark
 
  Constantine's lush shops sell soap and
 
  other products the company invents and
 
  manufactures from its headquarters in
 
  Poole Dorset
 
   
  here's typical honey I wash the kids you
 
  can cut this have whatever size you like
 
  made with English honey beautiful smell
 
  there are no lush products on amazon co
 
  uk because lush decided it wanted to
 
  control all aspects of its retailing
 
  what upset constantine was what happened
 
  when customers tried to find them when
 
  you type in lush inside amazon you're
 
  then taken to products from a competitor
 
  so similar products to our own but they
 
  are in our house Constantine was so
 
  incensed
 
  he took Amazon to court they have traded
 
  off our name they then damaged our
 
  reputation and then we lose business
 
  because the customer thinks that we are
 
  not providing the quality that they
 
  expect from us lush won its case Amazon
 
  declined to comment but says it intends
 
  to appeal but Constantine has a bigger
 
  objection to Amazon while lush employs
 
  people in its British factories and high
 
  street shops and pays corporate tax to
 
  the British government
 
  Amazon's UK operations pay a lower rate
 
  of corporate tax through an Amazon
 
  subsidiary based in Luxembourg
 
  it's saying to society here's a
 
  marketplace but we're not going to make
 
  a contribution to you financially unlike
 
  other marketplaces like the high street
 
  we're going to reconfigure that and this
 
  is our business model so I think that
 
  that's a fundamental attack on society
 
  the choice of having a single European
 
  headquarters has nothing to do with with
 
  tax or anything else that's simply the
 
  only way we could operate a business of
 
  this complexity and scale for the choice
 
  to be in Luxembourg tax was one
 
  consideration
 
  the French are also concerned about
 
  Amazon's tax arrangements
 
  imagine fiscal representative on
 
  strategy European Vasa Amazon tip
 
  apartment not only hope
 
  Yankee Dublin exactly high school he
 
  moved fast boo strategy de producción do
 
  a segment on trapeze but we said very
 
  consistently is that we pay all of the
 
  taxes we are obligated to pay everywhere
 
  in the world and we will always do so
 
  however people may feel in Europe back
 
  in Seattle
 
  Amazon's tax affairs hardly raise an
 
  eyebrow in the United States tax
 
  avoidance is generally applauding you
 
  know this is a country that happened to
 
  throw a whole bunch of tea into the
 
  Boston Harbor when the British wanted to
 
  tax them on something that they thought
 
  was unfair and so it is not surprising
 
  at all to I think most people who follow
 
  Amazon that it is doing what it can to
 
  pay as little in taxes as possible both
 
  in the US and abroad for successful
 
  business Amazon has one unusual feature
 
  it doesn't actually make money
 
  hahaha well we are a famously
 
  unprofitable company since its founding
 
  Amazon's sales have grown spectacularly
 
  but its profits have been minimal basil
 
  says that's deliberate because he's
 
  still investing in new warehouses and
 
  new businesses it's very hard to beat a
 
  non profit business other companies have
 
  to make a profit or their investors will
 
  be angry jeff has successfully made
 
  people want to support a company that
 
  doesn't need to make a profit and that's
 
  an incredible business advantage however
 
  well Amazon's persuaded the markets it
 
  doesn't need to make profits all
 
  governments that it doesn't owe more
 
  taxes that company insists it's still a
 
  good corporate citizen we've collected
 
  and remitted more than a billion pounds
 
  purchased many billions of pounds of
 
  products from UK suppliers we spent over
 
  a billion pounds in the last five years
 
  just on the delivery companies who do
 
  the last mile delivery and we've created
 
  you know many thousands of jobs there
 
  are new jobs in this warehouse which
 
  only exists because of Amazon
 
  [Applause]
 
  awesome books were started in a spare
 
  room in reading just seven years ago by
 
  move enough med his brother for us it
 
  was really just getting the supply and
 
  almost Amazon could take care of their
 
  marketing and everything that would
 
  attract the sales that we needed they
 
  get books from libraries charities
 
  publishers anyone who wants to get rid
 
  of large numbers the company's software
 
  tells its staff whether each book is
 
  worth listing on Amazon keeping to sell
 
  elsewhere or can only be thrown away
 
    
  awesome processes 18 million books a
 
  year and sells around five million to
 
  individual buyers with Amazon the
 
  dominant outlet ultimately we wouldn't
 
  exist without Amazon and so our profits
 
  are their profits in a way and it's only
 
  fair that we have that symbiotic
 
  relationship where as we grow they grow
 
  in has adopted Amazon's customer centric
 
  ideas at the end of a the customer is
 
  dictated that online is more convenient
 
  and the price points are better for them
 
  and so the market has to adjust
 
  [Music]
 
  [Applause]
 
  that adjustment has created losses as
 
  well as winners your friendly local
 
  shopkeeper may feel the efficiency of
 
  online retail comes with a high price in
 
  terms of our relationships we will
 
  become more insular as a society we will
 
  sit at home in our rooms and we will
 
  type in what we need we won't talk to
 
  anybody you know we won't communicate
 
  our communities will become smaller and
 
  we won't see people and I don't want
 
  that take care bye bye now
 
  Linda decided she had to stop using her
 
  own money to support the business and
 
  the bookshop has now closed is it in
 
  Amazon's interest that book shots go out
 
  of business no I don't know I don't
 
  think so i think that amazon does best
 
  in an environment where there's a lot of
 
  thriving competition where a company
 
  that that appreciates a competition and
 
  it challenges us to do even better
 
  can anything stop Amazon
 
  well competition between online and the
 
  high street maybe taking a new turn that
 
  could leave Amazon playing catch-up it's
 
  to do with smartphones at the moment
 
  people go into shops and their can check
 
  prices on their app check it on Amazon
 
  find it cheaper and buy it so try
 
  something on in the shop in the shop but
 
  then buy it through a competitor and I
 
  think those retailers are waking up to
 
  this fact and trying to create better
 
  experiences in the store in Silicon
 
  Valley eBay believes we're about to
 
  witness a blurring of on and offline
 
  shopping it wants to partner with
 
  traditional retailers and has a whole
 
  demo area to show what's possible
 
  so Lisa clicks on these shoes loves them
 
  looks with some of the photos says you
 
  know what I'm gonna get these they're
 
  right down the street so what's
 
  interesting there is click and Collect
 
  with a new personal touch and she
 
  notices she can check-in automatically
 
  when she gets to the store fantastic
 
  so she places the order and she knows
 
  when she then walks into the store the
 
  store assistants gonna say hey Lisa
 
  welcome to the store we've got your pair
 
  of shoes ready we can do things with
 
  technology in the physical store to make
 
  people understand find and discover and
 
  then purchase product in a far better
 
  way some of these ideas already out
 
  there such as giant touchscreens to
 
  encourage customers to buy online even
 
  when they're out shopping think Minority
 
  Report right the movie this is this is
 
  the possibility right of sort of you
 
  take these vertical surfaces and turn
 
  them into engagement right where the
 
  consumers can actually interact
 
  and according to eBay Amazon's business
 
  model may not be as efficient as it
 
  looks today having your own fulfillment
 
  centers and many of them is one way to
 
  go it's expensive it makes you become
 
  you know a physical logistics company
 
  eBay's vision reminds us that old
 
  fashion shops weren't actually such a
 
  bad idea after all
 
  guess what they have product sitting
 
  there so why then build another
 
  warehouse that's all around those yet
 
  another place for trucks to show up and
 
  drop product and that kind of thing and
 
  instead take the inventory that's
 
  already moved close to that consumer and
 
  get it to them right from that point
 
   
  anyone trying to challenge Amazon will
 
  find its business is protected by its
 
  massive investment in technology
 
  especially as it expands into media and
 
  tech services today it's taking on much
 
  fiercer competition than shops
 
  in reality Amazon is competing with
 
  Netflix and Facebook and Apple and
 
  Google and and those are the companies
 
  that have the ability to undermine what
 
  Amazon has built all over those years I
 
  to watch all these little battles take
 
  place to see who's gonna win whatever
 
  happens Jeff and Mackenzie have done
 
  okay he's not worth 27 billion dollars
 
  according to Forbes magazine she's
 
  become a novelist and he's bought a
 
  prestigious newspaper The Washington
 
  Post and he started his own rocket
 
  company Blue Origin to bring space
 
  travel to the masses
 
  maybe one day it'll deliver Amazon
 
  packages to the moon at this moment in
 
  time boy it looks like Amazon is hitting
 
  on every cylinder but it is a moment in
 
  time and I think it is entirely possible
 
  as we go two years five years down the
 
  road things will change Amazon will be
 
  disrupted one day then you worry about
 
  that
 
  I don't worry about it because I know
 
  it's inevitable companies come and go
 
  and the companies that are the shiniest
 
  and most important of any era you wait a
 
  few decades and they're gone and your
 
  job is to make sure that you delay that
 
  date I sir I would love for it to be
 
  after I'm dead the Open University
 
  delves further into how businesses like
 
  Amazon continue to boom to discover more
 
  go to BBC co uk
 
  and follow the links to the Open
 
  University where you can also take part
 
  in an online survey
 
  next here on BBC to Scotland to mark our
 
  50th birthday
 
  Darryl brain host a special quiz all
 
  about to.