business news in context, analysis with attitude

Vox has an oral history of Amazon Prime, which starts out in 2004:

“Amazon was worth $18 billion at the time. Its online rival eBay, on the other hand, was an internet darling worth nearly $33 billion. If you were an outsider to both companies and you had to pick one as the future Everything Store, it might have been hard to imagine Amazon as the victor.

“But 15 years later, Amazon is worth more than $900 billion, compared to just $33 billion for its old foe eBay, which spun off its (more valuable) payment division, PayPal. And the Amazon Prime membership program is perhaps the biggest reason why.”

With it, the story says, “Amazon single-handedly — and permanently — raised the bar for convenience in online shopping. That, in turn, forever changed the types of products shoppers were willing to buy online. Need a last-minute gift or nearing the end of a pack of diapers? Amazon was now an alternative to the immediacy of brick-and-mortar stores.

“But the idea came with huge risks, and it spurred real tension inside Amazon. Some managers resented that their projects appeared to be deprioritized for a secret program they knew little about. Others feared that Amazon’s top customers were going to abuse the program and ultimately bankrupt the company with soaring shipping costs.”

You can read the entire history here.
KC's View:
Jeff Bezos wasn’t interviewed for the piece, but a number of other people were, and they recall him saying things like, “I want to draw a moat around our best customers. We’re not going to take our best customers for granted.”

And: “I’m going to change the psychology of people not looking at the pennies differences between buying on Amazon versus buying somewhere else.” The goal was to make Amazon the default position for many consumers … and to a great degree the company has succeeded.

Brilliant. And the companies that have taken their customers for granted, that have not endeavored to change the psychology of shoppers so that they are the default choice, really only have themselves to blame.