Amazon’s Pandemic Savior Complex
In a mind-boggling image makeover, the most maligned company on Earth is now positioned as a public good
Year after year, Jeff Bezos and his Amazon juggernaut have claimed bigger and bigger chunks of a growing and sweeping collection of industries — electric vehicles, cloud computing, movie making, and gourmet foods. But now Amazon has improbably also become the most central economic player in the country apart from the Fed itself — the omnipresent channel for what seems like all surviving commerce as Covid-19 increasingly brings business to a standstill.
Yet Bezos has achieved an even bigger triumph, and that is managing in the midst of the pandemic to utterly transform Amazon’s public image. From a company long demonized for crushing small business, Amazon is now arguably a public good. Bezos and his vast “everything store” — its network of warehouses and one- and two-day transportation — have met this unforeseen and unprecedented moment with little visible fuss, exhibiting the apparent singular ability to stock every U.S. household with food and other necessities as long as we need them delivered to our doorstep. As long as the pandemic persists, Amazon will keep all 327 million Americans unstressed, in addition to hundreds of millions elsewhere on the planet, at least as far as essential supplies go.
But now Amazon has improbably also become the most central economic player in the country apart from the Fed itself.
“It’s the Amazonification of the economy,” says Sridhar Tayur, a professor at the business school at Carnegie Mellon University. Or one may want to call it Amazonization — Amazon’s power is not only what it has accomplished to date, but extends to how it’s built to pursue anything Bezos sets his eyes on. He chased books before anyone realized they could be a launching pad to something larger. He was a first mover for the cloud before rivals knew it was the new thing. He has changed the expectation of free, two-day delivery of nearly any item into an entitlement. As a literary inspiration, he called the whole enterprise the “everything store,” which most people thought was crazy—until it became clear he was serious and was pulling it off. Never — not in Sears’ heyday nor Walmart’s — has the U.S. seemed so dominated by a single retail outlet.
That doesn’t mean Bezos has won every contest, but very few entrepreneurs can convincingly mount just about any attack; Amazon has convinced everyone it can. That’s why, in 2018, Bezos instilled fear in the entire pharmacy industry by buying PillPack, the online drug store. The share prices of CVS, Walgreens, and Rite Aid plunged as a result and went back up only when it became clear that actually, they are in a strong defensive position.
In recent days, as cities and states have become paralyzed, shutting down bars, restaurants, and small businesses and considering Italy-like, shelter-in-place orders, Amazon has appeared to be taking business from the giants of the $1.2 trillion grocery industry like Safeway and Kroger. And if people are not going to movie theaters, a $19 billion business, many are turning to Amazon Prime Video.
But two years aggravating much of the country with a high-handed grab for expensive tax breaks from struggling cities to host a second Amazon headquarters, Bezos and his company’s appear to be fully forgiven, if begrudgingly. ”The true haters are always going to hate,” says Erik Gordon, a professor at the University of Michigan. “[But] the Amazon resenters might actually see the utility Amazon can bring them.”
Just last week, Bezos seemed to outdo his usual chutzpah with the announcement of his newest venture, Just Walk Out. It is a build-out of the technology in Amazon Go retail stores, where you walk through the front door, pick out your stuff, and leave without physically paying, as sensors understand who you are and what you’ve put in your cart. Bezos’ brainstorm was to invite his big legacy retail rivals — Walmart, Target, and so on — to adopt the system as their own on an open-source basis, of course, the Wall Street Journal reports. Walmart and Target declined (other retailers such as OTG, the airport restaurant and retail vendor, signed on).
Was Bezos simply trolling his most prominent, current prey? We can’t know. But the episode bears the usual hallmarks of Bezos attempting, regardless of the bodies in the way, to get ahead of new technology — in this case, cashierless. The way he sees it, in the stores of the near future, we will never pull out our wallet. And he will reap big profits through license fees for his system, along with the tracking data to be scooped up by store sensors. It won’t be a Bezos invention: In China, Alibaba has given new life to mom and pop stores by selling them digitalization-in-a-box kits. But, in terms of visionary execution, it is pure Bezos. (And in terms of timing, it couldn’t come at a more prescient moment with social distancing the new norm.)
Nothing, of course, is stopping other retailers from upping their game and wrong-footing Bezos. One or more of them can unveil a showstopper. What we see instead is Amazon rivals not blindsiding Bezos, but playing defense.
Walmart more than anyone is resisting Amazonization. It has asked some of its suppliers not to use Amazon’s cloud services, for instance, the Wall Street Journal reports. Walmart’s most optimal outcome with this strategy is becoming one of a handful of surviving big retailers who, alongside Amazon, run “omnichannel” operations straddling e-commerce and physical stores, suggests Dan Ives, an analyst at Wedbush.
The PR dichotomy persists — Amazon grows bigger and bigger, and Bezos stirs controversy by making tin-eared whoppers. For instance, during the current crisis, as businesses have shut their doors for at least a couple of weeks while the virus wends through the country, many CEOs have conspicuously proclaimed that everyone stays on the payroll. Not Bezos. Employees of Whole Foods, an Amazon subsidiary, were told to use sick days to cover their time off.
As long as the pandemic persists, Amazon will keep all 327 million Americans unstressed, in addition to hundreds of millions elsewhere on the planet, at least as far as essential supplies go.
Eventually, this moment of crisis will pass. When it does, there is no guarantee that Amazon will still be regarded as a public good. In fact, the pre-virus drumbeat to break up Amazon along with the rest of Big Tech is likely to resume.
Maybe that’s why one feature of Bezos’ current posture is how cautious he is treading, as though to be careful not to gloat. When a Tennessee man last week cornered the market on sanitizer and began to price gouge, Amazon threw him off the platform, eBay followed suit, and hate mail ensued. Ultimately, the man was forced to give away his entire inventory to charity. The e-commerce giant has also cracked down on virus scammers promising miracle cures.
With Amazon’s pandemic-era cachet surging, the company this week announced it will hire an additional 100,000 warehouse workers in the U.S. and raise hourly pay for all its fulfillment and delivery employees in the U.S., the U.K., and Europe, by $2, £2, and €2, respectively. In the U.S., that will mean $17 an hour. While doing so, Amazon also informed merchants selling on the platform that until at least April 5, it will no longer ship orders of anything but goods essential during the Covid-19 pandemic, such as food, household staples like toilet paper, and medical supplies.
The impression is of a company staking out high ground, said Gordon, the University of Michigan professor. “This is an opportunity to do good.” For Bezos’ many skeptics, the suspicion will be that, for Mr. Everything Store, it’s only a decoy for what’s next.