Has it gotten to the point where the—where Amazon is essentially sort of the public marketplace online; in terms of its size, in terms of its power, that it really demands more transparency in order for people to want to sell there because it is the main place to sell? Should there not be more transparency given that—the fact that it’s basically become the public marketplace online to sell things? So how much transparency does Amazon need given how big it is today? In the United States, Amazon accounts for over 50% of all online product search, which is staggering.

So what that basically means is over 50% of people online looking to learn more about products, they’re not starting on Google; they’re going to Amazon, and they’re looking to see what Amazon has to solve their product problems.

In Europe, in many of the European countries where Amazon has a marketplace, Amazon has more than 30% of the same type of product search share.

And certainly in Europe, we’ve heard 30% is the number that gets the EU trade regulators very interested.

In the United States, there’s less interest at this point among different regulators, but certainly in time, I suspect some will start to ask questions.

Amazon—at the same time that Amazon continues to be a very important player for product search and for product sales, Amazon’s perspective has historically been that everything they do is focused on creating a better and better customer experience.

If Amazon can create a marketplace with more selection, lower prices, more availability, faster delivery, how does that make things bad for customers? Part of the regulatory issues in the United States, anticompetitive regulations, a lot of it is written around the customer and understanding, is this bad for the customer? And I would argue that part of what we need to do as a country as we regulate large organizations, whether that’s Amazon, whether that’s Facebook, whether that’s Google, whether that’s other types of companies, we have to ask the question: It’s not just the short-term implication; it’s the long-term implication.

If you have a marketplace that is actively looking to drive down retail prices, well, you and I, as customers, we like lower prices.

The problem is in the end, if I’m a brand, and I’ve invested heavily in creating a high-quality brand, and I want my brand to be sold at $50, and it’s sold at $50 everywhere else, but on Amazon it’s sold at $40 because there’s some unauthorized sellers or some gray-market sellers that have access to the product that have chosen to sell it on Amazon for a much lower margin, you have a situation now where every other retailer and every customer anywhere can go on Amazon and check the price and say, “Gosh, it’s cheaper on Amazon than it is anywhere else, ” and even if Amazon’s just a small, core part of the full retail industry, whether that’s in the United States, whether that’s in Europe, if it’s only a small part, the impact of what happens on Amazon from a pricing perspective is felt throughout all different retail channels.

And that’s the challenge the brands today have with Amazon.

Customers don’t see it yet as a challenge.

But if brands are feeling pressured because they can’t control distribution, and ultimately pricing on Amazon gets to be cheaper, you have a situation where the brand has to deal with all of its retailers complaining that Amazon is cheaper; the brand is frustrated because there’s all this noise; the brand may not be as willing to launch new products because, lo and behold, it will somehow end up on Amazon, and the pricing they want will be hurt.

If brands don’t want to launch new products, customers do lose.

And they definitely lose in the long run because we need new products.

We need new ideas to come to market.

We need opportunities to get new colors, new flavors, new bundles.

If we don’t see those, as a consumer, we stagnate, and we say, “Oh, gosh, it’s still the same color as it’s always been.

” Even brands like Tide, there’s always a new and improved version, and there’s got to be new and improved to continue to find ways to keep customers excited about products.

If brands don’t launch new and improved, then we end up in a situation where we just go back to buying generics and we buy little plastic doodads to flip pancakes in our kitchen.

I want—I want a branded version, because the branded version comes with brand promises that offers me certain expectations of what I’m going to get.

If I go on Amazon and I look at all these products, many of them are brands that I as a consumer have never heard of, and that’s OK, but those companies have to work hard to build up my expectations about what I’m going to get as a consumer.

It costs money to build up expectations.

I’ve got to do advertising; I’ve got to do product development.

If my prices are always cheaper on Amazon and I get all this noise from all my retailers elsewhere, it becomes very frustrating as a brand to launch new products.

And so if the new products don’t happen, as consumers, we definitely do lose.

And the power of one marketplace, Amazon’s Marketplace, to determine all of this seems rather unprecedented.

We haven’t seen anything like that in terms of how their power over the pricing, their power over the brands, their power over all sorts of businesses, it’s essentially determining what the market is.

A long time ago, Amazon made a decision that as it grew and created more profits for itself, it would take those profits, reinvest them back into more infrastructure, but also invest them back as lower prices for consumers.

Most companies today, if they become more efficient, they’re able to create larger profits for themselves.

Larger profits keep shareholders happy.

You know, it’s a wonderful situation.

Amazon made the decision, let’s go long term.

Let’s take those profits and continue to create lower prices.

If we create lower prices, customers want lower prices.

They want lower prices today; they want lower prices tomorrow.

If I can create more catalog, more options for more products next year through lower prices, you’re going to come back next year as a customer and buy even more products.

We’re now in a situation where, unlike most companies, Amazon has taken that 20-, 30-year view and said, “I need some more time before I’m profitable.

” One of Jeff Bezos’ greatest offerings, greatest accomplishments, has been his ability to get Wall Street to accept the fact that for 20-some years, Amazon wasn’t going to be very profitable, and that’s OK, because they’re building infrastructure that will create huge opportunities for them to gain scale and gain customers and gain business.

In the last couple of years, we’ve seen how Amazon has been very successful in both being profitable, but also that scale is becoming very apparent.

When we look at what’s it going to take for Amazon to keep growing the scale, Amazon is now having to expand into other countries because they’ve created such an advantage for themselves certainly in North America, certainly in parts of Europe, as they add new marketplaces around the world.

Jeff Bezos has said he doesn’t know customers anywhere in the world who don’t want selection and low prices, and Amazon’s taking that selection-and-low-prices concept all over the world.

… Tell me about Amazon pushing into gathering other sorts of data and, for instance, with Alexa or facial recognition technology.

Bring me through storywise where that happens and why that’s happening from your perspective.

What are they looking to do there? Now, there’s been a lot of attention recently with regards to facial recognition software.

Like most things on Amazon, projects get rolled out; they’re hardly perfect on day one.

Amazon’s really, really good at launching products that are 80% ready, and that last 20% they continuously upgrade, upgrade, upgrade.

And in many ways it feels like changing the engine on the airplane midflight.

It’s exhausting to change things when you already have only a million customers using something, or only 10 million customers.

But Amazon makes those changes because they want to start to generate revenue, generate feedback from millions of customers using technologies.

There are privacy issues galore with regards to how Amazon collects data and how they, in the case of facial recognition software, how they actually share it with other organizations.

Historically, Amazon has collected all this consumer data and kept it to itself.

Facial recognition software is a little bit different, and I’m not a lawyer, I’m not a privacy advocate, but certainly there’s pause for thought around how is Amazon going to use this; how are they going to improve the technology to a point that if in fact it is, in fact, made available broadly to organizations that, in fact, it doesn’t end up hurting huge numbers of people, which the media has certainly talked about some of the challenges with the accuracy of the data to this point.

None of this surprises me that Amazon is building this.

It’s yet another situation where they figured out how to collect a lot of data, build the database, leverage the database, figure out how to put an offering behind the database.

And granted, in this situation, there’s privacy issues which there hasn’t been historically.

But none of this is particularly surprising.

… What are the questions that should be asked about where Amazon is headed in terms of its use of all of this data it collects on us? Amazon is a collection of literally dozens of companies, but there’s one database; there’s one customer data warehouse.

And so as we start to look at how do you create barriers or borders within that data warehouse so that you can’t take this set of information about a customer and merge it with this set of data about a customer to create certain insights that quite frankly make people very uncomfortable, I suspect what we’re going to see is people asking the questions around where are those barriers supposed to be, and how do we make sure those barriers do in fact remain in place so that an Amazon employee can’t look on one side of the wall, then go over to the other side of the wall and look on that side of the database and be able to pull two pieces of disparate information together? … You represent brands, right? I mean, you represent brands that are selling on Amazon.

Are you seeing brands that are being squeezed by Amazon at this moment? I represent brands today that face a number of challenges with Amazon, whether it’s being told that their products are going to be reimbursed less and less each year by Amazon, whether it’s Amazon saying, “If you want your products to actually sell, you’re going to need to spend more and more money advertising your products on Amazon.

” In all, the cost of doing business on this Amazon channel is getting higher and higher for brands.

And that becomes a situation that’s very challenging for brands that have become potentially over-reliant on this channel where there may not be a lot of good alternatives, especially online, for those brands to sell their products.

Is that monopoly power? … One may ask whether Amazon is demonstrating monopoly capabilities today.

When I worked at Amazon, we had training specifically on the use of terms like “monopoly.

” We were not allowed to use a term like “market share.

” Amazon has what’s known as “market segment share.

” What is “market segment”? What is “market segment share”? I don’t know, but I know that the lawyers at Amazon feel that those terms are much safer than using terms like “market share.

” When you have market segment share—and here’s where I think this is going— people will argue that certainly in the United States, Amazon represents about 4% of all retail activity.

Is 4% big enough to require extra attention? If we take that same 4% and we look online, Amazon’s share of online consumer sales last year I believe was somewhere around 47%, 48%.

That’s starting to become large enough that I would say that they certainly have a clear presence in online commerce for consumers.

And so at some point, this is where the regulators need to step in and ask the hard questions around how big do you need to be in whatever segment you choose to call yourself being part of, how big do you have to be before someone says we need to carefully ensure that consumers have choices, whether that’s channel choice, whether that’s product choice, whether that’s pricing choice? We need to ask those hard questions to make sure that Amazon isn’t throwing its weight around too much.

What would be so dangerous about using the word “market share”? Why would the lawyers worry about that? What does it connote? What does “market share” connote? … You’re asking me a legal question I don’t know the answer to… This term “market segment, ” which I’m sure will confuse some people when they hear it—what is a market segment? Well, market segment is whatever you choose to make it.

So if somebody said, “Well, how big is Amazon’s electronics business? Is it big enough that they have market power?, ” market power is really where we start to get into interesting anticompetitive discussions.

If you can’t define what segment you’re playing in, then it’s hard to define how big a player you are in this segment that nobody knows how to define.

So when we were asked to use the term “market segment” and “market segment share, ” in essence it’s a polite way of saying, “I’m not going to talk to you about how big we are and how important we may be in a consumer’s consideration set.

” It’s a clever way to change the conversation.

I don’t think Amazon wants employees running around talking about market share.

That would be I think a dangerous precedent and one that I certainly understand why they wouldn’t want tens of thousands of employees publicly using terms like that.

Anything else the lawyers advised you to say or not say when you were there? Any other verboten terms or forbidden terms? I don’t think so.

So “market share” was something they were really concerned about.

So going back 10 years ago now, there were people in Amazon who were already starting to think about these questions enough that we were being trained to use terms like “market segment share” versus “market share.

” Clearly somebody with the necessary legal training or PR training recognized that Amazon was growing very quickly and may well be in a situation that externally, questions like “market power” or “market share” might in fact be asked by other groups.

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