Unable to reshape the traditional retail industry, suddenly entering the game of Google, Meta

Unable to reshape the traditional retail industry, suddenly entering the game of Google, Meta

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2023-02-17 10:05:45

Investors at Amazon’s meeting earlier this month were greeted by an unexpected guest: the group’s CEO, Andy Jassy.

Unlike Apple’s Tim Cook, Meta’s Mark Zuckerberg or Alphabet’s Sundar Pichai, it’s rare for an Amazon CEO, whether Jassy or his predecessor Jeff Bezos, to accept a quarterly meeting to answer questions. Conundrum from Wall Street analysts.

“This meeting is great to be in,” Andy Jassy told analysts.

Jassy knows she has to interact more with Wall Street this year, after a rough start at Amazon. Since this man took over the empire in 2021, Amazon’s capitalization has nearly halved from its peak. Last year’s drop in e-commerce revenue for the first time in its 28-year history also led to layoffs affecting 18,000 employees – the largest number ever recorded of any public company. What a great technology.

As the successor nominated by Jeff Bezos himself, Andy Jassy has received most of the support from Wall Street, up to the present time. His vision for Amazon’s future has also come to the fore for investors to see.

According to the Financial Times, Andy Jassy, ​​a man who has worked for Amazon since 1997, is facing a series of challenges and a long-term strategic focus. The first challenge is to contain the costs of scaling, while satisfying lawmakers and the general public, who have raised doubts about the e-commerce giant since the pandemic. .

Meanwhile, Andy Jassy’s long-term challenge is similar to what Tim Cook faced at Apple: succeeding a visionary, influential leader and somehow making his mark. . Everyone wants to know how the 55-year-old got through “Day Two” – the unpopular term Bezos uses to describe a company’s “stagnant” after a long period of growth. at “Day One”.

Amazon when leaving Jeff Bezos: Unable to reshape the traditional retail industry, suddenly encroaching on the game of Google, Meta - Photo 2.

What was once thought to be the endless ambition Jeff Bezos set for Amazon has disappeared under Andy Jassy.

Before the pandemic, Amazon’s sales boom in 2020 thanks to many high-margin operations. However, inflation and a drop in demand have resulted in a net loss of $2.7 billion for the group for 2022. Still, Jassy remains optimistic.

Long-lived companies have to find ways to adapt and navigate different phases. This is just one of them,” Jassy told the Financial Times.

During the pandemic, Amazon was like an “emergency service”. The blockade order made online shopping the throne, and helped Amazon increase revenue by 38% in 2020.

Confident it will grow fast and strong, in just 18 months, the retailer has doubled the size of its logistics network, opening hundreds of new warehouses and delivery centers, even a shipping center. goods by air. At its peak, Amazon had 1.7 million employees, not including delivery drivers.

New businesses like grocery, advertising and healthcare are still in their infancy, but they seem poised to become the company’s new mainstay. An $8.45 billion deal to acquire the popular movie studio MGM showcases Amazon’s ambitions in an era of boom.

However, just as these costly decisions were supposed to start paying off, the situation took a turn for the worse. Jassy now blames external factors. “We thought we were out of the pandemic,” Jassy said. “However, the tension of geopolitical conflicts, inflation and the slowing economy pulled us back. There’s a lot of things you don’t expect.”

Amazon’s decision to cut is arguably the most influential among US tech giants. While the 18,000 figure represents only a fraction of Amazon’s total workforce, Jassy said the company won’t immediately cut it all.

Amazon when leaving Jeff Bezos: Unable to reshape the traditional retail industry, suddenly encroaching on the game of Google, Meta - Photo 3.

Amazon under the new CEO: Unable to reshape the traditional retail industry, suddenly entering the game of Google, Meta

What was once thought to be limitless ambition and passion under Bezos suddenly disappeared under Jassy. Jassy still ignores any suggestion that Amazon’s talent hoarding during the pandemic is irresponsible. “The hiring rampage is because we think about opportunity. When the company is growing well, it makes sense to double in size. And then the economy changes, the macro changes,” said Jassy.

On the operational front, little seems to have changed at Amazon under Jassy. He still starts meetings the way Bezos usually does: asks the presenter to write a six-page memo and asks attendees to read the whole thing in silence before discussing.

I don’t think that will change. It’s an extremely effective way to convey information,” said Jassy.

Additionally, Jassy hasn’t changed any of Amazon’s core leadership principles, including frugality.

The only difference is that while Bezos chooses to distance himself from politicians, Jassy is a frequent visitor to Washington. “I try to take the time to learn some of the concerns for Amazon. If you don’t spend enough time on it, people will fill that void. We try to make sure we have open conversations,” said Jassy.

So far, however, these efforts have not paid off much for Amazon.

Most recently, the FTC also considered a lawsuit against Amazon, such as its treatment of millions of third-party sellers. In response, Amazon accused the FTC of bias and harassment of executives.

Amazon when leaving Jeff Bezos: Unable to reshape the traditional retail industry, suddenly encroaching on the game of Google, Meta - Photo 4.

Amazon is encroaching on new business areas, especially artificial intelligence.

According to the Financial Times, Amazon is encroaching on new business areas, especially artificial intelligence. While AI and modern technology can be found on AWS and Amazon’s own operations, many fear the retailer is falling behind in the race with Microsoft and Google.

Amazon must be aware of the big trend. Amazon needs to have its strategic response,” said Jassy, ​​adding that he saw an opportunity if he partnered with small companies. One of them is Stability AI — a competitor to OpenAI.

I think that’s interesting – what can happen with AI. Most large, highly technical companies like Amazon have been working on large, innovative AI models on their own for a long time.‘, Jassy confirmed.

Meanwhile, the grocery business at Amazon is disappointing investors. Five years on from buying Whole Foods for $13.7 billion, Amazon has yet to reshape brick-and-mortar retail. Revenue from its physical stores grew only 10% during the period. According to experts, Whole Foods’ store format is not consistent, nor does it provide the right delivery centers.

Before that, Amazon tested the Amazon Go convenience store, where a camera can record what a shopper chooses and automatically debit it. The technology works with amazing accuracy, but efforts to sell it to retailers are limited. The company also plans to open hundreds of Amazon Fresh stores with the size of supermarkets, and act as small distribution centers for online customers, but so far, only a few dozen stores have been opened. open.

Amazon when leaving Jeff Bezos: Unable to reshape the traditional retail industry, suddenly encroaching on the game of Google, Meta - Photo 5.

There is still one area of ​​business where Amazon can set expectations: advertising on the website.

However, there is still one area of ​​business where Amazon can set expectations: advertising on the website.

A year ago, Amazon – a retailer with a history of nearly 30 years of development did not disclose the size of the advertising business. By this year, this division is estimated to be worth $38 billion with a respectable growth rate of 19% over the same period in 2022.

Amazon’s increased offering of advertising services on the website, in the context of Facebook’s limited targeting capabilities, has changed the order of the digital advertising industry. Amazon has now risen to third place in the global digital ad market with a 7.3% market share, according to Insider Intelligence.

According to investment bank Cowen, after Google and Facebook, more and more people are choosing Amazon as a potential advertising platform. A survey has shown that there continues to be “widespread interest among advertisers” in the desire to increase Amazon budgets in 2023, with 54% of Amazon advertisers saying they will continue to spend. more for this retail site.

We started investing more in Amazon and moving our budget away from Facebook and Google. Amazon sales to grow about 600% by 2022,” said one Amazon advertising client. “Changes to the performance of those platforms forced us to reconsider. The amount spent on Meta is decreasing“.

According to: Financial Times, CNBC

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