Many people know that Jeff Bezos is the richest person in the world and the founder of Amazon. They have seen pictures of him and perhaps heard about his high-profile 2019 divorce. But many are not aware of the darker side of Bezos' Amazon empire, including business ventures that raise questions about privacy, surveillance and product safety.
A Frontline documentary, "Amazon Empire: The Rise and Reign of Jeff Bezos," released in February 2020, exposes the backstory of the Amazon CEO's rise to power and the global implications of his rampant ambition and aggressive ventures.
It took Frontline a year to create "Amazon: The Rise and Reign of Jeff Bezos" and it includes many interviews with his top lieutenants, almost all of whom are men. What emerges from people who know Bezos and worked with him is not so much a picture of a power-driven despot as someone with uncanny visions of how people can be engineered and data can be exploited.
Customer Is King and so Is Data
As a Princeton graduate working on Wall Street, Bezos is largely credited with introducing the idea of basing financial analyses on data, an approach that had not been done before. He founded Amazon in 1995 as a seller of books, but even then collection of data was crucial to the business plan.
Right from the start, Bezos "treated the site as a laboratory where he studied customer behavior," says the film. According to Randy Miller, former director of pricing and product management at Amazon:1
"We could track how a customer navigated through the site. So we could see what you looked at; we could also see what you paused at; we could see what you put in your basket but didn’t order; we could see what you put in your basket and did order.
So that’s when we started realizing, man, this [data collection] is rich, this is rich rich rich. And so we’ve used it for everything."
Even when it only sold books, Amazon's ruthless business philosophy of using size to annihilate competitors was seen. Amazon could forego profits to gain market share and monopolize the marketplace, unlike smaller companies that couldn't afford to lose money. Undercutting competitors enabled Amazon to deal a deathblow to brick and mortar retailers who also had to pay taxes, unlike online Amazon.
Dennis Johnson, CEO of Melville House Books, says he was shocked when Amazon required 4% of profits to sell his books, which he considered a kickback. Miller admits that Amazon played dirty with booksellers.2
"In order to bring them into line, we would actually take them out of automated merchandising, take their prices up to list price. We would put references on the product page, their product page saying, 'You want this cheaper? You want this book on this topic for a way cheaper price? Click here.'
And we’d send them to whoever we thought their worst competitor was. That was how Amazon forced their vendors to comply. But that's an old Walmart trick. It wasn’t like Amazon created that."
New Initiative Solidified Amazon's Power
Two new initiatives turned Amazon into the force it is today, reshaping the retail marketplace forever. First was its decision to enlarge its offerings beyond books to include almost all merchandise. Sellers and manufacturers could avail themselves of Amazon's 12 million customers as Amazon became America's biggest "mall," reaching more customers than they could hope to on their own.
According to Yahoo Finance, 58% of Amazon sales3 are now from third parties. The second initiative was Bezos' decision to launch Amazon Prime in 2005, which was "the most successful membership program in history," according to Scott Galloway, a professor at NYU Stern School of Business.
Amazon Prime, a program in which customers pay a minimal yearly fee and receive free two-day shipping, later upgraded to one-day shipping, again stemming from Amazon's willingness to undercut competitors even when it meant foregoing immediate profits.
Though Amazon had few warehouses at the time, the bold move, according to James Thomson, formerly a senior manager and business head of Amazon Services4 at Amazon:
“… 'is one of the most important drivers of Amazon’s growth. When you go on [Amazon] and look to buy a product and it’s available in two days, delivered to your door anywhere in the country, that Amazon Prime program becomes a mechanism that keeps bringing you back as a customer to keep buying and keep searching for new products on Amazon."
Amazon also launched its own delivery service in 2013, creating a system that "would rival Fed Ex or UPS," says the documentary. The company made delivery vans small enough to be exempt from federal regulation and also dodged liability. When the vans were involved in accidents, which happened with regularity, Amazon claimed the vans "contractors" and it had no legal responsibility.