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Q: Has the nature of the company's challenges changed as it has pulled away from the dot-com pack? A: People recognize that in this market, having a leading market position is valuable and gives you more options. We have not really changed our strategy. As our sales have gotten bigger, it makes more sense to focus on operational excellence, which are the kinds of projects that lead to more focus on profitability. When you have revenues on the order of $1 billion, it starts to make a sense to try to save a basis point here, 100 basis points there -- if it adds up to 1% of sales, that's a very big number. Q: Can you acquire more companies now that dot-com stock valuations are down so far? A: Yeah, sure. One of the things that is likely to accelerate is the opportunity for consolidation. If a company that you were marginally interested in at one price is all of a sudden half or a third or a tenth as much, then maybe what used to be marginal becomes a yes. The big question is, at any price, what are you actually buying.... Are you buying a brand name...customer relationships...technology? Are you getting great, talented people? It's very easy at the investment-banker level to not really understand exactly what the benefit is. Maybe you haven't really bought anything. Q: You have said Amazon.com plans to do more overall than it did last year. A: It's not just in terms of opening stores. It's also international projects. Every year, we've managed to do more than we did the previous year, and I think we will this year. We are operating in an unconstrained market-size opportunity, and in an area where the underlying technology...improves every day. Either one is an unusual wind at your back. The two together makes it a truly unique situation. Q: Has your conception of Amazon.com's business model changed over the past year or so? A: The only thing that has changed is that we want to layer on top of our previous business model this Amazon Commerce Network business model. [The ACN is the set of Amazon.com partners, such as Drugstore.com, that pay Amazon for exposure on its site.] The retail businesses, which are the backbone of what we do, need to be driven toward profitability on their own, without benefit from that commerce network.... Our goal is not to...sell the razors at a loss and make it up on the razor blades. Q: A lot of people wonder if each of these businesses can in fact be profitable on their own. A: We certainly think they will be. The U.S. books business was profitable. We would try not to enter into a business area where we didn't think it was possible. As the technology improves, other businesses that might not have been possible five years ago become possible. It's easy to contemplate revolutionizing the [consumer] electronics business, for example -- the customer experience in electronics stores is terrible. And those markets are bigger than books. Q: How has your own job changed as the company has grown and you've added experienced managers from traditional companies? A: On a daily basis, I still do a lot of the same things, I just do them at a different level of detail. Of course, I preserve certain traditions, like working in the distribution centers at Christmas, because I like it, and it's very useful to see everything and know what's going on. I still spend a significant amount of my time doing e-mail. I still spend about a third of my time traveling. I still spend a significant amount of time helping to recruit. That's one of the most highly leveraged things I do. Q: There's been a lot more sentiment lately favoring traditional companies' advantages as they come online. How do you see them as competitors? And do you aim to link with any of them? A: We're agnostic on that second point. For the Amazon Commerce Network, if we found a good partner who was obsessively dedicated to the customer experience, who wanted to provide one of the stores on our Web site, that would be great for us.... [Clicks-and-mortar] is a clever name, but nobody's ever actually come up with what the real synergy is between physical stores and online stores. Q: In surveys, online customers say they want to be able to return stuff to stores. Not true? A: It's a total nonstarter. That one's just not real. Our return rates are incredibly low. The right way to deal with that issue to to give buyers so much information on the Web site at the time of purchase that they always purchase the right thing. You try to eradicate that problem at the root. Plus, we make returning stuff to us as easy as we can. In our electronics store, for instance, we send UPS to your house to pick it up and bring it back to us. Q: So do you not see these clicks-and-mortar companies like Walmart.com and Kmart's BlueLight.com as a particular challenge to Amazon.com? A: No, that's not what I mean. When I talk about clicks-and-mortar, I'm very specifically thinking about synergy between offline and online. Now, if a great physical retailer sets up a Web site, I don't think they're going to get any synergy between the two, but they do have certain advantages in the marketplace. One of those is that they have trusted brand names in many cases -- that's a huge head start. They have relationships with suppliers -- that's a huge head start. In some cases, they also have good access to capital. So I would not overlook those. Q: Recently you talked about possibly spinning off fulfillment operations such as distribution centers. Is that in the cards anytime soon? A: It was a little bit misreported. It was a very hypothetical question, and I gave a very hypothetical answer. In fact, I'm not even sure fulfillment would be the right thing to spin off. Distribution centers at this point are very, very core to our business -- one of the places where we derive huge competitive advantage. Q: Do you have a larger mission for Amazon.com than just to sell everything you can? A: The analog for what we're trying to do as earth's most customer-centric company is Sony in Japan. We see our mission as being bigger than ourselves and what we will do directly. So if you go back and look at Sony's early mission, they wanted to make Japan known for quality -- not Sony, but Japan. They did it. In a similar sort of way, we want to raise the worldwide standard for customer experience and customer service -- something that when we're all 80 years old, we can look back on and be very proud. Q: How has your life changed with the birth of your son, Preston? A: I have an even larger respect than before for mothers. I didn't know, or I would have been nicer to my mother as a teenager. I've never seen my wife happier or more tired. Q: And you? A: I'm hopeful that sometime over the next 18 years, I'll get a chance to pull more of the weight. I've changed some diapers and done some stuff, but in these early days, the physical demands of being a mother are very high. I've always worked about 65 hours a week, and I do the same thing now.... Having little Preston has cut into my ability to see movies and watch TV, but he has not cut into my ability to work for Amazon.com. Q: Whom do you look up to? A: ...Oprah Winfrey. She is the most inspiring person I ever met. She is somebody who is totally dedicated to using her life to improving other people's. I think it comes across when you see her show. |
