More Fulfilling Commerce.
When I joined Amazon for my MBA internship, it was my first step toward applying my B2B operations mettle to a consumer-driven brand on a journey that continues to this day. What I came to appreciate is not only how Amazon boldly invests in its operational infrastructure for the long haul, but also how it embraces consumer-first programs that reduce friction throughout the value chain.
Large Scale Success Starts with Small Experiments
In nearly 30 years of business, Amazon has always been about commerce, but how did it become an experience company? In 1999, Amazon introduced one of many significant innovations in e-commerce: one-click checkout, a streamlined experience for consumers that also targeted the pervasive problem of abandoned online shopping carts. Fast forward to today, this bold experiment is one among many thousands, or even millions, that have shaped what Amazon excels at everyday: bringing together the unique insights of what customers value with an unrivaled operational prowess that yields better experiences for millions of customers.
Create enduring customer value that is reinforced by your operational mastery.
Operating at the Heart of Experience.
In 2004, 80% of Amazon’s offering consisted of books, music, videos, and DVDs. These relatively homogeneous items were easy to receive, stock, pick and pack in a growing network of massive fulfillment centers. This type of inventory also moved quickly, turning over with changing tastes in culture and entertainment.
That summer, I explored an intriguing intersection of data science and operations. “Earth’s biggest bookstore” was a recognized destination for New York Times bestsellers and blockbuster DVD releases. If we could anticipate which titles would spike before they arrived at the warehouse, we could funnel them through a dedicated operations "shortcut" to minimize handling and deliver products to customers faster. Top titles consisted of millions of units, so the potential impact was nontrivial. With some fulfillment centers spanning the equivalent of 13 football fields, an optimized pick path could save miles of effort per employee, plus valuable time and money.
Success demands running the business while changing the business.
It didn’t take long to determine that Amazon’s vast selection has a very long tail, and beyond the handful of obvious fast movers, getting predictive within a narrow sales spike is actually extremely difficult to get right. Customer identity and transactions tell us something about the past, product correlations were still relatively uncharted territory, and the products that spiked sales were often the catalogs of recently deceased pop stars whose marketing value peaked at the news of their death. We weren’t in the business of predicting whose star would dim next.
Earned Secret
I learned some valuable lessons that summer. The fast pick strategy was a test that I was determined to prove, but the volatility of consumer demand didn’t justify the expense of running an exception to standard operations.
There is far greater value in getting good at the core that serves the larger population. The hypothesis was valid that faster, free shipping shifts market share and leads to greater customer satisfaction, it would just be executed on a whole different level. One year later, a revolution for "all-you-can-eat" two-day shipping was launched as Amazon Prime, raising the bar for commerce in the 15+ years since.
A healthy culture of experimentation tells us a lot. Sometimes the value of a good experiment is to rule out something you just shouldn't do.
Reflections
The challenges of being relevant to consumers and accountable for financial results are really the same whether you’re an emerging startup or an established platform, but the decisions you make can break a sweat either way. Luckily we don’t need to know all the answers right out of the gate, but there are a few principles we can take forward as we introduce a stronger culture of empirical practice to ongoing business:
- Good experiments turn hypotheses into reality. When growth is the fundamental source of value, growing up with your customers is a multilateral strategy. It’s not a fixed solution. It’s about building the muscle, connective tissue, and stamina to continually evolve.
- It's about deep customer learning in parallel with experience development. Whether you’re a small brand online or touching the lives of millions of people everyday, we are all capable of learning more with our customers through continuous discovery.
- Stake a claim for consumer recognition. Productized offerings create marketable value. The brilliant simplicity of terms like “one-click checkout” and “Amazon Prime” is that they tell customers what to expect from what you do. With every shipment, Amazon is fulfilling more than a transaction—it is upholding a brand promise.
