Retail

What Does the Bezos Departure Mean for Retailers?

What started out as an online bookstore became an e-commerce behemoth. Now, after nearly 30 years at the helm, Amazon founder and CEO Jeff Bezos is passing the baton for new leadership that will set the stage for the company’s future.

Bezos announced the move in an email to employees on Tuesday. Bezos will assume the role of executive chairman with Andy Jassy, who leads Amazon Web Services, stepping up to fill the role of Amazon CEO in Q3.

“As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions,” Bezos wrote. “I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.”

The announcement comes  in step with Amazon’s strong Q4 earnings report, with record-breaking revenues. For the first time, the company crossed the $100 billion quarterly threshold, securing $125 billion in revenue and $7.2 billion in net profits, up from $3.3 billion the year prior. Success was propelled by both the holiday season rush and the increased demand for e-commerce that has sustained throughout the COVID-19 pandemic.

“The broad shift in behaviors caused by COVID-19, new fast-growing technologies like e-commerce and cloud, as well as disruptive innovations like Alexa, and the promise of Amazon Go technology has all led to this milestone moment,” Hilding Anderson, Head of Retail Strategy at Publicis Sapient, told City A.M.

Though Bezos is stepping away from day-to-day operations, he will remain a presence at Amazon. Further, the transition shows the future of Amazon’s growth in the market and the strategic investments or developments the company may make moving forward.

And, well, there’s a lot to consider. Aside from Amazon’s e-commerce platform, there’s also their stronghold in the cloud computing market with the AWS services that Jassy has propelled, increased investment in their advertising platform and Amazon Prime services, as well as their continued expansion into the brick-and-mortar space with WholeFoods and Amazon Go. Bezos’ decision to focus on more philanthropic efforts, like the Bezos Earth Fund and Day 1, could influence cultural shifts the company could take in the future – especially at a time where corporate responsibility and brand mission are more important to consumers than ever.

“Will Amazon continue to invest in Whole Foods and the Amazon Go platform?,” Anderson told Retail TouchPoints. “Or will he focus on the core ecommerce/mobile/AWS/advertising businesses?”

In his letter, Bezos acknowledged the breadth of what Amazon has to offer, doubling down on the business’ potential for growth.

“Amazon couldn’t be better positioned for the future. We are firing on all cylinders, just as the world needs us to. We have things in the pipeline that will continue to astonish…We are leaders in areas as varied as machine learning and logistics, and if an Amazonian’s idea requires yet another new institutional skill, we’re flexible enough and patient enough to learn it.”

Although the company has seen unprecedented growth, Amazon is also facing its own set of challenges. Like other retailers, the company ran into logistical issues in the face of surging e-commerce demand throughout 2020, cracking down on price gouging and mitigating shipping delays. The business is also being investigated by both the U.S. and the European Union for antitrust practices and the treatment of their third-party sellers.

The future of Amazon – and the retail industry

Though the future of Amazon remains to be seen, one thing is certain – e-commerce isn’t going anywhere. Digital will continue to proliferate the consumer experience and retailers must follow suit to capture market share.

What has made Amazon so successful in the past is its ability to move at the pace of the consumer, evolving its breadth of services beyond just e-commerce to provide complete cross-channel experiences. As Bezos famously said: “The most important single thing is to focus obsessively on the customer. Our goal is to be earth's most customer-centric company.”

Couple this with the company’s inherent digital-first mindset – a natural competitive advantage the business had since its inception (perhaps, a blessing of timing for the company’s early entrance into the e-commerce space.) By consistently putting digital first and the customer at the center, Amazon has been able to embrace an organizational mindset that propels innovation forward and makes transformation a constant.

In today’s retail landscape, consumers are searching for convenience and value that go beyond just purchasing. In this way, retailers must become more than just a place where people can buy what they need – but a holistic brand that understands them, and offers a breadth of products and services that help educate and inspire, with competitive offers to match.

For retailers, the task is to look within their own organizations to uncover the roadblocks that hinder paths to growth and profitability. It’s about breaking down data silos, diving deep into supply chain optimization, redefining store experiences and creating an internal mindset that’s focused on building a foundation that’s fit to scale.

Amazon may have been first, but it certainly isn't going to be the only one. As the landscape changes, it’s up to retailers to decide what’s next.

--Amy Onorato