A Blog by Jonathan Low

 

Dec 31, 2019

Has Amazon Become Too Big To Manage?

Probably, but that won't stop it from growing profitably.

It just means that its products and services wont necessarily work, or be safe or deliver what they were advertised to do. The question is whether that is significant enough to stop merchants from listing with Amazon - or consumers from buying on its platform. And history suggests they won't stop. JL

Karen Weise reports in the New York Times:

60% of Amazon’s sales come from outside merchants.Each day, Amazon gets five billion submissions to edit details about the products for sale on its site. The edits come from the companies that fill Amazon’s Everything Store. That’s 1.8 trillion edits a year that Amazon needs to sort through. Are they accurate or misleading? Do they follow Amazon’s rules or even the law?  People who have worked at Amazon’s marketplace debate whether the company can build systems fast enough, and accurate enough, to keep up.  “They are a marketplace of trust, and if you cannot trust it, the whole premise of Amazon evaporates.”
Since the holiday shopping season is ending, it’s not a bad time to talk about Amazon.
Let me start with a single, large number critical to the shopping experience on Amazon: five billion. Each day, Amazon gets five billion submissions to edit descriptions and details about the products for sale on its site. The edits come from the companies that fill Amazon’s Everything Store.
That’s 1.8 trillion edits a year that Amazon needs to sort through. Are they accurate or misleading? Do they follow Amazon’s rules or even the law?

Continue reading the main story
Some of the edits are simple updates to a product, or a company trying out new marketing. Others are tactics used to sabotage a competitor’s products or add a certification, like Food and Drug Administration approval, that an item does not have.
If shopping on Amazon can feel a little chaotic — duplicate listings, weird variations, descriptions that don’t quite match a product — this daily edit is a big reason.
I learned the importance of five billion from Amazon when I was reporting on what has happened in the two decades since Amazon began letting outside companies list goods on its site. The move sharply increased the selection customers can find when they type in Amazon.com, and now about 60 percent of Amazon’s sales come from these outside merchants.
My article detailed how Amazon has squeezed more out of these suppliers over the years, making Amazon’s services, like advertising and fulfillment, essential to succeeding on the site, often in ways that make it harder to do business elsewhere.
I heard so much about how companies scramble to respond when Amazon changes its rules, which it does to present customers with a coherent, consistent experience even as the selection and number of sellers have grown so large.
Amazon’s decision to open its doors to outside sellers has been essential to its ability to get us almost anything in a matter of days, if not hours. It’s what lets us turn to it with the random, near stream-of-consciousness list of things that pop into our heads. Though my memory is hazy, I’m pretty sure one of my family’s first Prime Now orders came soon after my son was born: We got diapers, chocolate — and vermouth for Negronis.
Like Facebook in its effort to sort out fake news, Amazon has turned to algorithms to organize and police its site, and said it was spending $400 million a year to do so. On Thursday, the company said that it had record holiday sales and that “billions of items were ordered worldwide.”
Jeff Wilke, the chief executive of Amazon’s consumer business, told me that the company’s long-term future depended on patrolling the site without harming well-meaning merchants.
“We have a strong incentive to be as accurate as possible in identifying bad actors, make very few mistakes when we’re wrong,” he said, adding that Amazon also wants to give people second chances when they make an honest mistake.
People who have worked at Amazon’s marketplace debate whether the company can build systems fast enough, and accurate enough, to keep up. Some say the gap is closing; others fear the rot may grow too fast to catch.
I find myself thinking of a conversation I had toward the beginning of the year with Juozas Kaziukenas, founder of Marketplace Pulse, a research company. “If the chaos continues, I don’t know how long a consumer will be willing to put up with it,” he said. “They are a marketplace of trust, and if you cannot trust it, the whole premise of Amazon completely evaporates.”
That trust comes down to big decisions and little details, like those changes submitted five billion times a day.

1 comments:

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