Amazon is our desperate and vacant future

Amazon's drones will deliver the future of online shopping

"The death toll tells the tale. Two decades ago, there were about 4000 independent bookstores in the United States; only about 1900 remain. And now, even the victors are imperiled," wrote Steve Wasserman in The Nation. He declared the Bookstore Wars over and a new, more serious war underway: "Independents are battered, Borders is dead, Barnes & Noble weakened but still standing and Amazon triumphant. Yet still there is no peace; a new war rages for the future of publishing."

Amazon's drive to sell Kindle e-book readers has cost regular publishers dearly. Amazon forced them (if they wanted Amazon to sell their hardcopy books) to make digital works available for no more than $9.99, thus driving down profits available to other partners involved with the work, such as the author. Since the Kindle reader was the product -- the device, not the works themselves -- Amazon gained commercial advantage by driving down the value of the works. 

The latest "disruption," says Bezos, is that within five years, Amazon mini-drones may be able to deliver anything a customer could desire, including groceries, with 30-minute delivery in urban areas. This would disrupt the retail engine that drives 70 per cent of the North American economy -- and incidentally, apparently, crash retail workers' wages and working conditions to warehouse workers' levels. 

My week as an Amazon insider

But then it's a phenomenal operation. And to work in – and I find it hard to type these words without suffering irony seizure – a "fulfilment centre" is to be a tiny cog in a massive global distribution machine. It's an industrialised process, on a truly massive scale, made possible by new technology. The place might look like it's been stocked at 2am by a drunk shelf-filler: a typical shelf might have a set of razor blades, a packet of condoms and a My Little Pony DVD. And yet everything is systemised, because it has to be. It's what makes it all the more unlikely that at the heart of the operation, shuffling items from stowing to picking to packing to shipping, are those flesh-shaped, not-always-reliable, prone-to-malfunctioning things we know as people....

"It's a way of bullying businesses to use their services. And we refused. We've been in the high court this week to sue them for breach of trademark. It's cost us half a million pounds so far to defend our business. Most companies just can't afford that. But we've done it because it's a matter of principle. They keep on forcing your hand and yet they don't have a viable business model. The only way they can afford to run it is by not paying tax. If they had to behave in a more conventional way, they would struggle.

"It's a form of piracy capitalism. They rush into people's countries, they take the money out, and they dump it in some port of convenience. That's not a business in any traditional sense. It's an ugly return to a form of exploitative capitalism that we had a century ago and we decided as a society to move on from."

Kill your own business

Jeff Bezos thinks of himself as a great man, and why shouldn’t he? ‘Our vision is to have every book ever printed, in any language, available in under 60 seconds.’ He wrote that ten years ago; now it’s almost true. When he graduated from high school, first in his class, he gave a speech to his classmates on how the fragility of the Earth required them to explore outer space and work towards rehousing humanity in orbiting space stations. He has used some of his fortune to turn 290,000 acres in West Texas into a giant laboratory for new spacecraft, which he claims will be so efficient and inexpensive to service that everyone will eventually be able to leave the planet. In his annual letter to the shareholders of Amazon, he acknowledges that some of his decisions may seem inexplicable, but ‘it’s all about the long-term.’ To that end, he has donated $42 million to the construction of the Clock of the Long Now, which is supposed to tick for 10,000 years. His temporarily is not our temporarily....

The company’s motto was ‘Get Big Fast’. The Amazon isn’t just the largest river in the world: it’s larger than the next seven largest rivers combined. Bezos preferred the name Relentless.com, but friends persuaded him that it sounded sinister. (Type Relentless into an address bar and you still get directed to Amazon.) He also considered Bookmall.com (but he knew that soon enough he wouldn’t only be selling books) and Cadabra.com (sounded too much like ‘cadaver’). Naturally he couldn’t set up the business in New York – too many potential customers lived there, and he didn’t want to charge them all sales tax – but somewhere isolated would make it difficult to hire engineers. The compromise was Seattle: at least Microsoft was nearby. Washington is also one of the few American states that doesn’t charge any personal income tax. (In 2010, Bezos donated $100,000 to a campaign that successfully defeated Initiative 1098, supported by Bill Gates, which would have started taxing those who earn more than $200,000 a year.) Bezos took a four-day bookselling course through the American Booksellers Association. He used his savings and took out loans to hire a small staff, and his parents put up money from their retirement fund. They didn’t know anything about the internet, but they trusted him....

Bezos told the Washington Post (before he bought it) that ‘to be nine times bigger than your nearest competitor, you actually only have to be 10 per cent better.’ And his site was better, though by how much who could say? In 1999, when Toys ’R’ Us launched its website in time for Christmas, Amazon bought out its entire stock of the most popular toys (taking advantage of a free shipping promotion), and resold them on its own site. Toys ’R’ Us was fined by the Federal Trade Commission for over-promising. A department within Amazon called Competitive Intelligence noticed that a New Jersey company called Quidsi was having success with a site called Diapers.com: it sold nappies at a loss to entice customers to buy its other baby products. Amazon tried to acquire the company, but Quidsi wasn’t interested. So Amazon started selling its nappies for even less than Quidsi, though it meant losing $1 million a day. When Quidsi still wouldn’t sell, Amazon threatened to start giving away nappies. Quidsi sold to Amazon; nappy prices went back up.