Will We Forgive Amazon When This Is Over? - WSJ - 0 views
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all is far from well in the kingdom of Bezos. At a defining moment for the company, it is letting customers down.
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the promise to ship anything to our doorstep in a day or two that has gained it the trust of an astonishing 112 million Prime members in the U.S. (a nation of 129 million households) has evaporated nearly overnight.
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it feels like Amazon is little better than any other retailer at getting us what we need, when we need it.
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The fact that Amazon’s retail operations are functioning at all is a testament to the flexibility of the company’s infrastructure during a health crisis that few if any companies were prepared for.
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Those cracks include times when up to half the workers in some of the company’s facilities haven’t shown up, with some saying it was due to their fear they wouldn’t be adequately protected from coronavirus.
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It’s also due to Amazon’s just-in-time supply chain, reliance on third-party sellers and largely automated systems of buying and selling that were never designed to handle such a crisis.
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Amazon shoppers are unable to get many of the essential products the company says it’s prioritizing now.
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everything considered nonessential takes more time than the two days Amazon conditioned us to expect.
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In the mid-2010s, Amazon initiated a program called “hands off the wheel,” which replaced many of the functions of Amazon’s white-collar retail workers—those responsible for managing inventory and negotiating with sellers—with AI and automated systems
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One-third of respondents said the first time they had ever ordered groceries online was in the past 30 days, and 60% of respondents used Amazon to order groceries.
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The infrastructure Amazon built pushed the entire e-commerce industry toward ever broader selection delivered ever faster.
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Amazon’s systems respond more quickly to increases in demand than humans could, but it also leads to breakdowns when they encounter unexpected shocks—e.g., a global pandemic
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In the week ending March 28, Americans spent 47% more on consumer packaged goods purchased online when compared with the same period a year ago, according to Nielsen and Rakuten Intelligence.
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Amazon has hired 80,000 additional workers in just the past few weeks, as part of its pledge to hire 100,000 new permanent workers. It has also raised its base wage from $15 an hour to $17, through April.
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with more workers pouring into Amazon’s facilities, and more forced to stay by the lack of alternatives, there could be more protests by employees and more concessions from historically union-averse management
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Already, the company has instituted double pay for overtime, paid leave for associates with confirmed or suspected cases of Covid-19, a tripling of its janitorial staff and audits of its own facilities to comply with these measures.
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Consumers felt, in good times anyway, that “I can trust the item, I know it’s a good price, I have transparency on when I’m going to receive it, and if I have issues Amazon will work on my behalf,” he adds.
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A big edge Amazon holds over competitors is that it can cover losses or scant retail margins with a combination of good will from investors and a cross-subsidy from its booming cloud business, Amazon Web Services.
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Of all cloud providers, Amazon is the best positioned to benefit both in the long and short term from surging demand, Eric Sheridan, an analyst at UBS, wrote in a Monday note surveying the industry.
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All this increased usage means more revenue for AWS and more profit for its parent company. In turn, that means more opportunity for Amazon to, as Mr. Bezos famously put it, turn its retail competitors’ margins into Amazon’s opportunity.
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for Amazon, a company that may already be too big for its own good, it could lead to more of the regulatory scrutiny that its success was drawing even before coronavirus.
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An ever greater variety of customers will view Amazon as a basic utility but, wary of overreliance, will explore alternatives, too. The bill for Mr. Bezos’ possibly Faustian bargain with the universe—that everyone loves an innovative and ruthless competitor, even when it becomes dominant—may finally come due.