The Process That Lead To A Management Position

By Amy Wise

On September 14, 2010, Lore and Bharara went to Seattle to meet with Jeff Bezos about acquiring Quidsi. While they were in their morning meeting with Bezos, Amazon sent out a press release, introducing a new service called Amazon Mom. It's a sweet deal for new parents: They can get a year's worth of free two-day shipping (a program that costs $7

• Language: English
• Publisher: Amy Wise
• Release date: Oct 3, 2023
• ISBN: 9798868916298

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The Process That Lead To A Management Position

The Process That Lead To A Management Position

Copyright © 2023 by Amy Wise

All rights reserved

TABLE OF CONTENTS

CHAPTER 1 : SO LORE PICKED UP THE PHONE AND CALLED AMAZON.

CHAPTER 2 : OVERCOMING CHALLENGES, CONTINUING SUCCESS

CHAPTER 3 : THE BEGINNING OF HYUNDAI CONSTRUCTION COMPANY

CHAPTER 4 : ALL ROADS LEAD TO HONG KONG

CHAPTER 5 : WHO IS THE TRUE RICH?

CHAPTER 1 : SO LORE PICKED UP THE PHONE AND CALLED AMAZON.

On September 14, 2010, Lore and Bharara went to Seattle to meet with Jeff Bezos about acquiring Quidsi. While they were in their morning meeting with Bezos, Amazon sent out a press release, introducing a new service called Amazon Mom. It's a sweet deal for new parents: They can get a year's worth of free two-day shipping (a program that costs $79 to join), and More perks are available, including an additional 30% off baby diapers if they sign up for regular monthly diaper deliveries as part of the Subscribe and Save service. In New Jersey, Quidsi employees tried their best to contact the company's founders, discussing the public reaction to the Amazon Mom service. It is no coincidence that they are inaccessible. They were unaware of the meeting in Amazon's office.

Now Quidsi can understand himself clearly. That month, Diapers  listed a case of Pampers at $45; Amazon prices the same product at $39, and Amazon Mom customers with its Subscribe and Save service can get a box of Pampers for $30 less. By then, Quidsi's leaders had what they needed to know about shipping rates, which factor into Procter & Gamble's wholesale prices; and calculated that Amazon was on track to lose $100 million in three months just on baby diapers.

Inside Amazon, Bezos has streamlined these changes, factoring them into the company's long-term interests in delighting customers and building a consumer goods business. He told the vice president of corporate development, Peter Krawiec, not to pay more than a certain amount for Quidsi, but assured that under no circumstances would Amazon lose its deal with Walmart.

According to the results of the meeting between Bezos and Lore and Bharara, Amazon has three weeks to study Quidsi's finances and make an offer. At the end of the period, Krawiec offered Quidsi a price of $540 million, saying it was a stretch price. He gave Quidsi 48 hours to respond and made it clear that if the founders did not accept, the competition would continue.

Walmart has a natural advantage in this battle. Jim Breyer, managing partner of one of Quidsi's venture capital backers, Accel, also sits on Walmart's board of directors. However, Walmart is not ready yet. By the time Walmart upped its offer to $600 million, Quidsi had tentatively accepted. Mike Duke called and left messages with several Quidsi board members, pleading that they not sell to Amazon. These messages were then transcribed and sent to Seattle, as Amazon stipulated with a preliminary provision that Quidsi must pass on information about any subsequent offers.

When Amazon executives learned of Walmart's intentions, they turned up the pressure even further, threatening Quidsi's founders that Bezos, a fierce competitor, would drive up the price of diapers. for children, if they go with Walmart. Quidsi's board of directors met to discuss Amazon's offer and it is likely they will resume negotiations with Walmart. But then Bezos's Khrushchev-like zeal in a diaper price war made Quidsi worry that the company could suffer losses if it did something wrong along the way. Compatible with Walmart. So Quidsi's leaders stuck with Amazon, largely out of fear. The agreement was announced on November 8, 2010.

The loss-making Amazon Mom program was introduced explicitly to bring Diapers  to a standstill and force the company into a compromise; If anyone at the time had doubts about this, those doubts were quickly dispelled by Amazon's subsequent actions.

A month after announcing its acquisition of Quidsi, Amazon discontinued the program to new members. But the Federal Trade Commission later reviewed the deal, and a few weeks after shutting down the program, Amazon reopened it, albeit at a much smaller discount.

The Federal Trade Commission scrutinized the acquisition for four and a half months, going beyond the standard review to a second phase of inquiries, when companies had to provide more information about the transaction. . According to a Federal Trade Commission official, the deal is a warning. A key head-to-head rivalry and subsequent merger led to the demise of a major player in the category. But the deal was eventually accepted, in part because it did not result in a monopoly. There are a bunch of other companies like Costco, Target that sell baby diapers both online and offline.

Once again Bezos won, neutralizing a new competitor and filling his million-item store with another set of shelves. Like Zappos, Quidsi was allowed to operate independently within Amazon (from New Jersey) and soon expanded into pet supplies with Wag  and toys with Yoyo . Walmart missed an opportunity to get a team of talented entrepreneurs who go head-to-head with Amazon in a key product category. And insiders once again gasped in amazement, wondering how Bezos had arranged another acquisition. According to one observer: They are ready to light up the surrounding space to appear as a winner.

The worry arises that Amazon is not limited to New Jersey, Las Vegas and other US locations. The industrial city of Solingen, Germany, located between Dusseldorf and Cologne, is famous for the production of high-quality knives and razors. The local blacksmith profession dates back 2000 years and today the city is the capital of the knife industry in Europe and home to famous brands such as Wusthof, a 200-year-old company managed by seven successive generations of the Wusthof family. During the 1960s, Wolfgang Wusthof introduced the company's high-end products to North America, riding the bus from town to town with a suitcase full of knives. 40 years later, his grandson Harald Wusthof took over the company and began selling to the Williams-Sonoma and Macy's chains. Then, in the early 2000s, Wusthof began supplying goods to Amazon .

During its 50 years in the US, Wusthof has built its image as a premium brand, earning regular praise from Consumer Reports and Cook's Illustrated magazines. For that reason, they can charge $120 for a kitchen knife about 8 inches long, made from laser-checked high-carbon steel, even though kitchen knives of the same size are sells for $20 on Target. Maintaining high prices is important for a company that employs hundreds of skilled artisans in its factory, but must compete with an array of products of lower quality, to the untrained eye. , they all look almost the same.

Manufacturers are not allowed to set retail prices for their products. But they can decide which retailers to sell to, and one way they exercise their power is by setting a price floor with a tool called a MAP, or minimum announced price. MAP requires retailers like Walmart to stay above specific prices in their newspaper ads and announcements. Online retailers have a greater burden. Their product pages are considered a form of advertising, so they must set prices at or above the MAP, or face the wrath of the manufacturer and risk limiting product quantities. of the company when delivering or withdrawing them completely.

During the first few years of selling Wusthof knives, Amazon always respected the German companies' wishes to set prices. Amazon is also a good partner, placing large orders as traffic increases and settling invoices on time. Amazon quickly became Wusthof's leading online retailer and the second largest in the US, behind Williams-Sonoma. Then, tensions in the relationship began to appear. As Amazon's automated pricing software got better at site cleaning and search, matching low prices elsewhere, Amazon repeatedly violated Wusthof's MAP requirements, selling products like the $125 Grand Prix kitchen knife for $109. Wusthof felt it needed MAP to protect the value of the brand and the small, independent knife shops that were responsible for about a quarter of the company's sales and were unable to accommodate such price reductions. . Those are the people who built our brand, says René Arnold, CEO of Wusthof-Trident in the US. Amazon can't sell a single new knife anymore. They can't explain that it's like a store.

Wusthof finally ended supplying products to Amazon in 2006. We felt quite hurt, Arnold said. They lose sales, at least in the short term. But we believe that our products and brands are still stronger than those of our distributors. For the next three years – until 2009, when Wusthof changed his mind and began part two of his relationship with Amazon – Wusthof knives were absent from the shelves of the million-dollar store.

The companies that make products and the companies that sell them have waged versions of this battle for centuries. With its commitment to everyday low prices and its clever combination of direct retail with a third-party marketplace, Amazon has taken those tensions to a new level. Like Sam Walton, Bezos sees it as the company's mission to go beyond the supply chain and provide the lowest possible prices to customers. Amazon's management sees MAP and similar techniques as the last vestiges of an old way of doing business, gimmicks used by inefficient companies to protect their profits. their huge profits. Amazon has come up with a variety of workarounds, including a method called price hiding. In some cases, when Amazon breaks MAP, they do not list the price on their product page. A customer can see the low price only when he puts the product in his cart.

It's an unsophisticated solution, driven by Amazon's longstanding desire to get the lowest prices anywhere and the new ability of its pricing algorithms to quickly match any any important seller. If suppliers or brands leave Amazon, they will eventually return, Wilke predicts, because customers trust Amazon as a great information provider and customers value product selection. rich products. If you have customers ready to buy your product and you have the opportunity to tell them about your product, ultimately what brand wouldn't want that?"

Dyson, the British vacuum cleaner manufacturer, is an example of a brand that has cautiously appeared to tackle Amazon. This type of vacuum cleaner was sold on Amazon for many years and then James Dyson, the founder, went to Amazon's offices in his personal name to vent his frustration about repeated violations of MAP. Kerry Morris hosted Dyson on that memorable visit, saying: Sir James said he trusted us but we broke that trust. Dyson pulled its vacuum cleaners from Amazon in 2011, but some models are still sold on Amazon Marketplace by approved third-party sellers. Over the years, companies like Sony and Black & Decker have pulled various products from the site. In particular, Apple has tightly controlled Amazon, providing a limited supply of iPods but no iPads or iPhones.

In 2003, Michael Ross was the chief executive of Figleaves , an online swimwear and lingerie website based in London, which sold sports bras under the British brand Shock Absorber. This site caught Amazon's attention early on. To promote the company's US presence on Amazon's Marketplace, Ross helped arrange an uneven tennis match between Jeff Bezos and Anna Kournikova, Absorber's famous underwriter.

Figleaves sold its wares on Amazon's Marketplace for a few years, but stopped in late 2008. At that time, Amazon  carried a range of Shock Absorber bras and swimsuits; and Figleaves has sold very little on the site. In a world where consumers have limited choice, you need to compete to get a position, says Ross – who went on to co-found eCommera, a British e-commerce consultancy – says. . But in a world where customers have unlimited choices, you need to compete for attention. And this will require more than selling other people's products.

Even those who sell successfully in Amazon's Marketplace tend to judge that with caution. GreenCupboards, a website that sells environmentally responsible products, such as eco- and pet-friendly detergents, has built a 60-employee company that is almost entirely smart. via Amazon, despite the fact that founder Josh Neblett says Marketplace launches a race to the bottom. His company constantly competes with other sellers and with Amazon's own retail organization to offer the lowest possible prices and to capture the buy box - the implicit seller of a company. specific products on the website. Fierce price competition tends to push prices down and erase profits. As a result, GreenCupboards must receive more than Amazon – as if to survive. Neblett said the company has gotten better at sourcing new products, eliminating monopolies and building a lean organization. I always look at it as a game and we're looking for ways to play better, he said.

However, as