America's No. 1 financial conglomerate

Chapter 409 Amazon's Response

How should Amazon respond?

Upon returning to Seattle, Bezos appeared to be facing a formidable challenge, with clumps of his hair falling out.

Inside the conference room, twelve core executives of Amazon sat around an oval solid wood conference table, each with a solemn expression on their face. The oppressive atmosphere was even more suffocating than the gloomy weather outside the window.

As if overnight, e-commerce companies sprang up like mushrooms after rain.

Amazon went to a retail industry conference in high spirits but returned in a panic.

Chief Operating Officer Joe Gallini, holding a thick document, stood up with a serious expression. "According to our latest reliable information, Bertelsmann is close to finalizing its acquisition negotiations with Ingram. As a leading global book distributor, Ingram has long been an important partner of Amazon. If this acquisition is completed, we will lose a key support in the book supply chain."

"What's even more alarming is that there's new information coming out of Barnes & Noble that they are planning to have a deep collaboration with Bertelsmann to jointly develop e-commerce business, which means that we will completely lose our largest book supplier."

As soon as Joe Gallini finished speaking, a slight commotion arose in the meeting room as the executives whispered among themselves, their faces filled with worry.

Marketing Director Karen then added, "I learned from internal industry sources that Bertelsmann also intends to make a strategic investment in Barnes & Noble. If they actually complete this investment, then in terms of financial reserves, it won't be something I..."

"Nothing Amazon can compare to."

Karen then projected a latest market data report onto the conference room's large screen: "As of last month, our marketing expenses remained at a high level, with an average of 22.3 cents of marketing costs required for every dollar of sales achieved."

"Although the trend shows that this proportion is gradually decreasing, it is undeniable that in the current stage of development of the e-commerce industry, the most important winning strategy is still the investment of real money. Whether it is platform promotion or user acquisition, a lot of financial support is required. This is a reality that we cannot avoid."

"As an emerging business model, e-commerce is still in a period of rapid development and exploration. The cost of expanding business channels is unlikely to be significantly reduced in the short term. To put it bluntly, it comes down to who has more financial reserves and can survive in this fierce competition to the end."

Karen's words further intensified the tense atmosphere in the meeting room. Everyone fell silent, and a sense of impending doom enveloped the entire room. Deep down, everyone realized that Amazon was facing the most severe challenge in its history.

"Don't forget Walmart." After a moment of silence, someone finally broke the silence in the room.

Karen frowned, somewhat puzzled, and asked, "Our core business is book sales, what does that have to do with Walmart?"

Although Walmart is also involved in book retail, it does so by partnering with local bookstores and setting up book counters in its stores.

However, these bookstores are very limited in size, with each store typically offering only a few thousand different books, mainly bestsellers. In terms of both the variety and the level of expertise, they cannot compare to Amazon.

Karen doesn't believe Walmart poses a real threat to Amazon and is puzzled by the mention of Walmart's swimsuits.

"Walmart has more than 60 large regional distribution centers across the United States. These distribution centers have wide coverage, large storage capacity, and high delivery efficiency, which can fully realize the next-day delivery of goods ordered on the same day. In contrast, Amazon currently only has one large warehouse in Seattle in the United States. Cross-time zone delivery takes at least 7 days or even longer, which is a huge gap between us and Walmart in terms of delivery speed."

Bezos gave him a sharp look. This chief logistics officer, whom he had personally poached from Walmart, was someone no one in the room knew better than him.

"Rick, tell me your specific thoughts. Why are you paying attention to Walmart?"

Rick didn't have much to say, but instead asked, "If Walmart officially launches its online retail model and incorporates its book business into its online sales system, do you think the variety of books will still be an issue?"

Seeing that everyone was deep in thought, Rick continued to explain, "Currently, Walmart does rely mainly on partnerships with local bookstore chains for book sales, and the variety of books in its stores is relatively limited, only a few thousand."

"But let's not forget that this doesn't mean that the local bookstore chains that partner with Walmart only have a few thousand titles. Many local bookstore chains have extensive book inventories, but they are limited by Walmart's counter space and cannot display them all."

"Once Walmart decides to aggressively develop its online business, the situation will fundamentally change. Local bookstore chains that partner with Walmart can leverage Walmart's online platform to acquire customer orders, then pack and ship the books to Walmart's regional distribution centers, from where Walmart will distribute them to consumers through its efficient logistics system."

"Furthermore, to improve delivery efficiency, these bookstores may even pre-stock some books at Walmart's distribution centers and settle accounts with Walmart on a quarterly basis, just like with other Walmart products."

"In this way, the variety of books that Walmart's online platform can offer will no longer be limited by the size of its own stores, thus greatly enriching the range of books available."

"In the e-commerce sector, when different platforms are similar in terms of product variety, price, service, and other conditions, delivery speed becomes a key factor influencing consumer choices. Walmart, with its powerful logistics and delivery network, can provide consumers with faster delivery services, which will undoubtedly have a serious impact on Amazon's market share."

That's why it seems like overnight, everyone is targeting Amazon.

Amazon faces competition not only from direct rivals in the book industry, but also from the entry of powerful traditional retail giants like Walmart.

This retail industry conference not only made Bezos aware of Ernst's active plans to enter the e-commerce field, but also allowed him to keenly perceive more clues about the development of the industry.

It seems that major US retail giants have suddenly realized the huge potential of online retail and have all formulated development strategies for their online businesses.

Bezos's knuckles tapped lightly on the conference table, producing a rhythmic and crisp sound that subtly eased the tense atmosphere in the meeting room.

This Amazon founder, who is just over 34 years old, has eyes as sharp as an eagle's, as if he can see the harsh future trends of the industry.

"Damn it." Bezos suddenly muttered a curse under his breath. Without a doubt, the executives present all knew that the "damn it" he was referring to was Ernst.

Without Ernst's intervention, while American retail giants might eventually realize the development opportunities in e-commerce and gradually join the competition, the current frenzied competition would never have unfolded in such a short time.

Because he is Ernst, when he believes that online retail is the trend, no retail giant will fall behind and will all give it a try.

"Do you have any specific ideas or strategies for dealing with this?" Bezos turned his gaze to the executives present, hoping to hear more valuable opinions and suggestions.

No sooner had Bezos finished speaking than Marketing Director Karen was the first to chime in, "I still stand by my previous point of view, which is to accelerate the pace of category expansion in order to cope with the current competitive pressure."

"As everyone knows, through this retail industry conference, we can clearly feel that in the future, all retail categories in the entire e-commerce industry will face fierce competition. Whether it is books, clothing, electronic products, or home furnishings, they will all become markets that major companies are vying for."

"In this situation, our Amazon sales will inevitably be impacted by other competitors, which will in turn affect..."

The company's overall performance.

"Since we face enormous pressure from competition in a single product category, we should proactively seek change by increasing the variety of our products to diversify competitive risks and eliminate the impact of declining performance caused by competition in a single product category."

"Currently, we have 220 million active users on Amazon. Even with a conversion rate of only 10%, the more product categories we drive traffic to, the greater our potential for revenue growth. By expanding our product categories, we can not only increase the stickiness and purchase frequency of existing users, but also attract more new users to our platform, further expanding sales."

I disagree.

Almost as soon as Karen finished speaking, two opposing voices rang out simultaneously.

Everyone looked in the direction of the voice and found that the people who raised the objection were the technical director, Carfin, and the financial director, Sonic.

The two exchanged a glance, and then Kafen spoke first, saying, "Category expansion means we need to completely restructure and upgrade the existing website architecture. This will not only require a lot of technical resources, but also take a long time. Just completing the website architecture restructuring will take at least two months."

"Furthermore, we need to assess whether the existing server and storage devices can withstand the increased traffic pressure, and whether a large-scale hardware upgrade and expansion is necessary. In addition, various technical uncertainties may arise during the category expansion process, such as compatibility issues between system modules for information display, transaction processes, and inventory management of different product categories."

"Before these technical issues are properly resolved, hastily expanding into more product categories could very likely lead to system failures on the platform. Therefore, I do not agree with rashly undertaking large-scale category expansion; a detailed and thorough plan must be developed, and progress must be made in an orderly manner."

Kafin primarily expressed concerns about the category expansion strategy from a technical perspective, while CFO Sonic rejected Karen's proposed category expansion approach entirely from the fundamental perspective of business operations.

"Currently, in the book and audiovisual category alone, we already face fierce challenges from numerous competitors such as Bertelsmann and Barnes & Noble, and the market competition pressure is already enormous. If we blindly add more product categories at this time, it will undoubtedly further expand our competitive scope and create more enemies for ourselves."

"We must understand that every product category has its existing market leaders and competitors. When we enter a new category, we will inevitably affect the interests of these companies and trigger their strong counterattacks, which will undoubtedly make our current business situation even worse."

"The main problem is funding; we simply don't have enough funds to purchase goods."

"On the contrary, I believe we should adopt a specialized and refined strategy, selecting one or two product categories with core competitiveness and concentrating resources and energy on them. By continuously optimizing product quality, improving service levels, and reducing operating costs, we can build a strong competitive advantage in the selected product category and form a differentiated market positioning."

Many people nodded in agreement, agreeing that Sonic made sense.

"That's easy for you to say," Karen retorted, her voice slightly agitated. "Do you think the enemy will give us the chance to calmly choose our path and focus on building our business?"

Sonic remained unmoved by Karen's rebuttal. He simply glanced at Karen calmly before turning his gaze to Bezos. "I still stand by my point of view."

Bezos fell into deep thought. He felt that both sides had valid points, but he leaned more towards Karen's perspective.

It wasn't that he approved of Karen, nor that he thought Sonic's ideas were problematic; it was simply that he was targeting Ernst.

Previously, the two sides had no industrial overlap, which was fine, but now that this annoying guy dares to enter the e-commerce field, we must give him a heavy blow and avenge the previous humiliation.

The other party had no experience in e-commerce, while I had been deeply involved in this field for many years, so I had no reason to be afraid of him.

"Contact Wall Street, Amazon needs more funding."

With a major battle looming, supplies must come first, and ammunition reserves must be sufficient.

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