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Chapter 477 The Enemies Started Fighting First

Seattle, Amazon headquarters.

Bezos sat in his office, looking dazed, as if deep in thought.

Three documents were spread out on the table: Amazon's sales report for the past week, the inventory purchase list, and specific data on various products.

"Jeff, you wanted to see me?" The office door was gently pushed open, and Blackburn walked in.

His face showed obvious fatigue, and the pale blue under his eyes indicated that he had been working intensely recently.

Bezos snapped out of his reverie, turned his gaze to Blackburn, nodded slightly, and said, "Sit."

He then instructed his secretary to prepare a cup of coffee for the other party, and then reached for the sales reports and product data files on the table, handing them to Blackburn.

"In the seven days since the Amazon redesign went live, our sales figures have been outstanding. The total sales over those seven days exceeded $6500 million, far surpassing our initial expectations before the redesign."

Blackburn took the document and quickly scanned the key data. When he saw the sales figures and the number of new users, a hint of surprise flashed in his eyes.

Bezos continued, "This data represents a more than 500% increase from last week, and we've added over 40 new users. Notably, new categories contributed 62% of sales, a figure that clearly demonstrates the success of our previously established category expansion strategy."

"This once again demonstrates the potential of non-book products and shows the outside world that Amazon can sell more than just books."

"However," Bezos's tone shifted, his expression turning serious, "behind these impressive statistics, I also see potential crises."

He pointed to the section on non-book sales data in the document, his face showing dissatisfaction. "More than 72% of the sales of non-book products come from video products. This over-reliance on a single product category is abnormal and will not be conducive to the platform's diversified development in the long run. It is likely to leave consumers with a stereotypical impression."

In fact, Bezos knew the reason for this phenomenon, and Blackburn was also well aware of it.

A price war has begun, but that doesn't mean that all products on Amazon are seeing significant price reductions.

For products like clothing, especially branded goods, the wholesale prices from Amazon and Walmart are basically the same, and Walmart even offers some products at a lower price than Amazon.

The lower unit price of similar products on Amazon is, to some extent, due to subsidies from Amazon itself, so the price reduction is unlikely to be too large.

In this situation, Walmart's advantages in its online and offline system become apparent. Consumers won't log in to Amazon just to buy a product that costs tens of dollars but is a few cents cheaper.

Therefore, in response to this situation, Amazon also used a traffic-driving strategy, which is to select one or two product categories for large-scale promotions to drive traffic and boost sales of other products.

The products chosen were video products with high markup and Amazon's main product line of books.

In response to Bezos's question, Blackburn calmly replied, "We anticipated this situation from the very beginning when we formulated this traffic direction. Every strategic decision involves trade-offs, and there's no way around it."

"Facts have proven that we chose the right direction. Currently, Walmart's online team still relies on physical store inventory, and imaging products are not given enough importance in Walmart's supply chain system. According to our market research data, their out-of-stock rate for imaging products is as high as 32%, which is an important reason why we chose imaging products as our core traffic-driving category."

"Even if their logistics network covers 90% of the US population, so what? Without goods, orders still can't be generated."

Bezos smiled, even with a hint of pride, because he had personally chosen this product category to drive traffic.

"We will continue to increase promotional efforts for audio-visual products, but at the same time, we cannot be inactive with other products. We must formulate strategies as soon as possible to improve the current sales structure that relies too much on a single product category."

Blackburn was already preparing, and he immediately responded, "The marketing department has developed a new plan to increase traffic to the video and book categories. Purchases over $50 will receive free gift wrapping and random small gifts."

"To promote other product categories, I plan to launch a special coupon specifically designed to boost sales of those categories."

"Tell me your thoughts in detail." Bezos's interest was fully piqued.

Blackburn explained methodically, "My initial idea is that whenever a user spends $100 on books and video products, we will give them a coupon for other categories of products. The coupons will have different denominations, such as $5 off for purchases over $50, $10 off for purchases over $100, etc."

"Directly lowering the price of goods may not have a strong sensory effect on consumers. But when they have a coupon in their account that can be directly deducted from their purchase price, they will feel like they have received real money, and will then regard the coupon as money that can only be spent on Amazon, thus making them more willing to buy other categories of goods on the platform."

The retail mall model is the same as before, nothing much to say, it's just been moved to the internet and the scale is a bit bigger.

"Another issue is that we haven't explored overseas markets enough, or rather, we haven't managed them well."

Bezos also noticed this: Amazon's European market users account for only 14% of Amazon's global user base. This figure is not only far below the previously set target, but has even declined compared to the past.

It's worth noting that when Amazon only operated its book business, it still had a 17% user base in the European market.

Blackburn continued, "This is mainly due to two reasons. First, we don't have large-scale warehousing centers in Europe and America. For categories like clothing, unlike photographic products and books, consumers can't wait seven or eight days or even half a month. Insufficient logistics and delivery time directly affects the user's shopping experience."

"In response to this issue, I have already contacted some local brands in Europe and reached a preliminary cooperation agreement. For some brand products ordered by European users, the goods will be shipped directly from the brand's European warehousing center to achieve localized delivery and thus shorten the logistics time."

"However, this cooperation model is not suitable for some products that Amazon sources itself. In the long run, we must establish Amazon's own large-scale warehousing centers in Europe and improve the local logistics and distribution system."

Bezos fell silent.

He was well aware of the problems in the European market and the key to solving them.

But there is no way.

Amazon has just completed a funding round, but it spends money like water, so its cash flow is actually very tight.

"Our current stock price is very good, and it may be a peak in the near future," Blackburn cautioned.

"You mean taking advantage of the current stock price surge to raise funds from the market?"

Because of its recent outstanding performance, Amazon's stock price has surged for five consecutive days, and its market value has exceeded $74 billion.

Blackburn is right. Once Ernst's flash sale goes live, Amazon's stock price will definitely drop. What follows will be a fierce battle in the e-commerce arena, and it's very likely that Amazon's market value won't reach a new high for another month or two. Raising funds now is the best option.

His concern is that Amazon's recent institutional funding and subsequent fundraising from the market could have a negative impact.

"How about this," Bezos glanced at his watch, "it's too late today, let's have a high-level meeting tomorrow morning to discuss it together."

Blackburn had just nodded when the office door opened, and his secretary came in to remind him, "Boss, Walmart just updated its online homepage."

Bezos quickly logged onto Walmart's website, where Walmart prominently displayed promotional material for imaging products.

Blackburn glanced at the discount and thought, "Their discounts are 5% lower than Amazon's. Are they trying to go head-to-head with us in the imaging products market?"

"That's courting death." Bezos sneered and instructed his secretary, "Notify the technology department to lower the prices of all image products to match Walmart's prices, but give them a free digital poster made exclusively by us."

Looking back at Blackburn, "At the current prices, almost no one is making a profit. Walmart's extra labor costs will become their Achilles' heel. I really don't know what Walmart is thinking, using its own weakness to directly confront our strengths."

Blackburn frowned upon hearing this, also somewhat puzzled, but at the same time he had other concerns: "If we fight to the death, won't that give Flash Sale an advantage?"

Bezos's heart sank, but he immediately shook his head and said, "It's probably impossible for now. There hasn't been any promotion for Flash Sale, which means it can't be launched anytime soon."

"This is our opportunity. If we can defeat Walmart before the flash sale launches, we will be able to capture more market share."

Blackburn thought about it and dismissed the idea that the flash sale might benefit him.