CEO Jeff Bezos has built a company to improve the customer experience, but he has not built a profitable company. As it is structured today, Amazon cannot increase profits to match its current market valuation, but and as Amazon.com grows it may be losing sight of customer service.
According to Seeking Alpha “Amazon has many attributes of an early-stage growth company. Sales are growing rapidly. Market share is increasing. Their disruptive force is felt throughout the retail industry, and their cloud computing service is a major player. But, one significant difference between Amazon and a typical growth company is that a growth company has the goal of eventually becoming profitable. After 22 years of existence, the company is still not structured to make significant profits. But there are more signs of trouble”.
Over the holiday shopping period Amazon did rake in a lot of sales, but it seems that more and more customers are having issues with delivery times.
I, for example, have been an Amazon.com Prime customer for a long time, but packages delivery times are getting longer and some are arriving in poor condition. A shelf I ordered showed up with the hardware, but not with the shelf. In addition the Post Office is having a lot of problems keeping up with deliveries often telling customers the packages have been delivered when in fact hey have not. Amazon’s response is to wait a couple of days (ha?).
Amazon also seems to have a revolving door for employees . Churn and burn. “An overwhelming need for new bodies.” These are all phrases that have been used to describe Amazon’s high turnover rate and fast-and-loose corporate culture.
A low retention, ‘chew ‘em up and spit ‘em out’ strategy highlights the negative side of unbridled capitalism against which the current populist movements are reacting. It works well for dictators building pyramids and great walls, but for a healthy democracy … not so much. The relative happiness of an employee base has bottom-line repercussions far beyond customer satisfaction
Mr Bezos may be disrupting a lot of industries, but anyone can build a business that doesn’t make money and has a low employee retention. Consumers will pay more for good service, but they will drop you like a hot rock when you let them down. Amazon had better learn this lesson quickly.