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Competing with Amazon


At the 2021 FEDA conference last week, there was a panel titled “Competing with Amazon.” In my prior life as a tech investor, I spent 100s of hours studying Amazon so I'm sharing some thoughts on what it means for FE&S.

A key factor to Amazon’s success was that from the beginning, Jeff Bezos was an amazing storyteller. He knew what drove the economics of distribution (scale) and he relentlessly told this story to his investors, Board, and employees. Because people believed the story, their stock price was correlated with sales growth, not short-term profit margins. Investments weren’t questioned if it benefitted the customer and top talent all wanted to work there (people care more about great products and happy customers than this month's P&L). This created a massive flywheel that helped create a $1 trillion company in < 25 years.

Amazon didn't sneak up on legacy retailers, which had better brands and bigger bank accounts. They should have beaten Amazon but because they weren’t telling the right story, they were forced to prioritize short-term profits to keep their stakeholders happy. Ironically, that guaranteed long-term profits would be materially lower.

I believe the next wave of FE&S industry leaders will be created not because they beat Amazon but because they learned from them.

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