Amazon recorded its biggest sales in a day ever earlier this month. The latest invented special shopping day—Black Friday—saw the online superstore shift 7.4 million items in Britain. That is 86 items a second and up from a total of 5.5 million items in 2014.
Amazon has eight giant distribution hubs in Britain with another million square foot warehouse set to open next year. A lorry leaves one of these hubs every three minutes at this time of year.
According to Amazon boss Jeff Bezos, “Our culture is friendly and intense, but if push comes to shove, we’ll settle for intense.”
Amazon likes to present itself as a smooth automated machine. In truth it relies on harsh exploitation of people working in its warehouses (see below).
The firm likes to get publicity for plans to replace people with drones to deliver goods.
But in 2014 the US Postal Service announced a special partnership to deliver Amazon—and only Amazon—packages on Sundays. The terms of the deal are secret.
Bezos originally thought of calling his company Relentless.
In 1994 he quit a hedge fund to found a company that could ride the exponential growth of the early commercial internet.
It wasn’t a love of books that led him to start an online bookstore.
Bezos said that Amazon intended to sell books as a way of gathering data on affluent, educated shoppers. He later denied this.
The books were priced close to cost, in order to increase sales. After collecting data on millions of customers, Amazon could figure out how to sell everything else on the internet.
Before Google and Facebook did it, Amazon decided that real value lay in the data it collected about its customers.
It scanned books claiming it was to preserve knowledge. In truth it was so Amazon would have something to put on the company’s e-reader, Kindle.
Now Amazon sells a bewildering array of products.
Customer reviews are a way of getting free ratings on goods. The Amazon Prime service is trying to tie people into using Amazon to shop because it offers free delivery.
The company is currently providing phone apps for free—because so far it has failed to make a breakthrough in mobile phones. Ideally you will use their app on their tablet to buy their products from them.
As a small example of how the firm works, it provides a free programme for formatting scripts.
It comes with a button to submit a script to Amazon. The scripts can be reviewed by anyone.
Amazon is collecting data on what is popular in order to find out what to spend money on for its television services.
At one level it’s a gimmick. At another it shows the reach Amazon is aiming for. The company runs a similar process for self publishing online books. Neither is an attempt to encourage new writing. Amazon isn’t that profitable. One reason is that it sees its main task as to expand, and to gain weight and dominance.
So other retailers can sell through Amazon—for a fee. But Amazon keeps the data. And from next year the other retailers will have to use Amazon logistics to deliver their goods—for a fee.
The other reason declared profits are low is tax.
Taxes are airbrushed away. For years, Amazon fought furiously against paying sales taxes where it had no warehouses—and even where it did.
Amazon paid £11.9 million on £5.2 billion of sales last year in Britain last year.
To avoid some cosmetic changes by Tory chancellor George Osborne the company started paying tax on sales in Britain.
But it still bases its operation in Luxembourg for tax purposes. The Luxembourg Amazon charges its own companies enormous fees to keep the tax bill to a minimum.
And despite being the hub for French, German and British sales, it manages to run at a loss.
Amazon’s code of corporate secrecy is extreme—it won’t confirm how many employees globally it has. Nor will it say how many Kindle e-readers have been sold. But it is estimated that its books sales are about 5 percent of its turnover.
With Amazon’s patented 1-Click shopping, which already knows your address and credit card information, there’s just you and the BUY button. Transactions are deliberately as quick and thoughtless as scratching an itch.
The company is constantly accumulating information about people. It then uses this information to target sales and drive down the costs of what it buys.
Very early on the company created the “personalisation team,” or P13N. This replaced editorial suggestions with algorithms that used customers’ history to make recommendations for future purchases.
In the great American folk tale worker John Henry competes and wins against a machine. A sign was hung on a wall in the P13N office that read, “PEOPLE FORGET THAT JOHN HENRY DIED IN THE END.”
The formulas may be fancy but few customers realise that the results generated by Amazon’s search engine are partly determined by promotional fees.
Amazon sells at different levels of promotion. So in the case of books Amazon takes a cut on a percentage of sales from publishers as “marketing development funds.”
Publishing giant Random House currently gives Amazon an effective discount of around 53 percent. Smaller companies pay more.
Amazon also offers to take an additional payment, amounting to approximately 1 percent of sales.
Once the fee is paid marketing strategies can be discussed with Amazon staff. The fee is optional but without it the product ends up wherever the algorithms put it.
There is more to come. The company has patented “anticipatory shipping”.
This will use your shopping data to put items that you don’t yet know you want to buy on a nearby truck or in a local hub. As the somewhat creepy company missives always end, “This is still Day 1.”
‘It was just brutal’
Working conditions at Amazon are notorious. It deliberately builds “fulfilment centres” in areas with high unemployment.
Before workers can go home at the end of their eight-hour shift, or go to the canteen for their 30-minute break, they must walk through a set of security scanners.
Next to the scanners is a life-sized cardboard image of a cheery worker. “This is the best job I have ever had!” pronounces a speech bubble.
Workers are divided into four main groups. There are the people on the “receive lines” and the “pack lines”.
Some unpack, check and scan every product arriving. And some pack up customers’ orders at the other end of the process.
Another group stows away suppliers’ products somewhere in the warehouse. They put things wherever there’s a free space.
Workers use handheld computers to scan both the item they are stowing away and a barcode on the spot on the shelf where they put it.
So only Amazon’s computers know where everything is.
The “pickers” push trolleys around and pick out customers’ orders from the aisles. Amazon’s software calculates the most efficient walking route to collect all the items to fill a trolley.
“You’re sort of like a robot, but in human form,” according to one Amazon manager. “It’s human automation, if you like.”
Pickers holding computerised handsets are perpetually timed and measured as they fast-walk up to 15 miles per shift.
They are expected to collect orders in as little as 33 seconds.
The white collar workers aren’t much better off. Amazon encourages its “Amabots” to harshly criticise themselves and each other for their shortcomings.
Team members are ranked, and those at the bottom get eliminated every year. It is deliberate policy to keep turnover high.
In 2011 multiple ambulances famously parked outside a US Amazon warehouse during a heat wave.
They were there to collect and ferry overcome workers to emergency rooms. Afterwards Amazon installed air conditioners. Less well known is that the air conditioners’ arrival coincided with the expansion of the warehouse into holding groceries.
Every warehouse has its own “continuous improvement manager” with techniques borrowed from the car industry. As Marc Onetto, the senior vice president of worldwide operations, put it, “They are not consultants, they are insultants, they are really not nice.”
Some people also patrol the warehouses pushing tall little desks on wheels with laptops on them—they are “mobile problem solvers” looking for any hitches that could be slowing down the operation.
Managers can text the hand held screens to tell a worker to hurry up or to issue a warning.
There is a strict “three strikes and release” discipline system—“release” being a euphemism for getting sacked.
An employment agency called Randstad handles the recruitment.
Randstad calls this sort of system “Inhouse Services” and describes it as a “flexible work solution designed exclusively for each client to optimise the workforce and drive cost effectiveness”.
Employees wear blue ID badges. Agency workers wear green ones. “They dangle those blue badges in front of you,” one ex-Amazon worker told the GMB union. “On Christmas Eve an agency rep with a clipboard stood by the exit and said, ‘You’re back after Christmas. And you’re back. And you’re not. You’re not.’ It was just brutal.
“It reminded me of stories about the great depression, where men would stand at the factory gate in the hope of being selected for a few days’ labour.
“You just feel you have no personal value at all.”