I was recently quoted in an article in The New Yorker titled Is Amazon Unstoppable? I have written multiple articles about Amazon for Forbes, Observer, and other publications, and I am frequently quoted in the press on topics related to Amazon, retail, last-mile delivery, and innovation. I also used to work for Amazon. I was interviewed because of my knowledge of Amazon and last-mile delivery across multiple industries and global geographies.
In the article published in The New Yorker, it was mentioned that I wrote a memo related to Amazon’s last-mile delivery program. It’s true, I did write a memo. I wrote the memo because I have a background in accident investigations and risk management as a result of my first job out of college and my time at Deloitte, and I made suggestions related to Amazon’s last-mile delivery strategy to minimize risk.
I placed the memo on the desks of two individuals at Amazon that I thought might have an interest in the memo. I never engaged in a discussion with either of them, but my goal was for the memo to be read, generate awareness, and advance up the chain of command. I have no idea if it occurred. (I frequently wrote memos at Amazon using a technique I learned while I was a consultant for Deloitte. I utilize six-page memos, referred to as “Six-Pagers” in my consulting engagements).
I had only been in the company for a week when I wrote the memo and frankly, I didn’t know enough about Amazon to question the who, what, when, where, and why of what Amazon was doing. However, Amazon’s Leadership Principles, especially Ownership; Leaders Are Right, A Lot; Learn and Be Curious; and Bias for Action were the permission slip I needed to Dive Deep (another Amazon Leadership Principle) into the last-mile delivery program.
The purpose of the memo was to present options related to strategy and also point out the necessity for oversight of third-party delivery drivers and the importance of safety. Let me be clear: the memo was my way of conveying my opinion. I didn’t write the memo because I thought Amazon was doing something wrong or not taking the issue of last-mile delivery seriously. I believed that my background in risk management and accident investigations gave me a unique perspective and I used the memo as the mechanism to share my perspective. (I later learned that the topics I had mentioned in my memo had been discussed many times on different occasions within the last mile delivery team so I can’t claim I added anything new to the discussion).
Amazon’s Mission of Being ‘The Most Customer-Centric Company on Earth”
A large segment of Amazon is focused on customer experience, which includes last-mile delivery. I had casual discussions with co-workers from different departments across Amazon on the topic of last-mile delivery (and other topics), where I asked questions, voiced my concerns, was asked my advice, offered my opinion, and learned more about how Amazon operated.
Although most of the associates I spoke with at Amazon weren’t responsible for last-mile delivery (there is an actual team responsible for last-mile delivery), the associates were aware of the program and they each had an opinion. (The article states that I attended “meetings” related to Amazon’s last-mile delivery program, but that is false. I had discussions. I made it clear during the interview with The New Yorker that I was never a member of Amazon’s last-mile delivery team and at most, I only spoke to 6 or 8 people about my opinion on the topic during my time at Amazon. Most of the discussions took place over lunch with associates I had met for the first time.)
After a week or two, I no longer engaged in discussions related to last-mile delivery as I was focused on learning the job I was hired to do for Amazon. The topic rarely came up again during my time at Amazon, and until I was interviewed for the story in The New Yorker, I don’t believe I had thought about Amazon’s last-mile delivery program for several years.
The article in The New Yorker is a masterpiece of journalism by Charles Duhigg (as in Pulitzer Prize-worthy), but I disagree with the overall tone of the article. Jeff Bezos deserves to be compared to the great titans of the past who built America and his accomplishments should be respected. I don’t believe anyone in the history of business has been more influential or capable than Jeff Bezos; only John D. Rockefeller, Henry Ford, Bill Gates, and J.P. Morgan come close.
As for the topic of last-mile delivery covered in the article, I don’t believe anyone on the last-mile delivery team at Amazon or any of Amazon’s executives were negligent in their duties and I made this clear multiple times during the interview with The New Yorker. Much of what Amazon was doing was new and there was tremendous pressure to get a program up and running.
Speed and execution are of paramount importance at Amazon and I understood the need for Amazon to get a delivery program operating. UPS, the USPS, and FedEx had failed to meet Amazon’s needs for 100% delivery of packages, especially during Christmas, and Amazon wanted to avoid disappointing customers in the future hence the desire for Amazon to create a third-party delivery program. (I challenge the media to conduct a thorough review of criminal activity by drivers, driving records, and accidents at Uber, Instacart, Lyft, DoorDash, Postmates, Grubhub, and other companies reliant on gig workers to make deliveries. Many of the issues mentioned in the article related to last-mile delivery are not specific only to Amazon).
The tone of the article in The New Yorker is clearly anti-Amazon, but I am a supporter of the company and especially of Jeff Bezos. The only “crime” Amazon ever committed was hiring the best and brightest associates and executives and thinking bigger than any company that’s ever existed. Amazon’s dominance unfairly makes the company a target for critics. Walmart, Microsoft, Google, and Facebook all understand what I mean.
Due to so much interest in the memo as a result of the article, I have posted the memo in its entirety below. It’s important to remember that Amazon has ended its relationship with the third-party last-mile delivery companies that failed so miserably to meet Amazon’s needs. Amazon has gone to great lengths to take greater command and control of all things related to its last-mile delivery needs and although there is more work to do, Amazon is making great progress.
Do I still believe Amazon should have acquired a company to help scale its own last-mile delivery program with more focus on safety? Yes. Does it frustrate me that so many accidents occurred? Yes. However, since I wasn’t part of the last mile delivery team, my recommendations must be taken with a grain of salt as I was standing on the outside looking in with little to no understanding of what the last mile delivery team was doing or going through.
Is Amazon a Monopoly?
In addition to the topic of last-mile delivery, I am often asked if Amazon is a monopoly so let me address the question here. I’ve written several articles on the topic and I have researched the history of monopolies. Whenever the topic of Amazon being a monopoly is discussed, most legal scholars draw upon May 15, 1911, Supreme Court decision which declared Standard Oil was a monopoly. The Supreme Court determined that Standard Oil and its subsidiary companies constituted a combination of “restraint of interstate commerce” and Standard Oil had attempted to monopolize and did monopolize parts of commerce.
I do not believe Amazon can be found guilty of restraint of commerce. Amazon can easily argue that they in fact enable trade by allowing sellers to utilize its platform for commerce.
The only way I can envision Amazon being declared a monopoly is if the Sherman Antitrust Act is amended to include the phrase and definition: “Necessity for Trade.” If the Sherman Act is indeed amended, I believe an argument can be made that it has become necessary for sellers and brands to sell their products on Amazon’s platform or risk significant lost sales or even going out of business.
Based on such a definition, Amazon is a necessity for commerce and, therefore, a monopoly as there is no viable alternative for sellers and brands to turn to. (It’s conceivable that Amazon could make the argument that Walmart is a necessity for commerce due to the fact the company operates 5,358 Walmart and Sam’s Stores. Walmart sells more groceries than any other retailer and it generates over 50% of its revenues from groceries. Brands understand that they must get their products on Walmart’s shelves or risk losing massive revenue.)
In addition, Amazon has developed such a leading-edge fulfillment network that it in effect acts as a barrier to entry of competitors and instead, leaves no alternative but for some potential competitors to become customers.
I have no desire to see Amazon be declared a monopoly. However, I believe at some point, Amazon could face such a threat. My advice to Amazon is to THINK BIG to increase its competitive position while minimizing the risk of being declared a monopoly by strategically breaking up Amazon:
- Make AWS a separate company.
- Make Amazon Logistics and Fulfillment By Amazon a separate company and become a full-fledged 3PL selling 3PL services across industries. There is incredible potential for Amazon to generate billions in additional revenue operating as a 3PL
- Acquire Target, Costco, Kohl’s, Dollar General, or Menards. Target is at the top of the list for many reasons including the fact that Amazon can open Whole Foods Markets inside Target’s stores. Such decision can significantly increase Amazon’s grocery capabilities, while leveraging the retail space for Amazon’s private label brands
- Go Big into dark kitchens, but also leverage Whole Foods and the soon to be opened Amazon branded stores to prepare and deliver meals to customers; food is the new oil
Subject: Concerns and Recommendations, Last-Mile Delivery
I understand the need for Amazon to create a repeatable and reproducible process for delivering products to our customers. The competitive advantage of Amazon is its speed and ability to exceed customer expectations. Based on recent discussions, it has come to my attention that the strategy chosen by Amazon to meet last-mile delivery needs is to contract 3rd party delivery companies to deliver Amazon products without being Amazon-badged associates.
Based on my prior transportation and last-mile delivery experience, I have grave reservations about the use of contractors to deliver products for Amazon. Among my concerns are the following:
- There is no process for ensuring that drivers hired by contractors have clean driving records and have no criminal or drug arrests/convictions. There is no process for testing drivers to ensure they will follow all speed and traffic laws. There is no process for ensuring that all vehicles used to deliver packages for Amazon are road-worthy and safe.
- Driver turnover will be exceptionally high due to the increased pressure to deliver products based on Amazon’s delivery requirements. In the trucking industry, driver turnover exceeds 110% on average. I estimate that driver turnover among last-mile delivery drivers will be between 60% to 75%, minimum. High levels of driver turnover will result in decreased operational performance, service level variance to customers, and increased pressure on the management of 3rd parties to perform to Amazon’s requirements. In my honest opinion, I believe a situation will be created where corners will be cut.
- We are incurring significant reputational risk by not implementing a bulletproof process for ensuring only safe drivers deliver packages to our customers. The last thing Amazon should want to see is a headline that screams “Pregnant mother killed by driver speeding to deliver Amazon packages.” I believe it is highly probable that accidents will occur resulting in serious injuries and deaths.
- Acquire the last-mile delivery provider with proven driver training, driver testing and certification, vehicle inspections, established safety training and procedures, background checks for drugs, crime, and alcohol offenses; a process for minimizing driver turnover, and a proven record of scaling the business without decreased performance. Build our last-mile delivery program around the recommendations of the leadership of the company we acquire.
- Contract a 3rd party auditing firm experienced in DOT regulations, courier and last-mile delivery best practices, driver hiring, training and certification best practices; vehicle inspections, driver safety training, and best practices for measuring and monitoring drivers. Audit the driver program continuously to ensure all required safety procedures are being followed at all times.
- Implement a zero-tolerance policy for speeding and other rules violations.
- Hire an experienced courier, taxi, or transportation executive to manage the last mile delivery program; DO NOT hire or assign inexperienced personnel to manage and run the program. This is a vital requirement.
- Tie bonuses and promotions to safety and delivery performance.
This article has been reprinted with permission from Brittain Ladd’s LinkedIn page.