|From: Sr K||11/23/2020 3:52:40 PM|
Additionally, Prime members with a myQ smart garage door opener can receive packages inside their garage, and customers can also have their packages delivered to alternative locations.
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||11/28/2020 7:27:55 PM|
|Can Shopify Compete With Amazon Without Becoming Amazon?|
If the key to Amazon’s success has been to put the customer first, for Shopify the key has been to put the merchant first.
By Yiren Lu
New York Magazine
November 26, 2020
In March, the business of Ox Verte, an organic catering company in Manhattan, came to a standstill. Its roster of corporate clients — start-ups that offered free lunches, salespeople with round-table breakfasts — had all implemented work-from-home policies. Events and conferences were canceled for the foreseeable future. If Jessie Gould, the Ox Verte chief executive, hoped to keep her staff employed and her vendors paid, the only path through the pandemic, it seemed, was going to be retail sales. Instead of catering to offices, they would make deliveries to homes. In addition to ready-to-eat meals, they would sell grocery boxes that appealed to health-conscious consumers newly wanting (or forced) to cook. Ox Verte already had a website, but it wasn’t particularly well suited to taking individual orders, so to enable the pivot, the company put up a new online storefront using Shopify, an e-commerce platform based in Canada.
Unlike Amazon, which is an online marketplace where customers go to buy stuff, Shopify is a software platform visible only to merchants. You don’t go shopping on Shopify the way you do on Amazon; Shopify doesn’t list products directly on Shopify.com. Ox Verte used Shopify’s e-commerce software to handle payments and manage inventory. These features have made Shopify popular among “direct to consumer” brands that don’t want to share their profits or see their brand weakened on Amazon or other marketplaces run by a third party, like Wayfair or Walmart. “The whole spirit of the D.T.C. space is owning the relationship with the customer, having that direct line, and Shopify gives you that control much better than Amazon does,” says Paul Munford, an angel investor and the founder of the popular direct-to-consumer newsletter Lean Luxe.
Though Shopify’s operations are by nature low-profile, the company’s success has made it a linchpin in what Ben Thompson, the author of the tech newsletter Stratechery, recently referred to as the “Anti-Amazon Alliance.” (Another member of the would-be alliance, whose name recognition probably resonates more than Shopify’s: Google Shopping.) In the last few years especially, Shopify has struck up partnerships with ad giants like Facebook and taken on the kind of real-world functions that Amazon dominates. The dream for businesses that sell online has long been to have the ability to offer things like two-day shipping, easy returns, premium customer service and overall operational efficiency without having to be on Amazon’s website. Except for established juggernauts like Nike, individual businesses seem unlikely to realize that vision. But in creating software infrastructure that can be shared between merchants, Shopify has not only strengthened the competitive prospects of existing e-commerce businesses; it has also facilitated the emergence of new ones — including, as it turns out, my own.
In April, months after I started reporting this article, I left my full-time job as a software engineer with the intention of creating my own start-up. The plan had been to take some time to conduct user interviews and then figure out a product. But with the onset of the pandemic, my business partner and I saw an opportunity and decided to move immediately. We started an Asian grocery-delivery service, Mellow Groceries, that would let people shop from grocery suppliers in Flushing, Queens, many of which were only taking orders on the Chinese social-media app WeChat. And so I became a user of Shopify myself.
It’s one thing to report on software as an abstraction and quite another to actually use it as a paying customer. Our experience with Shopify was impressive. We uploaded a spreadsheet of product information — images, prices, categories — picked a template for our digital storefront and out popped a fairly sophisticated-looking e-commerce website. There was already a checkout page, which was integrated with various payment providers. Customizable purchase and shipping confirmation emails could be sent automatically to customers. When an order came in, we would get an email alert. There was a dashboard to track the behavior of visitors to the site. Within two days, we were open for business.
Like many other merchants, we were betting on the way Covid-19 was accelerating the spread of e-commerce generally to propel us specifically. It took eight years for e-commerce as a share of retail sales in the United States to grow to 12 percent from 5 percent. It took only the 12 weeks between March and June this year to reach 16 percent from 12 percent. In one sense, Amazon seems to be the biggest winner of the pandemic when it comes to shopping — the company’s stock price has been up by as much as 86 percent since the beginning of the year. But Shopify has benefited too: As supply chains evolved, wholesalers turned to retail sales and local businesses went online. (Through mid-November, Shopify’s stock price has risen 125 percent this year.) In the dark days of April and May, when even Amazon’s usual performance sputtered and those with Prime subscriptions faced delivery dates months into the future, consumers for the first time in years turned elsewhere — their neighborhood hardware store, their local fishmonger, the organic catering company that brought them lunch at the office — for e-commerce purchases. And they found that, often thanks to Shopify’s unseen capacities, the experience was actually pretty good.
Which is not to say that Shopify is the panacea for businesses that want to be online. As my partner and I would discover, while Shopify solves some challenges of starting an e-commerce store, it leaves others unresolved. In a landscape where customer attention is the scarcest resource, Shopify’s very identity as a neutral platform and invisible infrastructure is perhaps both its greatest asset and its greatest limitation.
The story of the last two decades in e-commerce has been, to a large extent, the story of Amazon’s rise, from humble reseller of books to default shopping destination and computing engine of the internet. Books have been written to explain its success, but the simplest answer lies in plain sight, in Amazon’s mission to be a place where customers can find anything they might want to buy online at the lowest possible prices. What will make customers happy? What will make them want to come back and buy again? The company has sought to address these questions again and again. When I buy something on Amazon, I know that it will be delivered for free and in a couple of days; if something is wrong with the purchase, I’ll be able to return it, no questions asked, without even a shipping label or packaging — I can just hand it over to U.P.S. All that convenience alone is worth the $119 annual Prime subscription.
The pampering of Amazon’s customers has been a boon both to them and to Amazon, securing its dominance, but the merchants — the other panel of the triptych — have not fared as well. Since Amazon first opened up its marketplace in 1999 to third-party sellers, 1.7 million of them have signed up, drawn in by Amazon’s huge customer base, sales volumes and its ability to fulfill orders. That last service, Fulfillment by Amazon (F.B.A.), means that a company doesn’t even have to store, pick and pack its own inventory.
Third-party sellers now account for about 60 percent of the commercial activity on Amazon; a big part of the reason Amazon can claim to be “the everything store” is because of these vendors. Yet their proliferation has, paradoxically, undercut what power they can exert. Individually, they have little brand recognition and little negotiating power against the marketplace. Today, if a business lists an article of clothing on Amazon for $50, Amazon gets $8.50 in commission; if the seller opts to advertise on the site, Amazon likely gets at least another $6.50. And if Fulfillment by Amazon is used, Amazon’s total cut gets closer to 40 percent. Amazon ships F.B.A. products in its own envelopes or brown boxes, highlights competing vendors on the site and charges extra for things like early reviews and dedicated account managers. Amazon monitors and collects pricing data and, until last year, prohibited sellers from offering their goods more cheaply elsewhere. (The company’s current policy says it monitors prices to prevent “practices that harm customer trust.”) One brand I had made plans to interview, upon hearing that I would be writing about the ways in which Shopify could compete with Amazon, decided it was no longer willing to talk to me. (Amazon says it has a “mutually beneficial relationship” with its third-party sellers and that “our interests are well aligned.”)
The story of Shopify’s rise, then, is in many ways a reaction to Amazon’s. It’s about a new generation of e-commerce merchants who want a shot at securing control by going out on their own. If the key to Amazon’s success has been to put the customer first, for Shopify the key has been to put the merchant first. After Warby Parker kicked off the direct-to-consumer phenomenon in 2010, Shopify has, by removing the technical barriers to entry in e-commerce, played an outsize role in fueling a boom that has since produced indie favorites like Gymshark, Brooklinen and Allbirds. (The New York Times’s merchandise store is also on Shopify.)
Now that companies like Shopify have turned software into a commodity, what distinguishes you isn’t whether you can write code, but whether you have something to say and an audience to say it to. The roles of “creator” and “influencer,” which began as ambiguous, relatively fringe side gigs, have become aspirational career paths: 86 percent of Gen Z and millennials recently surveyed said they would post sponsored content for money, and 54 percent said they would become social-media influencers. Influencers, in turn, have realized that it’s more lucrative and meaningful to promote their own products rather than someone else’s. With Shopify, celebrities like Kylie Jenner can leverage their pre-existing audiences on Instagram or Snapchat into billion-dollar e-commerce businesses seemingly overnight.
For these sorts of e-commerce brands, what’s being sold isn’t just some product with utility. It’s a feeling, a community, an identity. Shopify, being the blank canvas it is, is much more suitable for this kind of projection than Amazon, which, by virtue of being Amazon, effectively eclipses individual brands on its site. When you buy something from Amazon, you don’t remember whether it’s from Pvendor or Achiou, or some other third-party seller. You’re certainly not likely to tell your friend about it. But when you go to the Allbirds site and purchase a pair of their wool sneakers, you’re making statements, to yourself and to the world: You’re a card-carrying member of the technorati; you’re basic and proud of it.
Allbirds is one of Shopify’s biggest merchants, and it eschews selling through Amazon or other intermediaries like Foot Locker, despite the fact that doing so would be a shortcut to growth. The hits Allbirds would take to the integrity of its brand and pricing power aren’t worth it to the company. “Amazon is designed to commoditize products to the lowest common denominator of what they stand for,” Joey Zwillinger, Allbirds’s co-founder and co-chief executive, told me. “They would love to devolve us into a feature-and-benefit set and then put every knockoff in the world next to us, and then just drive everybody down to the lowest price, even if you’re sacrificing quality.”
On a snowy day in Ottawa this past winter, I visited the company’s headquarters to meet with Harley Finkelstein, Shopify’s chief operating officer at the time (he is now president). With an ebullience that matched Shopify’s soaring stock price, Finkelstein seemed to embody both the company’s wide-reaching ambitions and its Canadian wholesomeness.
Time and time again, we’ve seen that the personalities of leaders leave an imprint on the culture and ambitions of a company. Elon Musk (Tesla and SpaceX) is an intense iconoclast. Sergey Brin and Larry Page (Google) are former academics. Tobias Lütke, the chief executive of Shopify, was an early contributor to the popular open-source programming framework Ruby on Rails and a well-known enthusiast of the video game StarCraft — he recently made a public offer of an internship to the pro gamer known as SeleCT, declaring that his gaming accomplishments were “enough of a C.V.” Both Lütke, who is 40, and Finkelstein, 37, are active on Twitter, where Lütke has noted that he has rarely worked more than 40 hours a week (unlike Musk). At a time when Silicon Valley was chasing no-holds-barred growth, Shopify waited almost five years to raise significant amounts of venture capital, and despite the demands of various investors that the company move to Silicon Valley, it has remained based in Ottawa.
You get the sense, when talking to Finkelstein, that he relishes that Shopify has succeeded despite these departures from Silicon Valley orthodoxy. You can also tell how closely he and the company embrace the notion that they are the good guys. Lütke has said, “Amazon is trying to build an empire, and Shopify is trying to arm the rebels.” It’s an interesting thought, less hawkish than defensive, as though plucked from a galaxy far, far away.
Like Lütke, who came up with the idea for Shopify after creating software for an online snowboard shop, Finkelstein had firsthand experience as a merchant: During law school at the University of Ottawa in the late 2000s, he sold custom-designed T-shirts to pay for tuition — and he did so using Shopify’s software, he says, to easily “set up a beautiful, scalable online store.”
The company has come a long way in the decade since then. In the third quarter of 2020, Shopify’s gross merchandise volume was $30.9 billion, more than double what it was a year ago. About a million merchants use the platform. Most of these are small- and medium-size businesses that pay $29 a month for the basic software plus a per-transaction credit-card processing fee. But some 7,100 Shopify merchants subscribe to Shopify Plus, a premium version of the software that enables much more customization, costs in the thousands of dollars a month and now accounts for 25 percent of Shopify’s monthly recurring revenue.
In addition to providing software, Shopify has been expanding its offerings on e-commerce’s “back end” — in logistics, shipping and fulfillment. Last year, it introduced Shopify Fulfillment Network, a direct competitor to Fulfillment by Amazon. Instead of building or taking over its own warehouses, it created a network of seven existing third-party logistics providers (known in the industry as 3PLs) and retrofitted their software and hardware to closely integrate it with the Shopify platform. For Shopify merchants, this has meant a much more unified offline-online experience. And for the 3PLs, it brings them business. “One 3PL owner said to me, seven out of 10 merchants who are walking through the door are on Shopify today,” says Thomas Epting, who is the director of Shopify Fulfillment Network. “Individually, no one of them is big enough for me to want to go after, but collectively, if you deliver them to me in this easy way to fulfill, then I want that business all day long.”
In contrast to Amazon, which exercises complete control over its platform, Shopify tries to maintain a partnership ethos. In May, it partnered with Facebook to open Facebook Shops, a new feature that allows businesses to create storefronts right on Facebook and Instagram. For the announcement, Mark Zuckerberg brought Lütke on camera with him, effectively defanging what could have been viewed as a competitive threat.
And unlike Facebook itself, Shopify has successfully built a true ecosystem for developers on top of its platform, akin to Google’s Android operating system. Shopify fulfills what’s known in the software development community as the “80 percent use case,” which means it provides 80 percent of the features that merchants need and third-party developers supply the rest — building customized apps for, say, reviews, or discount codes for influencers to give away. But Finkelstein is keen to point out that while Shopify made a billion dollars in revenue last year, Shopify app developers made almost $7 billion as a community. “There’s a start-up in Winnipeg that employs 400 people,” he says, “and almost all they do is create Shopify apps.”
Through Mellow Groceries, my business partner and I got a peek into this thriving, global Shopify community online. We paid for several Shopify apps to add ZIP-code checking and shipping categories onto the site. From a teenager in a 2018 YouTube video, we learned what to do when we were getting tons of add-to-carts but no sales. (That YouTuber now has 243,000 subscribers.) On the subreddit r/shopify, I learned what the term “drop-shipping” means: It refers to an e-commerce model in which the retailer keeps no inventory but instead simply ships its products directly from its supplier to the end customer. The stereotypical drop-shipper fulfills its orders from the Chinese e-commerce site AliExpress, or even Amazon, but we too were in effect drop-shipping groceries from Flushing grocery suppliers. There is, in these online communities, an almost jubilant rejection of formal education, a sense that anything is possible if you are young, hungry and ready to hustle.
This, of course, is a particularly rosy view of entrepreneurship. The reality is that while many merchants have made money as Shopify stores, many have not. Drop-shipping, in particular, has prompted criticism for luring in the young and ingenuous — because even though drop-shippers do not handle inventory, they still have to pay upfront for any advertising or marketing. The need to reach customers has spawned a cottage industry of so-called gurus, many of whose marketing materials evoke get-rich-quick schemes. (“I’m 24, graduated college, never had a job and make 500k a year off e-commerce!”)
Similarly, a partnership ethos sounds great and offers flexibility and reach, but there are also real drawbacks in trying to align the incentives and interests of so many parties. Facebook and Shopify currently present a united front, but it’s hard to imagine, given how important commerce is to the monetization of Facebook’s platforms, that Facebook won’t eventually try to cut Shopify out of the equation. And Shopify Fulfillment Network will need to balance the customization that brands want with the standardization that is necessary to yield efficiency. Part of what enables Amazon to offer two-day delivery, after all, is that everything is shipped in the same kinds of packaging by Amazon employees trained from the same manual.
My partner and I spent our days posting blurbs on Facebook groups, talking to moms on Nextdoor, the neighborhood social-media site, and experimenting with various kinds of referral programs. Naïvely, the one thing we didn’t want to try was paying for digital advertising, in part because grocery margins were already razor thin, and if we had to pay to acquire customers, we would have lost money on every transaction. Perhaps as a result, we were never able to generate more than a handful of orders a day, far from the thousands we would have needed to break even.
We weren’t the only ones finding the direct-to-consumer food business challenging. In October, Jessie Gould wrote on Medium that Ox Verte was winding down its home-delivery service. “The world has changed dramatically,” she said, and Ox would have to as well. She planned to take some time to figure things out, but the ambition was to build a company that would provide plant-based food to an even broader audience. “For the past six years, Ox has transformed the way NYC office workers eat, and I believe that we can do the same for all American families.”
As for my business partner and I, we closed Mellow down after a month, having stumbled upon what many other Shopify merchants well knew: You need two components to build a successful e-commerce business, the software that runs the online store and the marketing to get customers to come to the store. A large part of what makes marketplaces like Amazon so attractive to merchants — why they keep selling there despite the lack of data transparency and the costs — is that it provides both components. Shopify, on the other hand, only provides the former. If you sell a product for $10 on a Shopify store, you’re paying 59 cents for payments processing and maybe a few dollars more for storage and fulfillment, but that doesn’t include any marketing. When I asked Finkelstein about this during our interview, he acknowledged it, albeit euphemistically. “There is this resourcefulness that is required,” he said. “That’s what’s exciting about commerce and retail in 2020. It’s about who can figure out how they can connect best with a potential set of customers.” The gist of his response was that building an e-commerce brand today is essentially a marketing exercise; it’s the one thing that you, as the entrepreneur, can’t outsource to Shopify.
You can, however, outsource it to the big ad networks. For most of the mid-to-late 2010s, the playbook for a direct-to-consumer brand was straightforward: a Shopify site and Facebook ads. Let’s say you spend $15 to manufacture a sweater, pay another $15 to market it through Facebook ads, then sell it for $80 on your Shopify store and pocket $50. The problem was that Facebook, like Amazon, is a landlord who knows how to squeeze blood out of a stone. By early 2020, the same brand was paying $75 per sweater to Facebook and losing money on every transaction. Even for brands that were able to keep down their C.A.C., or cost of acquiring a customer, they often found it was a strategy that didn’t scale up. As they went from spending $500 a day on Facebook ads to $5,000 a day, the digital audiences they were targeting remained roughly the same size, driving up the costs of getting consumers while also challenging their patience. “It’s the easiest time in the world to make something and build a business to 20 million” in annual revenue, says Allbirds’s Zwillinger. “Now, getting beyond that — you need to have great business strategy and great product.”
He draws a line between truly distinctive, innovative products with strong organic marketing (like Allbirds, of course) and white-label razors, toothbrushes, phone chargers and groceries gussied up in fancy packaging that constitute a good proportion of the direct-to-consumer world. The former, he believes, can make a go of selling their wares exclusively on Shopify, while the latter are commoditized products that will ultimately have to go to Amazon, because that’s where their customers are.
Brooklinen, for instance, a well-funded direct-to-consumer sheets company that runs on Shopify (and has blanketed the New York subway system with ads), began selling on Amazon as well two years ago. “We got a report that we had thousands of people searching for Brooklinen on Amazon search,” Justin Lapidus, the company’s senior vice president for growth marketing, told me. “And that more than 90 percent of those people were ending up buying other products that were not Brooklinen.” For Brooklinen, it was a worthwhile trade to give up some profit in exchange for access to a market it otherwise wouldn’t be able to tap. “A lot of people just say they only buy things on Prime,” Lapidus said.
Shopify got to where it is today by expressly not being a marketplace, by presenting an alternative direct-to-consumer model. But in doing so it has accumulated the clout, power and cash that matches that of many marketplaces and dwarfs the majority of its clients. There is a world in which Shopify could wield this status to direct traffic toward brands. There is a world, in other words, in which Shopify could become a marketplace itself.
When I raised the possibility with Finkelstein in February, he said “not now, not at the moment.” And yet, only months later, in May, Shopify started a new consumer-facing app called Shop, which it described as a “digital assistant” for customers making purchases from Shopify merchants. Built from an earlier app called Arrive, which let you track the progress of your packages, the app is, if not a marketplace then an aggregator at least. Businesses you’ve already purchased from are pinned, Instagram-stories-style, for easy access, while a section underneath displays new products and recommendations. On another tab, a recently added pandemic-era feature allows you to browse local businesses on Shopify. Because you still have to leave the app to make purchases, Shop resembles Google Shopping more than Amazon, and it lacks the convenience of a single cart. It’s a product that reflects the philosophical tug-of-war between Shopify’s original antimarketplace stance and its stated ideal of helping merchants be as successful as possible.
Because what if the way to help merchants is to bring them customers through more consolidation? In a recent post on the industry blog 2PM, Web Smith, an e-commerce pundit, bemoaned the absence of a Shopify ad during last year’s Super Bowl. The sporting event, he pointed out, would have been a great chance to highlight selected Shopify-powered brands, in a medium that would have been prohibitively expensive for any one of them individually. “Imagine a $5.7 million 30-second advertisement that sent tens of millions of Americans to marketplace.shopify.com,” he wrote, envisioning such a site. “When those potential customers, developers and consumers arrive, they’d see a curation of Shopify’s greatest brands — new and old, established and fresh.”
In talking to merchants, it becomes apparent that it isn’t so much that they dislike marketplaces inherently; it’s that they dislike the symptoms that marketplaces typically engender. Every brand would love exposure to huge amounts of passing traffic — just not if that means they have to be a serf to the feudal lord of the marketplace. For Zwillinger, an ecosystem closer to that of Alibaba’s Tmall, where companies maintain control of their brands and pricing, would be appealing, especially if consumers go there. “If you can build that market,” he said, “that truly would be the antidote to Amazon.”
The reality is that Shopify long ago ceased to be just an agnostic builder of e-commerce websites. Shopify Capital is a profit-seeking funding program that is able to provide loans and cash advances to merchants precisely because Shopify has access to a great deal more merchant data than banks do. Shopify may have an avowed aversion to kingmaking, but offering loans or advances to merchants is just that, only in another form, Smith argues. Given that it’s already happening, Shopify might as well go even further.
Indeed, Shopify’s products today range from Shop Pay, which competes against Apple, Google and Amazon Pay, to Shopify Fulfillment Network, which competes against Fulfillment by Amazon, to Point of Sale hardware, which competes against Square. Many of these initiatives are new and some will probably not pan out. Still, if even a portion succeed, they will bind Shopify merchants much more closely to the platform in a way that its core product, the site builder, which by this point is largely commoditized, does not. But if there is any reassurance for merchants that Shopify won’t become like Amazon, it’s that in this interim period Shopify needs the merchants as much as — and perhaps even more than — merchants need Shopify.
“You think about the three classic axes of business: convenience, quality and price,” says Nikhil Basu Trivedi, a venture capitalist who has invested extensively in the e-commerce space (he is a shareholder in both Amazon and Shopify). “Amazon is very difficult to beat, I think, on both convenience and price. So really the way to go off on them is by offering differentiated, high-quality products.”
In this, Shopify is aided by a shift in the culture that it helped bring about. In the future, “everyone will be doing entrepreneurial stuff, even if you don’t call yourself an entrepreneur,” Finkelstein told me. “You’ll see more people who have a great following on Twitter decide that they’re going to monetize that.” He went on to say: “The idea of having a safe job is something our parents had.” And why not? The cost of failure in entrepreneurship, he claims, is trending toward zero.
Toward the end of our interview, Finkelstein made a statement about how Shopify was the company best positioned to “own entrepreneurship” the way that Facebook owns social and Google owns search. At the time, it felt a bit too slick for me. But then I thought about it. Mellow Groceries was in many ways an expression of a certain perspective on the world that I had — that Asian groceries were hard to access in New York and that in the middle of a pandemic there were people who would pay for that access. If I had had to write the code myself for a whole website to test that idea, I probably wouldn’t have attempted it. Ultimately, I did not succeed as an e-commerce merchant, but Shopify made it possible for me to try.
Illustrations by Jaedoo Lee
Yiren Lu is a writer and software engineer in New York City. She last wrote about the Chinese super-app WeChat.
|RecommendKeepReplyMark as Last Read|
|From: Sr K||11/30/2020 12:01:12 AM|
| WORLD OBITUARIES|
Former Zappos Chief Tony Hsieh Exalted Customer Service, Set High Bar for Rivals
Entrepreneur nurtured online shoe seller, was bestselling author and management guru
Tony Hsieh shown at a Las Vegas conference in 2017.
PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
Updated Nov. 29, 2020 5:25 pm ET
Tony Hsieh, who led online shoe retailer Zappos.com Inc. for two decades, had some surprising guidance for employees: If customers wanted a shoe Zappos couldn’t supply, the representative should direct them to a rival that could.
That service, he figured, was a good way to cultivate loyal customers.
Mr. Hsieh, an internet pioneer, customer-service fanatic, management guru and bestselling author, died Friday at the age of 46 of injuries from a house fire in New London, Conn.
As a young entrepreneur, he changed the face of internet retailing with bold strokes. To overcome customer skittishness about ordering shoes without trying them on first, Zappos offered free shipping and free returns, giving customers as long as a year to send back unwanted products. Customers could order dozens of pairs of shoes and keep only those they liked—a policy that set a high bar for rivals.
Zappos.com’s Tony Hsieh offered insights on hiring practices in a 2013 WSJ interview.
The Harvard-educated chief executive, whose parents were immigrants from Taiwan, also insisted on keeping his call center in the U.S. rather than outsourcing it to an overseas supplier that might not meet his exacting standards. Instead of being compensated for handling a high number of calls quickly, Zappos employees were encouraged to spend hours on the line with a single customer if that’s what it took to reach satisfaction.
Virtually all retailers claim to offer great service, a generous assortment and competitive prices, said Mark A. Cohen, director of retail studies at Columbia University Graduate School of Business. “Most of them,” he added, “are not telling the truth.” Mr. Cohen, also a longtime Zappos customer, said the company persisted with what he called an incomparable service level.
Alfred Lin, who met Mr. Hsieh at Harvard and served as chief financial officer of Zappos in its early years, said Zappos succeeded partly because of his friend’s willingness to try things that struck others as crazy. One of those ideas was offering recent hires a month’s pay if they quit. That proved a good way of eliminating employees who weren’t highly committed, Mr. Lin said.
Lavish customer service was costly in the short run but paid off long term, Mr. Lin said. Those who returned the most shoes also ended up paying for lots of shoes and were the most profitable customers, Mr. Lin said.
A memorial image of Tony Hsieh was displayed in Las Vegas on Saturday. PHOTO: STEVE MARCUS/LAS VEGAS SUN/ASSOCIATED PRESS
Mr. Hsieh, fueled by Red Bull and Grey Goose vodka in his early days as a sleep-deprived entrepreneur, came across as shy and reserved but loved to throw huge parties. For a spell he lived in an Airstream trailer in downtown Las Vegas, where he kept a pet alpaca named Marley.
He co-founded an online ad company in his early 20s and sold it to Microsoft Corp. for about $265 million in 1998. The next year he invested in what became Zappos, nursed it through the dot-com bust and later became CEO. Amazon.com Inc. bought Zappos in 2009 for about $1.2 billion and, impressed with Mr. Hsieh’s style, let it operate as an autonomous subsidiary led by Mr. Hsieh, whose name is pronounced shay. He retired in August as chief executive of Zappos.
Phone numbers were displayed prominently on the website, and customers were encouraged to call Zappos representatives rather than email them. “The telephone is one of the best branding devices out there,” Mr. Hsieh wrote in his 2010 bestselling memoir, “Delivering Happiness.”
He was known for management experiments that struck some as visionary and others as wacky. Among the company’s 10 core values was “Create Fun and a Little Weirdness.” One of its conference rooms featured a pit filled with small plastic balls. In recent years, Zappos has tried out a management style called Holacracy that seeks to eliminate managers and let employees figure out what to do.
The oldest of three sons, Tony Hsieh was born Dec. 12, 1973, in Illinois, where his parents were graduate students. When he was 5, the family moved to the Lucas Valley area of Marin County, Calif. His mother was a social worker, and his father a chemical engineer at Chevron Corp.
At age 9, he persuaded his parents to pay $33 for a box of dirt containing at least 100 earthworms. His idea was to create a worm farm in his backyard and sell his slithering product to the public. He buried chicken wire in an effort to keep his worms from escaping and fed them with raw egg yolks. After a month, he discovered they had all escaped.
His SAT training began in sixth grade. His parents also required him to take piano and violin lessons. To make them think he was practicing, he recorded practice sessions and played them back early on weekend mornings.
His mother hoped he would go to medical school or earn a Ph.D. He preferred the idea of going into business so he would be free to do whatever he pleased.
As a teenager he delivered newspapers but quit after calculating that he was making only about $2 an hour.
Tony Hsieh, second from left, at Microsoft headquarters in 2008, with Bill Gates, center.PHOTO: STEPHEN BRASHEAR/ASSOCIATED PRESS
In the magazine Boy’s Life, he found an ad for a $50 kit that could make pin-on photo buttons and persuaded his parents to buy the device. He advertised the service and soon was making about $200 a month through mail orders. The venture persuaded him, he wrote later, that he could run a successful business with no face-to-face contacts.
Later, he spent $800 for a Boy’s Life ad offering to sell magic-trick kits for $10 apiece. He received one order and wrote the venture off as a lesson in humility.
In high school, he signed up for a Pascal computer-programming course and hung out in the computer lab. Soon he was making $15 an hour working for a programming company. To get more free time, he wrote, “I started making deals with my teachers in which they agreed to let me not attend their classes as long as I did well on their tests.” When one teacher assigned him to write a sonnet, he decided the iambic pentameter form was too much work and instead wrote 14 lines in Morse code. The teacher gave him an A+.
At Harvard, he studied computer science and generally tried to do the smallest amount of schoolwork required for decent grades while earning money through computer programming and managing a pizza supplier. He signed up for Mandarin because he already knew how to speak it.
After graduating, he joined Oracle Corp. in 1995 and was trained in database programming. Five months later, he quit to focus on a business he and a Harvard classmate, Sanjay Madan, had started to create websites for companies. Quickly bored by that business, they transformed it into the LinkExchange internet ad service, based in San Francisco, and attracted funding from Sequoia Capital.
Within two years, Mr. Hsieh was bored by that business and agreed to sell it to Microsoft. To celebrate, he took about 15 friends on a three-day Caribbean cruise.
With another friend, Mr. Lin, he set up an investment fund and business incubator, Venture Frogs. They soon heard from Nick Swinmurn, who had set up shoesite.com and aimed to create the Amazon of shoes. Mr. Hsieh thought that it was “like the poster child of bad internet ideas,” as he put it later. Who would buy shoes without trying them on? He changed his view after Mr. Swinmurn told him that 5% of U.S. shoe sales were already being done via mail order.
Tony Hsieh before the start of a meeting in 2012 in Las Vegas.PHOTO: DAVID BECKER/ZUMA PRESS
Mr. Hsieh suggested finding a snappier name for the website. Mr. Swinmurn came up with Zapos, derived from a Spanish word for shoes. Mr. Hsieh told him to add another P so people wouldn’t call it ZAY-pos. Venture Frog provided seed investment.
After Sequoia initially declined to invest in Zappos, Venture Frog put in more capital, and Mr. Hsieh began spending more time advising the shoe company. Then came the 2000 dot-com stock crash, and funding from other potential investors dried up. Mr. Hsieh decided to spend full time guiding the people he called Zapponians—and prove doubters wrong. The first step was to lay off some of the staff and cultivate the ones willing to bet their careers on online shoe sales.
To keep the unprofitable business going, Mr. Hsieh raised cash by selling his prized San Francisco loft. To give Zappos a better assortment of shoes and more reliable service, the company began holding its own inventory instead of relying on shoe manufacturers to ship the product. Sales jumped.
Zappos initially outsourced the warehouse operations. That proved disastrously unreliable, and Mr. Hsieh scrambled to set up a company-owned warehouse in Kentucky. For an e-commerce company, he concluded, warehousing and related logistics were too vital to be entrusted to outsiders.
MORE ON TONY HSIEH
Before Hsieh’s Death
Among cities identified as good places to open a call center was Las Vegas. Mr. Hsieh, a poker player who had spent time at high-stakes tables there, decided to put both the call center and the headquarters in Las Vegas so front-line customer-service people would be at the heart of the company rather than on the fringes.
In Las Vegas, Mr. Hsieh invested $350 million into revitalizing part of the city’s downtown including real estate, restaurants, retail and a tech startup fund starting in 2012. His vision included the development Container Park, a quirky shopping and entertainment center where retailers operate in converted shipping containers. Visitors are greeted by a giant sculpture of a praying mantis that shoots fire.
Mr. Hsieh was unmarried and had no children. In 2012, he told the New York Times that he enjoyed “hanging out with different people” rather than formally dating. “I’m not opposed to the idea of marriage,” he said. “But statistically, if half of all marriages end in divorce, and of the ones that remain married many are unhappily married, the odds are stacked against you.”
Friends recalled his sense of humor. After Zappos had a rash of late deliveries in 2014, he sent an apology note to customers and provided a phone number for use by anyone who suffered “undue hardship.” As for those who were merely annoyed, he said, they were welcome to call Zappos and “ask whoever answers the phone to do something weird and embarrassing, like sing ‘I’m a Little Teacup.’”
Write to James R. Hagerty at email@example.com
|RecommendKeepReplyMark as Last ReadRead Replies (1)|
|To: Sr K who wrote (164166)||11/30/2020 1:23:54 AM|
|From: Sr K|
|Before Tony Hsieh’s Death, Firefighters Rushed to Burning Home With Trapped Man |
Recordings of Connecticut first responders offer look at the circumstances surrounding Hsieh’s death
Tony Hsieh at a conference in Las Vegas in 2017.
PHOTO: RICHARD BRIAN/REUTERS
Nov. 29, 2020 6:03 pm ET
Recordings of emergency responders offer a glimpse into the circumstances surrounding a Connecticut fire that led to the death of former Zappos.com Inc. Chief Executive Tony Hsieh.
First responders in New London, Conn., rushed to a burning three-story, beachfront home around 3:34 a.m. on Nov. 18, where an emergency worker said one man was “stuck inside,” according to a radio recording of first responders. Some firefighters and dispatchers referred to the victim as “trapped,” while one said the man was “barricaded” inside.
“The male is barricaded inside,” an emergency worker said over the radio. “He’s not answering the door. Everyone else is outside the house. They are trying to get him to open up.”
The recordings were archived by Broadcastify, which streams public-safety, marine and aircraft radio dispatches, and verified by Storyful, a news and intelligence agency, which is owned by The Wall Street Journal’s parent company, News Corp.
Mr. Hsieh’s attorney, Puoy Premsrirut, and Thomas Curcio, the New London fire chief, didn’t respond to questions about the recordings. In response to questions about Mr. Hsieh’s death, Chief Curcio confirmed that firefighters were called to the home, removed a man and took him to the hospital. Ms. Premsrirut said Mr. Hsieh died from injuries suffered in a Nov. 18 fire in New London.
READ THE FULL OBITUARY FOR TONY HSIEH
Tony Hsieh nurtured the online shoe seller and became a bestselling author and management guru.
Chief Curcio said the fire was still under investigation. No cause has been released.
Dispatchers sent police officers to the home and called the New London fire chief and fire marshal to the waterfront house on Pequot Avenue, a tree- and bush-lined row of large, modern houses, overlooking a sandy beach at the mouth of the Thames River.
Firefighters went to the back of the house where they had received reports of smoke, according to the recordings. Chief Curcio said they forced their way inside to find the man.
“We have one victim being pulled from the fire now, unresponsive,” a first responder said. “And we’re going to the hospital.”
Chief Curcio said first responders performed CPR on the victim. Mr. Hsieh was eventually flown to the Connecticut Burn Center in Bridgeport, Conn., where he died Friday, a hospital spokesman said.
Property records show the home was purchased for $1.3 million in August by a woman named Rachael Brown. A longtime Zappos training manager is named Rachael Brown. She didn’t respond to messages seeking comment. Mr. Hsieh lived in Las Vegas.
An unidentified other person suffered a hand injury in the fire, according to the recording. The person refused an ambulance and further medical attention.
—Alejandro Lazo contributed to this article.
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved.
Appeared in the November 30, 2020, print edition as 'Recordings Raise Questions on Death.'
|RecommendKeepReplyMark as Last Read|
|From: Sr K||11/30/2020 9:47:18 PM|
|Former Zappos CEO Tony Hsieh’s Death Is Ruled Accident by Medical Examiner |
Tech entrepreneur died from complications of smoke inhalation, office says
Tony Hsieh, shown at the 2013 Aspen Ideas Festival, helped change the face of internet retailing.
PHOTO: LYNN GOLDSMITH/ZUMA PRESS
Updated Nov. 30, 2020 9:06 pm ET
Former Zappos.com Inc. Chief Executive Tony Hsieh died from complications of smoke inhalation, according to the Connecticut Office of the Chief Medical Examiner, which ruled the death an accident.
Mr. Hsieh, who led online shoe retailer Zappos.com Inc. for two decades, died Friday at the age of 46 in New London, Conn. His attorney, Puoy Premsrirut, said Mr. Hsieh died from injuries suffered in a Nov. 18 fire in New London.
New London Fire Chief Thomas Curcio didn’t return calls seeking requests for comment Monday. Chief Curcio previously said the fire was still under investigation. No cause has been released.
First responders in New London rushed to a burning three-story, beachfront home around 3:30 a.m. on Nov. 18, and upon arrival saw dark smoke coming from a storage area at the back of the house, police said in a news release Monday.
People at the scene told first responders that Mr. Hsieh was locked inside the storage area, and emergency personnel then broke down the door and extinguished the fire, police said. The New London police department and fire marshal’s office are still investigating.
According to a radio recording of first responders, an emergency worker said one man was “stuck inside.” Some firefighters and dispatchers referred to the victim as “trapped,” while one said the man was “barricaded” inside.
Chief Curcio previously said first responders performed CPR on a man rescued from the fire and took him to the hospital. Mr. Hsieh was eventually flown to the Connecticut Burn Center in Bridgeport, Conn., where he died, a hospital spokesman said.
Property records show the home that sustained the fire was purchased for $1.3 million in August by a woman named Rachael Brown. A longtime Zappos training manager is named Rachael Brown. She didn’t respond to messages seeking comment. Mr. Hsieh lived in Las Vegas.
Mr. Hsieh changed the face of internet retailing as a young entrepreneur. To overcome customer skittishness about ordering shoes without trying them on first, Zappos offered free shipping and free returns, giving customers as long as a year to send back unwanted products.
Write to Kate King at Kate.King@wsj.com
|RecommendKeepReplyMark as Last Read|
|From: Sr K||12/1/2020 12:33:10 PM|
Amazon's cloud unit taps own chips for new supercomputing offering
Amazon Web Services, or AWS, sells its computing services based on the customer's choice of an underlying central processor chip. Software developers have traditionally chosen between Intel ( INTC
) or AMD products, but since 2018 Amazon ( AMZN
) has also offered its own "Graviton" chips designed with technology from Arm, which is in the midst of a $40 billiontakeover by Nvidia Corp. ( NVDA
|RecommendKeepReplyMark as Last ReadRead Replies (1)|
|To: Sr K who wrote (164171)||12/5/2020 5:02:58 PM|
|AMZN has not been tracking with QQQ this week .. big bummer. Hoping it is building some pent up energy and will get a boost during the "Santa rally" later this month.|
I've seen lots of institutional call buying in AMZN this past week in early 2021 expiries.. it'll go up, just a question of when.
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||12/10/2020 11:57:05 PM|
|Amazon Wants to Train 29 Million People to Work in the Cloud|
New programs seek to help people from Montana to Nigeria attain roles ranging from tech support to machine learning
By Chip Cutter
Wall Street Journal
Updated Dec. 10, 2020 3:41 pm ET
Amazon. AMZN -0.09% com Inc. announced an effort Thursday aimed at helping 29 million people world-wide retrain by 2025, giving them new skills for cloud-computing roles as the pandemic upends many careers.
The online giant committed $700 million last year to reskilling 100,000 of its own workers in the U.S. The new effort will build on existing programs and include new ones in partnership with nonprofits, schools and others.
Amazon’s latest initiative is geared toward those who aren’t already employed at the company. The idea, it says, is to equip people with the education needed to work in cloud-computing at a number of employers seeking to fill high-tech positions. While some participants might find jobs at Amazon, it is more likely they would get hired at other companies, including many that use Amazon Web Services, the online retailer’s cloud division.
The free training could support those looking to prepare for entry-level support positions or in helping existing engineers broaden their expertise in areas like machine learning or cybersecurity, the company says.
Teresa Carlson, a vice president at Amazon Web Services, says the company hears almost daily from its clients that they can’t find the right people to fill technical jobs as many organizations move their applications and processes to the cloud.
“We need our customers to have the right skills if they’re going to go through a digital transformation,” she said.
Employment data showed the pace of hiring slowing substantially in November. WSJ’s Eric Morath breaks down why the labor-market recovery has lost its momentum. Photo: Jeff Chiu/Associated Press
Amazon declined to disclose the cost of its new training programs, but improved industry education benefits the company in other ways. It has hired 275,000 full- and part-time employees in the U.S. since the start of the year. Ms. Carlson says that Amazon finds it must retrain some new hires after discovering their technical capabilities are lacking once they are in the door.
“When you spend as much time as we do hiring people and getting the right people on board, it’s kind of frustrating when you bring them on and you’re having to spend another year or more getting their skills up to speed,” she said. “We see it ourselves, so we put these programs into place. We hear it from our customers and our partners, and it’s the right thing to do.”
More sophisticated cloud skills might be crucial to Amazon’s business. The company’s cloud division has become one of its most important profit drivers. It posted $11.6 billion in sales in the quarter that ended Sept. 30, up 29% from a year earlier.
Cloud computing, which was hot before the pandemic, has become even more central to many companies as they speed up their adoption of such digital tools. Amazon’s cloud rivals, including Microsoft Corp. and Google-parent Alphabet Inc., also have seen strong growth in the sector as users embrace their services, as have companies such as Zoom Video Communications Inc. that provide cloud-based products to facilitate remote working and teaching.
Most of Amazon’s courses can be taken remotely, through Amazon itself or via partners that focus on helping people find new careers. Those organizations are located in places ranging from Newark, N.J., to Missoula, Mont., and internationally from Nigeria to Australia.
The content varies widely. One two-day program prepares students to work as entry-level fiber-optic fusion-splicing technicians, an in-demand field that involves testing and installing the delicate cables made up of minuscule glass tubes that power cloud data centers. Another course, called Cloud Practitioner Essentials, covers the basics of the AWS cloud, while other training focuses on more advanced skills, such as machine learning.
The push could help millions of workers navigate career changes without incurring steep debt at a time when many find themselves out of work and burdened by student loans.
A report commissioned by Amazon and conducted by researchers at consulting giant Accenture PLC found that 33 million Americans could double their income, earning a median salary of $35 an hour, by gaining new training in what the authors describe as “opportunity jobs,” or those in industries deemed at low risk of automation that are expected to grow. Many of those positions are in digital fields.
The obstacles to retraining or learning a new skill can be great. Many people in low-paying jobs or out of work might struggle with child care issues or a lack of time to undertake a new program, to say nothing of the “change fatigue” some feel in pursuing new career paths, said Kelly Monahan, a global talent lead researcher at Accenture. Still, digital skills are likely to be a career differentiator.
“The technical side of work is becoming so paramount,” she said.
Jarred Gaines started 2020 working as a fitness director and personal trainer at a Boston area gym. The 35-year-old planned to launch his own fitness facility later in the year, but the pandemic squashed those ambitions. In May, he started a 12-week course through a free, Amazon-supported
Mr. Gaines—who said he still is passionate about fitness but doesn’t miss the 5 a.m. client appointments—says a technical career hadn’t been on his radar. “My experience with tech was mostly upgrading my cellphone for the newest one Apple told me to,” he said.
He hopes to take on increasingly sophisticated cloud and engineering roles, and continues to take community college courses, but he acknowledges a career shift takes additional effort. “Be ready to grind,” he said.
Amazon says it is on track in its own efforts to retrain its workforce. The company trained 15,000 workers in the first year of its upskilling pledge announced in 2019 and says it would meet its goal of reaching 100,000 staffers by 2025. The most popular retraining program internally so far has been Amazon Career Choice, in which the company subsidizes community college courses, setting up employees to eventually leave Amazon. Most courses so far have focused on health care, transportation or technical jobs but can vary regionally, a spokeswoman said.
Write to Chip Cutter at firstname.lastname@example.org
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved.
Appeared in the December 11, 2020, print edition as 'Amazon Offers Plan to Train Millions to Work in the Cloud.'
|RecommendKeepReplyMark as Last Read|