What didn’t Jeff Bezos know and when didn’t he know it?

Discussion
Source: C-SPAN/User-Clip: McGrath Bezos
Jul 30, 2020
George Anderson

A Republican representative from Wisconsin may deserve some social media mocking for not knowing the difference between Facebook and Twitter after yesterday’s “big tech” Congressional hearing. What, however, can you say of Jeff Bezos?  Amazon’s CEO offered less than satisfactory answers to questions about his company’s vetting of third-party sellers and its alleged use of sales data to compete directly with the marketplace vendors and brands it claims are so important to its business.

Rep. Lucy McBath (D – GA) questioned Mr. Bezos about the information that Amazon requires third-party sellers to provide in its efforts to prevent the sale of stolen goods on the site. When asked how his company verified that information supplied by third parties was accurate, he said, “I don’t know the answer to your question.”

Mr. Bezos would not be the first CEO of a company not to know “how the sausage is made,” so to speak, but his lack of a ready-prepared answer is startling since it was common knowledge that the sale of counterfeit and stolen goods on the platform would be on the list of questions he would be asked.

For the record, Amazon introduced a program earlier this year that involves in-person verification of third-party marketplace sellers. When the pandemic hit, Amazon shifted to a video call verification system.

Mr. Bezos also said in his testimony that his company will pursue action with law enforcement authorities when and if it becomes aware of sellers engaged in illegal activities using its marketplace.

In response to a question by Pramila Jayapal (D-WA) about a Wall Street Journal report earlier this year that Amazon has leveraged sales data from third-parties to launch competitive private label items, Mr. Bezos cited company policy that prohibits that activity.

“I can’t guarantee you that that policy has never been violated,” he said. “We continue to look into that very carefully. I’m not yet satisfied that we’ve gotten to the bottom of it, and we’re going to keep looking at it. It’s not as easy to do as you would think because some of the sources in the article are anonymous.”

DISCUSSION QUESTIONS: How important is ending the sale of stolen and counterfeit goods to Amazon’s future success? What about allegations that it is using data to compete directly with third-party sellers on its platform?

Please practice The RetailWire Golden Rule when submitting your comments.
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"Jeff Bezos has jumped the shark."
"Perhaps not knowing is purposeful. Not knowing prevents you from having to say “yes we do that. It’s part of our growth strategy.”"
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39 Comments on "What didn’t Jeff Bezos know and when didn’t he know it?"


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Mark Ryski
BrainTrust

Ending counterfeit goods is an ongoing challenge, but I don’t think it’s impacted Amazon’s success in any material way. The allegations about competing directly with third-party sellers are more problematic. The fact is, sellers can choose to be on Amazon or not, however, given its size and place in online retailing, the choice for these sellers is difficult: sleep with the enemy (Amazon) or try to go it alone without the massive distribution from Amazon? This is not a new issue, and I was unsatisfied with Bezos’ answers to these questions.

Zel Bianco
BrainTrust

Did he really not know the answers to those questions or was he displaying his version of CYA?

Suresh Chaganti
BrainTrust

Jeff Bezos’ performance is disappointing, but expected. Apple, Amazon and Facebook bend over backwards to portray an image that they are not very big, and claim innocence or ignorance about indulging in anti-competitive practices. It is laughable.

Bob Phibbs
BrainTrust

Does Amazon care? Nope. Their goal will be one bill each month for your digital subscriptions, healthcare, banking, insurance, and even merchandise. Make no mistake the data is all Amazon is about as it digitally connects the dots to steal market share and keep customers close. Selling on Amazon is still a deal with the devil.

Gene Detroyer
BrainTrust

“Keeping customers close” is the objective of every business. “Their goal will be one bill each month for your digital subscriptions, healthcare, banking, insurance, and even merchandise.” Shouldn’t it be?

Yes — if you are going to do business with Amazon, do it with your eyes wide open.

Dick Seesel
BrainTrust

I have a problem with the sale of stolen and counterfeit goods on Amazon — especially because it violates the bond of trust between company and customer. I take less issue with using data to develop private label goods.

If you’re Macy’s, or Kohl’s, or Target, you evaluate the sale of products from your own suppliers — especially the national brands — in order to uncover trends and opportunities in your own labels. (And sometimes those branded suppliers lose shelf space to private label goods, just as they do in grocery stores.) Is what Amazon doing all that different, or is the issue its sheer scale and ability to read and react to the data?

Suresh Chaganti
BrainTrust

Amazon’s strong arm tactics extend beyond that. The Wall Street Journal documented a number of instances where they engaged companies with bait for acquisition, sought proprietary information, and promptly launched competing products.

I am personally aware of instances where Amazon is forcing brands to sell on Vendor Central based on the data they see on Marketplace.

There is a suspicion in the seller community that Amazon sponsors some level of unauthorized reselling of the products that are not on Amazon yet. They then use this data to approach brands to put products on Marketplace or Vendor Central.

The last one may sound like a conspiracy theory, but seeing WSJ’s investigative reporting, I’d not be shocked if it turns out true.

Mohamed Amer
BrainTrust

Mr. Bezos is fully aware that the Amazon brand is built on trust. Consumers trust the value received, the Prime service promise, the ease of enjoying the multitude of consumer offerings, and the trust consumers have placed in Amazon regarding their data. That is the background against which Mr. Bezos must confront his inner demons of crushing any and all competitors; he cannot ignore his company’s trust issues with third-party vendors while relying on the consumer trust he has worked hard to create and earn. Amazon cannot have it both ways.

Jeff Weidauer
BrainTrust

Jeff Bezos has jumped the shark. This one-time entrepreneur has joined the ranks of untrustworthy company execs who deceive and obfuscate to protect the bottom line, all while claiming ignorance of his company’s misdeeds.

Gene Detroyer
BrainTrust

If I am the CEO of a trillion dollar company with over 800,000 employees, I may tell a subordinate that we must vet third-party vendors. That person will send the message to the next level down, then the next and the next. Finally a team will be put together to establish a program.

I assume it is getting done. If I have any follow-up, the extent of it is asking that subordinate if it got done. End of conversation.

If I am asked how, I answer the question honestly: “I have no idea.”

I will add personally, nor should I have any idea.

George Anderson
Staff

Don’t you think he should have known he was going to be asked that question or something similar to it in advance and been ready to answer it? Mr. Bezos’ apparent unpreparedness for obvious questions seems very un-Amazon-like to me. The company and its communication reps are as good as it gets in my experience. “We’ll get back to you” responses are a far cry from that.

Gene Detroyer
BrainTrust

Should he have known the question was coming? Yes. Should he have had an answer, yes. Should it have been in excruciating detail? No. Should he know the details of the process on an everyday basis? … Not if he is doing his job as CEO.

We have this idea that CEOs know exactly what goes on in their companies. CEOs are not the sheriff, they are a leader.

My company, Allendale Pharmaceuticals had great experiences with Walmart and Amazon as customers. On the other hand, Walgreen’s refused to pay us (until the lawyers got involved) and Target continually took unjustified deductions. Why? Because they could. Do I believe that the CEOs of either of those companies knew what was happening? No way.

Ken Lonyai
BrainTrust

“I don’t know the answer to your question” equates to “excruciating detail” for you Gene? Were your example companies’ CEOs testifying before Congress?

You must really be smitten with Bezos/Amazon to be apologizing for him so extensively in this discussion.

George Anderson
Staff

The question isn’t whether he should know every single detail of how his business works as CEO. It’s whether he should have known in a public forum that these specific questions were coming (the answer being yes) and should he have had simple, concise responses when asked (the answer here also should have been yes).

Gene Detroyer
BrainTrust

I agree. He should have had a paper ready to read with a very simple and concise answer. For that he would have been skewered as he is now as dodging the issue.

Did he handle it well? No. Are our expectations of what a CEO of a large company knows ignorant? TOTALLY!

Rick Moss
Staff

Gene, you are saying, in essence, that it’s a CEO’s responsibility (to his shareholders, I imagine) to be willfully ignorant of matters he is being questioned on by the U.S. Congress. Perhaps true, and all the more tragic, if so.

Gene Detroyer
BrainTrust

He should have know the question was coming. He should have been prepared to give a BRIEF overview. If Congress wanted to know details, then bring in the guy who is running the vetting program.

I will go one step further. If he knows the details of how it is done, he is not doing his job as CEO, he is getting too involved in the everyday business of a company that has 800,000 people and a value of $1 trillion.

Lisa Goller
BrainTrust

Ending the sale of counterfeit goods is vital to Amazon’s future success. Companies that earn our trust earn our business. Fraudulent players put Amazon’s consumer loyalty at stake. Amazon’s recent launch of a Counterfeit Crimes Unit shows it is willing to take action against shady suppliers to restore consumer confidence.

As for private label, it depends whether Amazon accessed more detailed, proprietary data than most retailers receive. Whether that is the case is currently unclear. Private label has always been built on the notion that “imitation is the sincerest form of flattery.” Retailers see what’s selling then replicate popular products to get in on the action.

Jeff Sward
BrainTrust

Disappointing and disingenuous. He had to know going in that he would be expected to answer that question. It was a moment to either build trust or skepticism. So skepticism it is.

Gene Detroyer
BrainTrust

Say I am the head of product development for my large supermarket chain. A new vendor comes in and sells us a new type of cookie, “New Cookie.” It is hugely successful and I notice its success as I check the weekly item sales. “New Cookie” is flying off the shelves.

I tell my team, give me a new private label item just like “New Cookie.”

Is that different from what Amazon does?

Ananda Chakravarty
BrainTrust
Lets assume for a moment Bezos was completely truthful in his answers – the sale of stolen and counterfeit goods has been an ongoing problem and he has instituted (at least in name) programs to address the issue. More importantly, to be fair to Bezos, he has 2.5 million+ sellers on the platform and over $160 billion in third-party merchant goods sold on his site. The real question here is, what is the level of responsibility his platform has over sellers on his site and tracking counterfeits? For end-customers, the counterfeits are difficult to detect, only the brand names like Gucci, Ulta, Prada, etc. care about and take steps to stop the counterfeiting, but they are also depending on and growing business with huge markets in Asia – particularly China, which is known for many actors engaged in counterfeiting. For Bezos, he may truthfully not know or perhaps can’t know because of the volume of business. Putting impenetrable safeguards in place can be cost prohibitive and lawsuits to date are a lower cost of doing… Read more »
Gene Detroyer
BrainTrust

“For Bezos, he may truthfully not know or perhaps can’t know because of the volume of business.” Or, as CEO, should not know.

Ananda Chakravarty
BrainTrust

Gene, though I believe he might not have the details, I don’t believe as CEO he could not know the answers. The buck stops with the CEO. The CEO still has the responsibility for all actions of the organization. He should have been briefed on the potential question by his underlings and had a clear reply. I’m certain all of the key answers were at least partially scripted — especially when being televised. PR is critical to Amazon, and this would be no different. In this case, I suspect his legal counsel suggested, “I don’t know” is probably your best answer and to skirt the issue, and so it was given. I’m certain he would have some deeper details to share, and if not, has the power to find out.

Liz Adamson
BrainTrust

I have watched over the last couple years as Amazon has put more and more controls in place to keep counterfeit goods off of its marketplace. They are working on the problem and making progress, although there is still a long ways to go.

As for Bezos’ answers, how can a CEO of a company as large as Amazon know all the details of the different processes used within the company? While I don’t expect him to be familiar with every detail, less than knowledgeable responses don’t make him look very good to the public and I do wonder if he couldn’t have been better prepared.

Gene Detroyer
BrainTrust

What surprises me Liz, is that so many people expect this of CEOs. You ask the right question, “…how can a CEO of a company as large as Amazon know all the details of the different processes used within the company?”

Neil Saunders
BrainTrust

As far as I am concerned, the whole hearing is a waste of time. There are millions unemployed and politicians of all shades are completely unable to reach any agreement on how to provide essential benefits to those people. Meanwhile, they are spending their time grandstanding by asking questions to companies that have grown by focusing on consumers and relentlessly delivering what they want. Perhaps if politicians had the same focus and sense of innovation they’d achieve great deal more.

Paula Rosenblum
BrainTrust

Jeff Bezos was a Golden PR machine for years. That’s over now. Let’s face it, kids. His retail operations don’t make money, he’s a master of distraction and the company packaging is an environmental disaster waiting to happen.

Jeff Bezos should find some good works to do, including taking better care of his employees.

Gene Detroyer
BrainTrust

As of 2018, Amazon has knocked Google off the top spot as the best place to work in the world, according to LinkedIn.

Doug Garnett
BrainTrust

Amazon is no longer the naive startup which can get away with “I don’t know” as an answer. It should concern us all that Mr. Bezos attempted to use that answer to deflect questions he knew were critical.

Ryan Mathews
BrainTrust
Counterfeits are probably more of a problem for Amazon than stolen goods, which feels more like a Craigslist problem to me since it’s hard to understand how it could scale. If something were on the low end, why go through all the hassle of selling it online? And if it were on the opposite end of the value scale — say a hot Basquiat painting — putting it on Amazon seems like a good way of getting caught. Counterfeits, because they can be scaled, are clearly more of a problem and Bezos clearly should have had a canned answer in his pocket. The fact that he didn’t leads the cynical to believe that a.) he is aware of the problem, and b.) he isn’t worried about it for one reason or another. As far as the data question, it seems to be an example of caveat venditor – let the seller beware. Amazon routinely brutalizes partners and actively sets up entire categories of vendors to fail. Anyone who enters into business with Amazon with their… Read more »
Brian Cluster
BrainTrust

As CEO of a company for 26 years and as one that helped build the company from the ground up, Mr. Bezos has a great deal of knowledge of how things work and the processes involved in bringing in new sellers. He should have been more forthright in the answer and should have specific steps that the company plans to take to address the issue.

I find that the counterfeit issue is the most disheartening because it impacts the brands and ultimately the consumers. According to the OECD, counterfeit goods account for 3.3 percent of all goods sold online and we may all have counterfeit goods in our house right now. For consumers to trust Amazon more, Amazon will need to do a better job evaluating new sellers through better data and third-party validation, monitoring existing sellers, and having a process of rapid enforcement.

Steve Montgomery
BrainTrust

Perhaps not knowing is purposeful. Not knowing prevents you from having to say “yes we do that. It’s part of our growth strategy.”

Cynthia Holcomb
BrainTrust
Seriously, the richest man in the world cares about answering all these annoying questions in a congressional hearing? No. Characterizing Mr.Bezo’s responses yesterday, the word incredulous comes to mind. “It’s not as easy to do as you would think because some of the sources in the article are anonymous” stated Bezos commenting upon the WSJ report stating Amazon leverages third-party data to compete with the third-party sellers on the platform. Is this not common knowledge in the retail industry? Stolen and counterfeit goods? Is this not common on Amazon? There is a sea change in the world. Watching Bezos dodge the truth yesterday, demonstrates Mr. Bezos does not care about the suppliers enabling him to personally earn $13B in one day nor the dangers to customers consuming counterfeit goods. Amazon practices a form of competitor censorship, gobbling up the little guy. Like the powerful OZ, Amazon hides behind the curtain of tremendous power believing Amazon is too big to fail. What Amazon is missing is the human component. People do care about integrity and honesty.… Read more »
Ken Lonyai
BrainTrust

Anyone defending/apologizing for this money glutton needs to be ashamed of themselves. If he had to go before investors, it’s beyond a doubt that he would have proper answers. Congress’ buffoonery at holding corporations/C-suite leaders accountable during/after investigations has sent a message that Congress can be had. It’s all a sideshow that both sides knowingly participate in for their own gains.

There is no need for Amazon to care about fake goods and fake reviews–people keep coming back anyway and Bezos’ pockets keep getting stuffed.

There’s no legislation, there’s no real concern. All there is are consumers that have to decide to vote with their dollars by supporting abusive behemoth companies or instead, small businesses that do better/have more customer respect–especially during this challenging period.

Rick Moss
Staff

Perhaps consumers are indeed starting to vote with their wallets, Ken. Note a new Rakuten Intelligence report that Amazon’s market share slid from 42.1 percent in January to 38.5 percent in June. During the same period, Target’s share grew from 2.2 percent to 3.5 percent. Walmart saw its share grow from 4.2 percent to five percent.

storewanderer
Guest
15 days 14 hours ago

Amazon will do what it needs to do to get its share back up. They are already doing things this quarter: I am getting free shipping, no minimum codes, 5% back when buying at Amazon with Chase Credit Card, etc. The issue I am running into on Amazon is their pricing is often not the best; I can do better with Walmart, Target, Kroger, in some cases even the drugstore chains with sales. I do think Amazon has by far the easiest website to order from. Some of these others are really awful.

Target will not hold its share gain as they blew it on essential goods during the pandemic and have way way too many out-of-stocks throughout their stores, but Walmart may hold some of its share since they did a much better job having essential goods in stock. Also, in the case of Walmart and Target, are we counting buy-online-pick-up-in-store sales in those market share figures?

Patricia Vekich Waldron
Staff

Bezos and Amazon have officially jumped over to the dark side. Their breadth and depth is so great that they are the default choice for many consumers purchase decisions. Managing an organization this vast is no easy task and I don’t except a CEO to know all operational details, but I do expect them to prepare to respond appropriately to Congress. Bezos is no better than tobacco, airline and auto executives that effectively lied to Congress in the past.

Craig Sundstrom
Guest

How important? Not very. It’s not something consumers really give much thought to — how often are they even aware they’ve purchased them? And those in a position to do something about it — or at least think about it — probably have more pressing concerns at the moment.

storewanderer
Guest
15 days 15 hours ago
Maybe it needs to be explained in a way people will better understand: A significant portion of the products for sale on Amazon are actually a dressed-up streamlined product listing, but functions just like a fixed price listing on eBay. You have a mixture of items shipped directly from independent sellers (identical to fixed price listings on eBay), you have items being sold by independent sellers but shipped by Amazon (this is like the hybrid Ebay-Amazon model), then you have the items that are actually sold by Amazon and shipped by Amazon. I don’t think the average consumer is aware how many independents are selling things on Amazon. I think everyone assumes Amazon is Amazon and when you go buy there, you are dealing with Amazon. Amazon has promoted this with its sleek website and streamlined product listings, however, it is very clear when you click the list of available items who you are going to be buying from. As far as Bezos, do you think he is going to actually admit to selling counterfeit… Read more »
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Braintrust
"Jeff Bezos has jumped the shark."
"Perhaps not knowing is purposeful. Not knowing prevents you from having to say “yes we do that. It’s part of our growth strategy.”"
"If he had to go before investors, it’s beyond a doubt that he would have proper answers."

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