Why Jeff Bezos "Flywheel"-concept doesn't work for Amazon anymore

 

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These days, the Internet presents hundreds of articles, blogs, videos, courses etc. praising Jeff Bezos’ “Flywheel Theory” — the concept that

1. “taking care of customers” by offering a best selection of products at a fair price inevitably increases customer traffic and sales, 
2. which leads to more sellers flocking to Amazon with their newest and best products (which accelerates the flywheel's energy even more)…
3. and therefore attracts more customers …

and so on… And that this is what is happening at Amazon.

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But — Is this true? Can Amazon's "business flywheel" really work "this way"? 

Flywheels are mechanical devices, which perform according to their design, regardless of what's going on in the world (inflation, recession, depression, etc.). 

In contrast, Amazon's "business flywheel concept" depends on HUMAN warehouse workers, who are NOT mechanical devices and who care about their payrate, working conditions, and how their managers manage operations. 

Logically, the more Amazon's "business flywheel" accelerates — and the more warehouse workers the company has to employ to fulfill and deliver all orders  — the more all "human issues" increase.

Which is reflected in Amazon's extremely high turnover rate, rate of serious accidents at their warehouses, and in how much money Amazon spends on trying to keep "human issues" in check. 

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There was however a time when Amazon managed to make HUMANS part of their “flywheel” — during the company’s early days. 

Then, Amazon courted indie authors, small publishers, top reviewers and affiliate marketers and “offered them opportunities” they did not get anywhere else. 

As a result, these indie authors, small publishers, top reviewers and affiliate marketers became Amazon's fans. They behaved like Steve Jobs' fans, not talking with but "preaching" to their family, friends, fans, and social media followers that Amazon would help them too to make their dreams come true: 

• publish books, 
• sell any other kind of product, 
• have access to a recognized venue to sell products, a space to garner reviews, and the option to brag about their products’ sales rank,
• collect affiliate fees for featuring/selling Amazon's books and products,
• and more...

And in preaching their gospel — these HUMANS powered Amazon’s flywheel with all their might. 

Of course, all of that went downhill once scammers invaded Amazon's ecommerce platform, posting fake reviews, selling fake products, and running all kinds of schemes, which forced Amazon to fight the scammers' efforts in the toughest ways possible, thereby also destroying their fan flywheel, as a side effect. 

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Unfortunately, at the time, the company missed the opportunity to "replace" the author/vendor/affiliate marketer flywheel with another human flywheel — their 1 million+ warehouse workers. 

The company's best opportunity to do that came during Holiday Peak 2020, when the pandemic caused incredible stress for their workers. 

Then, Amazon could have announced that every warehouse worker would receive an additional Christmas bonus – a free Prime membership, for as long as they worked at Amazon.

It would have been a fitting move; after all, it was the warehouse associates who moved the goods. 

Gifting free Prime memberships to the warehouse associates would also have resulted in a major marketing campaign, because in "rewarding their hardworking workers with a Prime membership" – in times of a crisis – would have suggested that the membership is a special, valuable gift. 

Alas, Amazon missed the opportunity.

Maybe not surprisingly, the following year, 2021, Amazon spent $4.3 million on union busters and in 2022, more than 3-times as much — a whopping $14.3 million. 

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I believe, for Amazon, making their warehouse workers the spokes of a new, enticing flywheel will be key to reducing their operational costs and accelerating a new and improved flywheel. 

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Gisela Hausmann is the author of “Winning @ Amazon,” released on May 1, 2023. She has worked with and for Amazon for a quarter of a century, as a small publisher, an author, a top reviewer, a former stockholder, and eventually an associate at one of the company’s delivery stations. 

Some of her ideas how Amazon could become a better employer have been featured on Geekwire's podcast "How Amazon could be Earth’s best employer: 5 ideas from a logistics pro turned warehouse worker" and  in Inc. Magazine.

(C) Gisela Hausmann

Images: via Shutterstock - Viktor Chursin (flywheel), Frederic Legrand - COMEO (Amazon workers)