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Jeff Bezos Steps Away As The Amazon Effect Intensifies

Jeff Bezos is stepping away. After over two and a half decades at the helm of Amazon, Bezos will be handing off CEO responsibilities at the behemoth he built to the head of Amazon Web Services, Andy Jassy, and transitioning into the role of executive chairman starting in Q3 of 2021.

The news dropped as part of Amazon’s blockbuster Q4 earnings report. The company notched its first $100 billion quarter, with net sales checking in at $125.6 billion and a 44 percent bounce over 2019’s Q4 results. It should have been nearly impossible for any announcement to make a dent in that news — but the second-wealthiest man on the planet (behind Elon Musk) stepping away from his post to begin his next chapter is eye-catching. Though it seems Bezos intends to stay busy, and that he will not be enjoying a quiet retirement on a beach with his billions.

“As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions,” he told Amazon employees. “I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.”

Afterall, having an impact is what Bezos does best. Amazon started out as an online bookstore when it first launched. Today it runs the largest marketplace on the internet, a massive cloud services company in AWS, and a growing collection of physical stores including Whole Foods and its emerging Amazon Fresh grocery chain. Bezos, in his expanded remarks on his departure, said he believes Amazon is now at its most inventive point ever, making it the “optimal time for this transition.”

It probably doesn’t hurt, as Amazon’s most recent earning report underlines, that now is also the optimum time for Bezos to leave at a high point — as online shopping has in the last year transitioned from being a preference of some consumers to a necessity for all. But while the pandemic has offered a major push to Amazon as homebound consumers began to rely on it not as a luxury but as a necessity for staying safe and sane, it did not create the trends that Amazon is benefitting from now.

The Amazon Effect

Karen Webster has been writing about the Amazon Effect for the last five years as Amazon has found ways to enter, improve and disrupt vertical after vertical and raise the level of the technological game for every other player hoping to remain competitive.

“The Amazon Effect on all retailers is about raising the expectations consumers have of the merchants they shop,” Webster noted.

And it can be seen everywhere — in books, where the company started, of course, but also in apparelelectronicsluxury items, home goods, video home shopping and of course in grocery, which Karen Webster noted was seeing a particularly turbo-boosted version of the Amazon Effect.

“In many cases, it’s about making it easier to get the exact same thing they’d otherwise spend 45 minutes going to the store every week, sometimes dragging the kids along, to buy,” Webster wrote in 2018. “It’s why Walmart paid $3 billion for Jet.com, and Kroger was willing to pay $400 million to buy Boxed. It isn’t about having an app that can only be used to pay inside a store and not do much else in the way of adding value to the overall grocery shopping experience. It’s truly about being an omnichannel merchant — making it convenient for the consumer to buy things wherever they want to buy them and to get them whenever and however they want them.”

That was written two years before the COVID-19 pandemic began. Before Whole Foods made grocery delivery free for Prime members, before Amazon folded Fresh delivery service into the main Amazon Prime offering and before Amazon launched its second chain of physical grocery stores.

Looking Ahead

Bezos suddenly has a lot more free time on his hands seeing as he will no longer be CEO of the nation’s largest eCommerce company. Though what that will really mean is still a matter for some debate, as Bezos has  confirmed that he will remain involved at Amazon, focusing on the “large ‘one-way door’ issues,” in the future in his capacity as executive chairman.

The move has some precedents in recent history. Google CEO Eric Schmidt  became Google’s executive chair in 2011, longtime Disney CEO Robert Iger moved into an executive chairman position in early 2020 and Mastercard CEO Ajay Banga transitioned into the executive chairman job at the conclusion of 2020. The position in recent years has been defined as being on the whole more active in the day-to-day operation of the business than the typical board directors of the past, Peter Crist, chairman of executive recruitment firm Crist Kolder Associates told The Washington Post of the forthcoming change.

“In many respects, nothing has changed. When you’re the founder, people listen no matter the title,” he told The Wall Street Journal.

And Bezos will likely be no exception, though there is some reporting to indicate that previous firms in similar situations that have done better financially speaking when their founding CEO has fully stepped away from the business, as opposed to continuing to control things in a less official capacity.

And Bezos’ replacement steps into an interesting situation as he takes on the top job at Amazon, in terms being buffeted by headwinds and tailwinds simultaneously.

The Amazon effect is undeniably ascendant in retail as of early 2021, as consumers have entirely rewritten their commerce habits around digitization and every business has sought to tap into their inner Amazon to serve consumer wants. Karen Webster’s theory of three years ago that consumers would no longer want to make a weekly 45-minute sojourn to the grocery store, kids in tow, has as of 2021 been borne out by the data demonstrating that consumers have in fact time-shifted their grocery shopping habits as they’ve digitized them.

But all that success has caught the attention of legislators who are beginning to question if Amazon is so successful as to constitute a monopoly that needs to be broken up under antitrust legislation. With Jeff Bezos officially out, Jassy will now be the top executive who will have to answer when Amazon is almost inevitably called to Capitol Hill later this year to provide answers.

Meaning even though Jeff Bezos is leaving, he will be far from gone — and Amazon won’t slow down in his absence. If anything, by all indications, things will only keep on going faster.

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