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Five Challenges Awaiting New Amazon CEO

New York (AP) — A discreet online bookstore built by Jeff Bezos in 1995 sells everything from diapers to sofas, makes movies, owns a grocery chain, and provides cloud computing services to businesses 1.7 I couldn’t imagine it would be a huge trillion dollar. in the world.

Amazon is more than that, and now it’s up to Andy Jassy to move the company forward as CEO.

On Tuesday, Amazon announced that Bezos would resign this summer to take on the role of chairman so he could focus on new products and early initiatives being developed at Amazon.

Bezos is still expected to play a major role in the company, but it is Jasie who will take over many of the challenges posed by the Amazon surge. Some of them are shown below.

Growing SCRUTINY

Regulators around the world are looking at Amazon’s business practices, especially how to look up information from companies that sell products on their sites and use them to create their own Amazon-branded products. Bezos said in a pre-parliamentary hearing last summer that even if Amazon had a policy prohibiting employees from accessing seller data, it couldn’t guarantee that it didn’t violate the policy.

For decades, tech giants have enjoyed light touch regulation and star status in Washington, but the need for stricter surveillance is increasing. The US government has already accused two big tech companies, Google and Facebook, in antitrust proceedings.

Amazon is under investigation by federal and state antitrust laws. This is in addition to the European Union regulator’s accusation of antitrust violations in November, which Amazon has an unfair advantage over access to data from third-party sellers. I blame you for getting it.

A report by the House Judiciary Committee in October called for new rules to protect competition, as Amazon and others could dissolve, making it difficult to buy other businesses. ..

Labor dispute

The pandemic reveals how Amazon handles workers who pack and ship boxes in a vast warehouse. Many have protested the lack of masks and protective equipment, but others say the company has not announced how many people are ill.

Amazon has made changes since it began receiving complaints, but its labor issues go far beyond the pandemic.

Alabama warehouses will start voting this month if workers want to join the union. This is a threat to companies that have been successful in blocking. As part of that, Amazon says it will pay workers at least $ 15, which is more than double the minimum wage.

But regulators are paying attention. On Tuesday, the same day Bezos said he would resign, the US Federal Trade Commission ordered Amazon to pay nearly $ 62 million to take a hint that it was supposed to go to a delivery driver.

As Amazon is the second largest private employer after Wal-Mart, it could be scrutinized further. Last year alone, Amazon hired 500,000 people, bringing its total workforce to nearly 1.3 million.

Cloud growth

Amazon is known as a place to buy books and toothpaste. But it’s the behind-the-scenes Amazon Web Services business that is making the most money for the company.

AWS remains the number one provider of cloud computing services, but competition is intensifying, especially with Microsoft, which is aggressively selling large contracts to businesses and governments. Last year, Amazon lost a multi-billion dollar contract with Microsoft with the US government. Amazon is fighting that decision in court.

The promotion of Jassy (53) from AWS may indicate where Amazon sees future growth. Last year, about 60% of Amazon’s total profit came from AWS.

“Jeff Bezos chose the technician,” said Scharita Kodari, an e-commerce analyst at Forrester Research. “My premonition was that it was about the future of the technology company.”

Kodali believes AWS will be the biggest growth source for Amazon, as it is likely that Amazon will not be able to make a major retail acquisition due to regulatory scrutiny. She believes Amazon’s opportunities in cloud computing are endless and envisions projects such as developing facial recognition for government agencies.

Mark Cohen, director of retail research at Columbia University’s Graduate School of Business, believes that both retail and cloud services are “very important” to Amazon, but believes that there are more opportunities for cloud services. Cohen considers Amazon to be a “popular government provider” at the national, state, and local levels.

Retail threat

While Amazon has plenty of room to grow in e-commerce, it faces the threat of major retailers like Wal-Mart using their stores as delivery hubs.

Prior to the pandemic, Wal-Mart and Target were expanding their curbside pickups for shoppers who received online orders on the same day. But with a pandemic, it’s accelerating.

Best Buy said late last year that it would reduce the floor space reserved for traditional shopping in some stores and focus on supporting store pickup and online order delivery. Wal-Mart plans to build a warehouse in the store where self-driving robots will take out groceries and shoppers will be ready to pick them up in less than an hour. Target automates the back room to ship online orders and perform curbside pickup.

But Amazon’s lead is insurmountable. According to research firm eMarketer, it accounted for about 40% of online purchases in the United States last year, with Wal-Mart at 5.8%, eBay at 4.9%, and Apple at 3%. Nonetheless, analysts say large retailers are being forced to use stores as a weapon, put profit pressure on Amazon, and add more distribution hubs for competition.

“Amazon has a lot of opportunities, but in-store people show that their store is a big asset of time,” said Charlie O’Shea, a retail analyst at Moody’s. ..

Looming Bezos

Another challenge for the new CEO is Bezos himself.

Amazon has revealed that he will not go far. Bezos remains the company’s largest shareholder, giving great power to the company founded in 1995. Bezos said he would focus on new products and initiatives from his position as an executive chair.

Jason Schlotzer, a business professor at Georgetown University’s McDonough Business School, said tensions could arise if the CEO was transferred to the board and still in business. The new CEO may want to end some of Bezos’ initiatives that Bezos disagrees with. Alternatively, other executives may continue to report to Bezos and take Jasie out of the loop.

Schloetzer said that for it to work, Amazon needs to structure its roles to keep them from stepping into each other.

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Associated Press writer Mercy Gordon of Washington and Matt O’Brien of Providence, Rhode Island contributed to this report.

Five Challenges Awaiting New Amazon CEO

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