0:00:03 > 0:00:07OK. You just type "www dot amazon dot com".
0:00:07 > 0:00:09That takes you to our website.
0:00:11 > 0:00:13The British do more of their
0:00:13 > 0:00:16shopping online than any other nation.
0:00:16 > 0:00:19Last year, tens of millions of British customers used Amazon
0:00:19 > 0:00:22to buy £4.5 billion worth of goods.
0:00:22 > 0:00:25It's the instant gratification part of it that is
0:00:25 > 0:00:28so attractive to me and a little bit ominous.
0:00:28 > 0:00:31Amazon is accused of changing the book business from this...
0:00:31 > 0:00:34Just have a read through a couple of pages, see what you think.
0:00:34 > 0:00:36..to this.
0:00:39 > 0:00:42Amazon's ambitions now stretch way beyond books...
0:00:42 > 0:00:44We're about to leave for Afghanistan.
0:00:44 > 0:00:48- ..into the world of media. - Introducing Amazon Fire TV.
0:00:48 > 0:00:52Its drive to cut prices puts the squeeze on competitors.
0:00:52 > 0:00:55It's actually designed, from the ground up, to be a shark,
0:00:55 > 0:00:59like it's designed to dissolve and destroy other businesses.
0:00:59 > 0:01:03But Amazon is also creating new jobs in Britain.
0:01:03 > 0:01:07It gives us an opportunity to access a marketplace that we would
0:01:07 > 0:01:10never otherwise be able to access.
0:01:10 > 0:01:13Start with the customer and work backwards.
0:01:13 > 0:01:16Amazon's amazing story, from start-up to global titan,
0:01:16 > 0:01:20is also the story of its founder Jeff Bezos.
0:01:20 > 0:01:22He really is a tough boss.
0:01:22 > 0:01:27He has driven that company and drives those people very, very hard.
0:01:27 > 0:01:30We ask what Amazon's ever-growing business is doing to our economy
0:01:30 > 0:01:32and our lives.
0:01:32 > 0:01:35And we examine how Jeff Bezos' formula for success shapes
0:01:35 > 0:01:40Amazon's culture and has made him such a happy billionaire.
0:01:40 > 0:01:43HE LAUGHS LOUDLY
0:01:51 > 0:01:55There aren't many places where Amazon doesn't reach these days.
0:01:55 > 0:01:58In fact, the more remote the spot,
0:01:58 > 0:02:02the more difference it's made to people's lives.
0:02:02 > 0:02:06Online retailing really opens up the world to us.
0:02:06 > 0:02:09You can't buy a rowing machine in John O'Groats,
0:02:09 > 0:02:14but Fred Fermor's arrived the day after he ordered it on Amazon.
0:02:14 > 0:02:18Although we live in quite a remote area, we still have the same choice
0:02:18 > 0:02:22as someone walking down Oxford Street in London.
0:02:22 > 0:02:27Across town at the hotel, the darts team's shirts also
0:02:27 > 0:02:30came from Amazon, ordered by the manager, Andrew Mowat.
0:02:32 > 0:02:36Before companies like Amazon or even the internet,
0:02:36 > 0:02:39it was a lot more difficult for us to get things here.
0:02:39 > 0:02:42We maybe had to do a 20 mile trip to Wick or Thurso,
0:02:42 > 0:02:45or even worse than that, a 120 mile trip to Inverness.
0:02:45 > 0:02:47John O'Groats has one shop.
0:02:47 > 0:02:51The locals still use it, but it's never going to have all
0:02:51 > 0:02:55the things they can find when they're back home, looking online.
0:02:55 > 0:02:59What's a chap to do if he needs a fancy dress costume?
0:02:59 > 0:03:01Ooh, yes!
0:03:01 > 0:03:06Or even a special kind of mop for the family ferry business?
0:03:06 > 0:03:10The convenience is irresistible, done at the click of a button,
0:03:10 > 0:03:14you can buy it and basically, it's here the next day.
0:03:16 > 0:03:21You don't have to live in John O'Groats to feel the lure of Amazon.
0:03:21 > 0:03:25We asked teacher Melanie Collins to run an experiment with her
0:03:25 > 0:03:27London class.
0:03:27 > 0:03:31Year Six, I'm going to write a word on the board and I want you to think
0:03:31 > 0:03:35about the first thing that pops into your head - what does this word mean?
0:03:35 > 0:03:4020 years ago, there was just one answer.
0:03:40 > 0:03:43I'm going to show you two pictures up on the board
0:03:43 > 0:03:47and you're going to put your counters underneath what you thought of first.
0:03:52 > 0:03:55OK. Mustafa, can you please come up
0:03:55 > 0:03:58and count how many people thought of the river?
0:03:58 > 0:04:01- Eight.- Eight people, OK. Thank you.
0:04:01 > 0:04:04The mighty river never really stood a chance.
0:04:04 > 0:04:0714 people, OK, have a seat, please.
0:04:07 > 0:04:11Most businesses would happily give their annual profits for that
0:04:11 > 0:04:13level of customer awareness.
0:04:13 > 0:04:17Amazon's ability to get into our heads is
0:04:17 > 0:04:20the product of an unique company culture.
0:04:20 > 0:04:24Its engineers in London are working on its growing film and TV service.
0:04:24 > 0:04:26Scroll through that quickly.
0:04:26 > 0:04:29It's got a bit of information about each of the actors.
0:04:29 > 0:04:31Some of the other movies they were in.
0:04:31 > 0:04:34- Hey, guys.- Hey.
0:04:34 > 0:04:36The British business is run by Christopher North,
0:04:36 > 0:04:39an American who moved here ten years ago.
0:04:41 > 0:04:44Everyone's kept in tune with the ideas of founder Jeff Bezos
0:04:44 > 0:04:49through a kind of "Amazon think" they're all expected to sign up to.
0:04:49 > 0:04:52We have 14 leadership principles at Amazon
0:04:52 > 0:04:55and these are a set of principles that describe to us
0:04:55 > 0:04:59the characteristics we need to exhibit to be a successful Amazonian.
0:04:59 > 0:05:02And I think we've found that they are kind of glue that knits us together
0:05:02 > 0:05:06as a company, even now today that we're 97,000 employees at Amazon.
0:05:06 > 0:05:09The principles are on the website for anyone to see
0:05:09 > 0:05:13and if you work at Amazon, you'll never forget them.
0:05:13 > 0:05:18It would be the equivalent of...how the Ten Commandments influenced
0:05:18 > 0:05:21Christianity. They're not just words.
0:05:21 > 0:05:24You have to be able to embody these things on a day in
0:05:24 > 0:05:28and day out basis, otherwise you just won't survive at Amazon.
0:05:28 > 0:05:33Staff don't have to learn the leadership principles by heart,
0:05:33 > 0:05:36but there's one idea that's drummed into them every day.
0:05:42 > 0:05:44Customer obsession is the single most
0:05:44 > 0:05:45important thing to Amazon,
0:05:45 > 0:05:49the thing we've focused on from the very beginning.
0:05:49 > 0:05:53Amazon executives and Jeff Bezos in particular will tell you
0:05:53 > 0:05:57until you cannot stand hearing it any longer that they start
0:05:57 > 0:06:00with the customer and work backwards.
0:06:00 > 0:06:03Start with the customer and work backwards.
0:06:03 > 0:06:05I don't think you should make any bones about it.
0:06:05 > 0:06:08There's no socially wonderful thing about working
0:06:08 > 0:06:11from the customer backwards. It's smart business.
0:06:14 > 0:06:17You only have to visit your local Royal Mail sorting office
0:06:17 > 0:06:20to see the impact of online retail.
0:06:20 > 0:06:23E-mail has meant we're sending fewer letters,
0:06:23 > 0:06:28but that's more than made up for by all the extra parcel deliveries.
0:06:31 > 0:06:34Last year, Amazon alone sold an average of more
0:06:34 > 0:06:39than £70 worth of goods to every man, woman and child in Britain.
0:06:41 > 0:06:43Amazon account for a large amount of our traffic.
0:06:43 > 0:06:47The difference in volume is ginormous.
0:06:47 > 0:06:50Yeah, massive contributor to
0:06:50 > 0:06:52the amount of traffic we pick up now.
0:06:56 > 0:07:00Amazon's business is good news for some, but bad for others.
0:07:00 > 0:07:04We're a little low on stock at the moment.
0:07:04 > 0:07:05Across Britain,
0:07:05 > 0:07:09book shops have been closing at the rate of more than one a week.
0:07:09 > 0:07:12See you soon! I'll give you a call later, Mrs Carrington. OK. Bye-bye.
0:07:12 > 0:07:17In Banstead, Surrey, Linda Jones is ready to name the culprit.
0:07:17 > 0:07:19I've actually had people coming in and taking
0:07:19 > 0:07:23photos of books on their phones and looking and saying...
0:07:23 > 0:07:26They'll look at the back and they will be there for some time
0:07:26 > 0:07:29and they will leave and I know exactly what they're doing.
0:07:29 > 0:07:33They are going to Amazon to order that book
0:07:33 > 0:07:35because they can get it a lot cheaper.
0:07:35 > 0:07:40Linda says Amazon's prices can make trading impossible for her.
0:07:40 > 0:07:46For instance, David Walliams' new book, Demon Dentist, on Amazon, £5.
0:07:46 > 0:07:52We have to retail it at £10.99, £12.99. We can't buy it for £5.
0:07:52 > 0:07:56- < How much does it cost you to buy? - It costs us to buy £8.99.
0:07:56 > 0:08:00Amazon admits it sells some books at a loss.
0:08:00 > 0:08:04I think you'd find across many retail businesses it's very
0:08:04 > 0:08:07common for bestselling products to be sold at very low margins,
0:08:07 > 0:08:09even sometimes at a loss, but ultimately,
0:08:09 > 0:08:11we have to figure out how to make it all work.
0:08:11 > 0:08:15Linda needs to take £10,000 a month, just to break even.
0:08:15 > 0:08:18That hasn't been happening and for the past year,
0:08:18 > 0:08:22she's been using her own savings to keep the shop open.
0:08:22 > 0:08:26'I love books and I love book shops and it's all well
0:08:26 > 0:08:28'and good having that passion,'
0:08:28 > 0:08:31but I just can't afford to keep putting money into the business.
0:08:33 > 0:08:38For Amazon's founder, book shops are just on the wrong side of history.
0:08:38 > 0:08:40Complaining is not a strategy.
0:08:40 > 0:08:43Amazon is not happening to book-selling,
0:08:43 > 0:08:46the future is happening to book-selling.
0:08:46 > 0:08:50Amazon didn't invent the idea of shopping from home.
0:08:50 > 0:08:54Mail order catalogues had offered it for decades.
0:08:54 > 0:08:57But this kind of thing started to feel distinctly low-tech
0:08:57 > 0:09:01when a new vision appeared in the 1990s.
0:09:01 > 0:09:04Imagine a world where every word ever written,
0:09:04 > 0:09:08every picture ever painted and every film ever shot could be
0:09:08 > 0:09:13viewed instantly in your home via an information superhighway.
0:09:13 > 0:09:17Ordinary domestic phone lines offered access to an exciting future.
0:09:17 > 0:09:21It all comes down to computers communicating.
0:09:21 > 0:09:24And in fact, that's already happening on something called
0:09:24 > 0:09:26the internet.
0:09:34 > 0:09:38The internet was already a hot topic in New York in the early '90s.
0:09:38 > 0:09:42It had caught the attention of a young Jeff Bezos.
0:09:42 > 0:09:47The wake-up call was seeing web usage grow at 2,300% a year.
0:09:47 > 0:09:51Back then, Bezos was a bright 20-something computer science graduate,
0:09:51 > 0:09:55rising through the ranks of a Wall Street firm which
0:09:55 > 0:09:58was pioneering computer-based trading.
0:09:58 > 0:10:02There was plenty of talk about what the internet might
0:10:02 > 0:10:04mean for business.
0:10:04 > 0:10:07In 1994, there was this idea -
0:10:07 > 0:10:11maybe the internet's going to be powerful enough that you can
0:10:11 > 0:10:15use it to create a kind of intermediary between customers,
0:10:15 > 0:10:18shoppers, and manufacturers. Well, that was a very vague idea,
0:10:18 > 0:10:22but Jeff had this notion that maybe if you focused on one product
0:10:22 > 0:10:26category, on the internet you can offer everything.
0:10:26 > 0:10:29The question was - what's the first best product to sell online?
0:10:29 > 0:10:32I made a list of 20 different products and sort
0:10:32 > 0:10:35of force ranked them according to several different criteria
0:10:35 > 0:10:37and ultimately picked books.
0:10:37 > 0:10:40Bezos was already married to MacKenzie Tuttle
0:10:40 > 0:10:42who he'd met at work.
0:10:42 > 0:10:46But their domestic routine was about to be disrupted.
0:10:48 > 0:10:51He wanted to break away from the investment firm,
0:10:51 > 0:10:55roll up his sleeves and build a business.
0:10:55 > 0:11:00The Bezoses packed up their apartment and left New York behind.
0:11:00 > 0:11:03He was in such a hurry that he hired a removal truck,
0:11:03 > 0:11:06he told them to drive west and that he would get started
0:11:06 > 0:11:08and call them in a couple of days and tell them
0:11:08 > 0:11:11where exactly on the West Coast they should go.
0:11:11 > 0:11:15Once, young men were told to go west, in search of gold or land,
0:11:15 > 0:11:18but in the '90s, they went west in search of geeks.
0:11:18 > 0:11:23Bill Gates' Microsoft dominated the new world of personal computers
0:11:23 > 0:11:27from his hometown of Seattle, Washington.
0:11:27 > 0:11:29So there was plenty of tech talent around
0:11:29 > 0:11:32and Bezos sent the removal truck there.
0:11:34 > 0:11:38Also heading to Seattle from California was an experienced
0:11:38 > 0:11:42programmer, Shel Kaphan, Amazon's first employee.
0:11:44 > 0:11:48First we had to buy some computers and software.
0:11:48 > 0:11:51We couldn't afford very big computers or very many computers.
0:11:51 > 0:11:56We did have to be frugal cos there was not a huge amount of investment.
0:11:57 > 0:12:01The garage at Jeff and MacKenzie's rented house became the office.
0:12:01 > 0:12:05Bezos insisted on getting desks made from doors to save money.
0:12:05 > 0:12:08It's become part of Amazon mythology.
0:12:08 > 0:12:11The original example of another of those leadership principles -
0:12:11 > 0:12:13frugality.
0:12:19 > 0:12:24But employee number one always had his doubts about the desk doors.
0:12:24 > 0:12:27If you ask the people building them, you'll learn that they were
0:12:27 > 0:12:30actually more expensive than just buying a cheap desk.
0:12:30 > 0:12:33Looks frugal, but it isn't really frugal.
0:12:33 > 0:12:37I think frugality's in some ways a much misunderstood leadership principle.
0:12:37 > 0:12:40Frugality doesn't mean cheapness, it doesn't mean penny-pinching.
0:12:40 > 0:12:43It means making efficient use of scarce resources
0:12:43 > 0:12:44and I think with the door desk idea,
0:12:44 > 0:12:47the idea that you would improvise a desk
0:12:47 > 0:12:50out of the materials at hand, you also have the idea of a kind
0:12:50 > 0:12:54of scrappiness, or a kind of making do with what you have to hand.
0:12:54 > 0:13:00After months of coding on the doors, Bezos' new business was launched.
0:13:00 > 0:13:03Www dot amazon dot com.
0:13:03 > 0:13:06That takes you to our website.
0:13:07 > 0:13:11Amazon's eighth employee, Tod Nelson, had been
0:13:11 > 0:13:15working as a waiter before he got the job that changed his life.
0:13:15 > 0:13:19They had actually started shipping books in Jeff's garage.
0:13:19 > 0:13:21Then they moved to this small warehouse.
0:13:21 > 0:13:24Tod started working, ordering and despatching books.
0:13:24 > 0:13:29He and his colleagues responded to a computer linked to Amazon's website.
0:13:29 > 0:13:32They had a bell that whenever a customer had ordered a book,
0:13:32 > 0:13:36there'd be a little ding and everyone would cheer, so you'd made another
0:13:36 > 0:13:42sale, and within the first few days, it was - ding-ding-ding-ding-ding!
0:13:42 > 0:13:45They had to turn it off because, you know, it was annoying.
0:13:45 > 0:13:49By listing any book that could be ordered from distributors, Bezos'
0:13:49 > 0:13:54small business would claim the title "Earth's Biggest Bookstore".
0:13:54 > 0:13:57Over some large number of years, I think
0:13:57 > 0:14:01internet book-selling is going to become a very large business.
0:14:01 > 0:14:04At the end of each day, work in Amazon's offices stopped
0:14:04 > 0:14:06and everyone, including Jeff and MacKenzie, went
0:14:06 > 0:14:10down to the basement to help get all the orders into the last post.
0:14:10 > 0:14:14There was this feeling you just couldn't do enough.
0:14:14 > 0:14:18I was working 12-16 hour days, working most weekends.
0:14:18 > 0:14:21I didn't take a vacation for the first two or three years.
0:14:21 > 0:14:24But it's what I wanted to do. I was excited by my work.
0:14:24 > 0:14:27It's the most fulfilling work I've ever done.
0:14:27 > 0:14:31That first tiny basement warehouse in Seattle is a world
0:14:31 > 0:14:36away from what Amazon now calls its Fulfilment Centres.
0:14:36 > 0:14:39With more than 100 million items for sale on the website,
0:14:39 > 0:14:43keeping tabs on them across the network of warehouses is so complex
0:14:43 > 0:14:48that only the central computer really knows where things are.
0:14:48 > 0:14:54Amazon has such faith in it that any item can be stowed on any shelf.
0:14:54 > 0:14:58The product is stored completely randomly around the building
0:14:58 > 0:15:02and so the stower is allowed to pick any location that they want
0:15:02 > 0:15:04to in order to put that product away.
0:15:04 > 0:15:08The random arrangement is actually efficient because it reduces
0:15:08 > 0:15:10the chance of a worker picking the wrong item,
0:15:10 > 0:15:15which might happen if similar items were stored side by side.
0:15:15 > 0:15:19A customer will come onto the website, order the product,
0:15:19 > 0:15:22and the computer system will decide the best fulfilment centre
0:15:22 > 0:15:26in which to pick that product and we have pickers
0:15:26 > 0:15:30and the computer system will send to their hand-held scanner
0:15:30 > 0:15:34that order that says "go pick Downton Abbey Series Two"
0:15:34 > 0:15:38and it will also tell them where that product is.
0:15:40 > 0:15:44The ordering process is almost completely automated.
0:15:44 > 0:15:46But only a human being can walk down an aisle
0:15:46 > 0:15:50and tell the difference between an icing bag and a cuddly toy.
0:15:50 > 0:15:54They will scan the product and then the computer system knows that
0:15:54 > 0:15:57product has moved from the shelf into the tote.
0:15:57 > 0:16:00Because the computer knows how big things are,
0:16:00 > 0:16:04it even tells the packers what size box to use for each item.
0:16:11 > 0:16:14Then, only at the final stage,
0:16:14 > 0:16:18the item is matched up with the customer's name and address.
0:16:19 > 0:16:22It goes on to our outbound dock and it will get put on to
0:16:22 > 0:16:25one of our many carriers' vehicles for onward delivery.
0:16:30 > 0:16:34Back in John O'Groats, there's a new van load of online purchases.
0:16:38 > 0:16:41- Hi.- Morning.
0:16:45 > 0:16:47Andrew, your costume's here.
0:16:47 > 0:16:49Perfect.
0:16:49 > 0:16:53Fred Fermor runs the ferry to Orkney.
0:16:53 > 0:16:55Out of season, there's time to get things shipshape.
0:16:55 > 0:16:58- Here's that mop you ordered. - Thanks, Fred.
0:17:03 > 0:17:06- I'll have a bottle of Red MacGregor, please.- No problem.
0:17:06 > 0:17:10And Andrew Mowat knows it's always easier to get the party started
0:17:10 > 0:17:13with a Captain America costume.
0:17:21 > 0:17:24Bezos was picky about who joined Amazon.
0:17:24 > 0:17:27He originally interviewed everyone personally.
0:17:28 > 0:17:31James Marcus passed the test.
0:17:31 > 0:17:35He didn't overwhelm you in a sort of showbizzy titan of business way.
0:17:35 > 0:17:39But he had a lot of brain power and a lot of focus
0:17:39 > 0:17:43and after ten or 15 minutes of talking to the guy,
0:17:43 > 0:17:46a certain kind of magnetism came into play, which was not
0:17:46 > 0:17:51traditional and was that much more persuasive, I think, because of it.
0:17:51 > 0:17:54Amazon was soon too big for everyone to meet Bezos, but new
0:17:54 > 0:17:59recruits were fired up in sessions about him and the company history.
0:17:59 > 0:18:03In the initial training, you talk about things that Jeff
0:18:03 > 0:18:05would like and things that Jeff wouldn't like.
0:18:05 > 0:18:08You learned his story.
0:18:08 > 0:18:12Driving out in the Sedan and being in the garage
0:18:12 > 0:18:15and founding the company. People love a winner.
0:18:15 > 0:18:20And so, just being on that team felt like something.
0:18:20 > 0:18:24It was the kind of job you could tell your future wife's
0:18:24 > 0:18:27relatives about and they would be impressed.
0:18:27 > 0:18:32At Christmas, the office staff were expected to help pack books at the warehouse.
0:18:32 > 0:18:36It gave them a rare insight into those much discussed customers.
0:18:37 > 0:18:39You would pick the weirdest things.
0:18:39 > 0:18:43There was a lot of porn, there was a lot of scientific literature,
0:18:43 > 0:18:46and I gift-wrapped once a copy of Mein Kampf.
0:18:46 > 0:18:49Of course, I was hoping that whoever was sending it to someone
0:18:49 > 0:18:52for a Christmas gift was sending it
0:18:52 > 0:18:55as a kind of cautionary tale about man's inhumanity to man,
0:18:55 > 0:18:59or see how far we can fall, but sadly,
0:18:59 > 0:19:03the card that went inside the thing simply said "Merry Christmas".
0:19:06 > 0:19:10By the late '90s, San Francisco was buzzing with dot com start-ups,
0:19:10 > 0:19:12reinventing business.
0:19:12 > 0:19:15And office life.
0:19:15 > 0:19:17This is Nuskha. She's an old-timer here.
0:19:17 > 0:19:19Been here since May!
0:19:19 > 0:19:24Companies like pets.com were famous for spending their investors'
0:19:24 > 0:19:26money with no sign of profits.
0:19:26 > 0:19:29Amazon too was losing hundreds of millions,
0:19:29 > 0:19:32while moving to ever bigger offices.
0:19:32 > 0:19:35But in the dot com boom, new rules applied.
0:19:35 > 0:19:37Wall Street gave companies a pass.
0:19:37 > 0:19:40They said, "OK, we don't care if you make money yet.
0:19:40 > 0:19:43"You're going to some day, but for now, just grow.
0:19:43 > 0:19:46"Take that money, reinvest it in servers and marketing, whatever.
0:19:46 > 0:19:48"Just grow until you hit the sky
0:19:48 > 0:19:52"and we'll be there as loyal investors behind you."
0:19:54 > 0:19:57Bezos and his staff think about Amazon's growth
0:19:57 > 0:20:00as what they call the flywheel effect. It works like this.
0:20:00 > 0:20:04If a customer's pleased with their Amazon purchase, they buy more,
0:20:04 > 0:20:08and tell their friends, so Amazon gets more traffic.
0:20:08 > 0:20:11That means it can offer more products, at lower prices,
0:20:11 > 0:20:14which in turn attracts more customers.
0:20:14 > 0:20:18The flywheel builds momentum and becomes unstoppable.
0:20:19 > 0:20:21It seemed at that point that
0:20:21 > 0:20:23there was nothing that Amazon couldn't conquer.
0:20:23 > 0:20:28In 1997, Amazon floated on a rising stock market only two years
0:20:28 > 0:20:30after it had opened for business.
0:20:30 > 0:20:32It was heady days for the internet,
0:20:32 > 0:20:35and the stock price did nothing but go up, up, up.
0:20:36 > 0:20:39Amazon's hard-working staff had all been given stock options
0:20:39 > 0:20:40when they joined.
0:20:41 > 0:20:45One of the greatest absurdities at Amazon was that the reason
0:20:45 > 0:20:49everyone was killing themselves was because of the possibility
0:20:49 > 0:20:53that they would become hideously, unspeakably rich.
0:20:53 > 0:20:56At the same time, no-one ever talked about this.
0:20:56 > 0:20:58You know, it was very gauche to talk about it.
0:20:58 > 0:21:00Everyone had to pretend
0:21:00 > 0:21:03as though it was some kind of communist state, that everyone
0:21:03 > 0:21:08was just working because they just loved working crazy, crazy hard.
0:21:08 > 0:21:11But the reality, of course, underlying everything,
0:21:11 > 0:21:14is that there was this hope of some enormous payoff.
0:21:14 > 0:21:18And, for a while, it looked like that dream had come true.
0:21:21 > 0:21:24- Did you read the Times this morning? - Yes, I saw the Times this morning.
0:21:24 > 0:21:26"At one point on Friday,
0:21:26 > 0:21:29"Amazon.com's total stock market value
0:21:29 > 0:21:31"surged past 30 billion,
0:21:31 > 0:21:36"making it worth more than a major industrial company, like Texaco."
0:21:37 > 0:21:40According to my calculations, you yourself are worth
0:21:40 > 0:21:44somewhere in the vicinity of 9 or 10 billion today.
0:21:45 > 0:21:48- I only say that because I've got a follow-up question.- OK.
0:21:48 > 0:21:50What's with the Honda?
0:21:50 > 0:21:52This is a perfectly good car.
0:21:54 > 0:21:57The image of Jeff is one of a sort of brilliant,
0:21:57 > 0:22:02strategic, financial mind, and a delighted child, you know.
0:22:02 > 0:22:06And that laugh. I mean, really.
0:22:07 > 0:22:09Really.
0:22:09 > 0:22:11Jeff's laugh is memorable.
0:22:11 > 0:22:14You know, when you talk to him, if you're in a meeting with him,
0:22:14 > 0:22:17it's the thing you emerge talking about.
0:22:24 > 0:22:25Oh!
0:22:25 > 0:22:27HE LAUGHS
0:22:27 > 0:22:30I loved the challenge of it when I was there,
0:22:30 > 0:22:34especially at the beginning, and, frankly, I loved Jeff too.
0:22:35 > 0:22:39But working down the hallway from his laugh, after a while,
0:22:39 > 0:22:42it can, you know, get to grate on one.
0:22:45 > 0:22:47- Thanks very much indeed.- Thank you.
0:22:47 > 0:22:53In 1997, the internet was still a novelty for British business.
0:22:53 > 0:22:57'Botham's have set up what's called a website...'
0:22:57 > 0:23:00Back then, the new technology was much hyped
0:23:00 > 0:23:02but didn't always deliver.
0:23:02 > 0:23:06The web promised universal access to information, but, then,
0:23:06 > 0:23:09in the early days it involved unplugging the telephone
0:23:09 > 0:23:10to use your dialup modem,
0:23:10 > 0:23:14and then having to wait many, many minutes before every page loaded.
0:23:14 > 0:23:16But it was still pretty exciting.
0:23:16 > 0:23:17DIALUP TONE
0:23:17 > 0:23:20Most big retailers didn't even have a website,
0:23:20 > 0:23:24but there were already other online book-sellers competing with Amazon.
0:23:24 > 0:23:27Simon Murdoch was running a British site called Bookpages
0:23:27 > 0:23:30when he got a call from Seattle.
0:23:30 > 0:23:34Jeff Bezos got in touch and arranged to come to London.
0:23:34 > 0:23:36I think he talked to several businesses.
0:23:36 > 0:23:39He met us in a hotel in central London.
0:23:39 > 0:23:42Bezos said his staff in Seattle were already working
0:23:42 > 0:23:44on a UK version of Amazon,
0:23:44 > 0:23:48but Murdoch's book business created another possibility.
0:23:48 > 0:23:50The first discussion was, "We're coming here anyway.
0:23:50 > 0:23:52"Would you like to be part of it,
0:23:52 > 0:23:54"or would you like us to compete with you?"
0:23:54 > 0:23:56- Quite aggressive?- Yes.
0:23:56 > 0:23:59A deal was done for Amazon to buy Murdoch's business,
0:23:59 > 0:24:04and for Murdoch to become head of Amazon's UK operation.
0:24:04 > 0:24:08Amazon.co.uk is going to revolutionise book-selling,
0:24:08 > 0:24:10because we're going to make a very large number of books
0:24:10 > 0:24:11available to people very easily.
0:24:11 > 0:24:14Initially, people were pretty nervous about
0:24:14 > 0:24:17online shopping, I think. The idea of putting your credit card details
0:24:17 > 0:24:20into a little box on screen was worrying.
0:24:20 > 0:24:23Hello, Amazon.com. This is Deanne. How can I help you?
0:24:23 > 0:24:27At first, Amazon set up call centres to take down the credit card
0:24:27 > 0:24:29details of timid customers.
0:24:29 > 0:24:33But most soon got used to the online routine.
0:24:33 > 0:24:37Amazon helped encourage people to trust the actual process
0:24:37 > 0:24:39of just buying something online.
0:24:41 > 0:24:45Satisfied customers were persuaded to move from books to toys,
0:24:45 > 0:24:51CDs, videos and more, as Amazon expanded its range.
0:24:51 > 0:24:55We're trying to build a place where people can come, to find
0:24:55 > 0:24:58and discover anything - with a capital A - that they
0:24:58 > 0:25:01- might want to buy online. - But any thing?- Anything.
0:25:04 > 0:25:06Amazon was becoming a giant retailer,
0:25:06 > 0:25:11but Bezos decided it could be a marketplace at the same time.
0:25:14 > 0:25:18That would be a way to spin Amazon's flywheel even faster.
0:25:18 > 0:25:22Bezos would get more value from both Amazon's website
0:25:22 > 0:25:23and its warehouses
0:25:23 > 0:25:26by offering outsiders the chance to sell their products
0:25:26 > 0:25:29on the website and use the warehouses
0:25:29 > 0:25:31to store and dispatch them.
0:25:31 > 0:25:34It's called Amazon Marketplace.
0:25:36 > 0:25:40The fundamental innovation was inviting third party sellers,
0:25:40 > 0:25:43not only on to our site, but to actually compete with us
0:25:43 > 0:25:46directly on the very detail page. That's been so successful
0:25:46 > 0:25:48that today more than 40% of all the units
0:25:48 > 0:25:52sold on Amazon worldwide are sold by third party sellers.
0:25:55 > 0:25:59And that's creating jobs, even in this Nottinghamshire village.
0:26:04 > 0:26:06It's possible to make a living simply by spotting bargains
0:26:06 > 0:26:09in supermarkets to sell on Amazon,
0:26:09 > 0:26:13as Mark Reedman and Keith Whittle have discovered.
0:26:14 > 0:26:18So, we've got a couple of dolls. We've not sold dolls before.
0:26:18 > 0:26:21- How much was that, then?- 4.99.
0:26:21 > 0:26:25- What do you reckon you can sell it for?- We're selling for 17.- Whoa.
0:26:26 > 0:26:30Yes, you really can comb your local shops to find cheap stock
0:26:30 > 0:26:35to sell on Amazon Marketplace, if you know what you're looking for.
0:26:35 > 0:26:39Boots, or Sainsbury's, or Tesco's, or Argos,
0:26:39 > 0:26:43there are certain times of the year where they will do deals.
0:26:43 > 0:26:48It sounds easy, but like Amazon itself, this is a tech business.
0:26:48 > 0:26:50They track prices using software.
0:26:51 > 0:26:55In August, they bought a load of Star Wars Mr Potatoheads
0:26:55 > 0:26:57and have been watching their price ever since.
0:26:57 > 0:27:00It sort of dropped down at the beginning of the summer,
0:27:00 > 0:27:02but as soon as we hit the November, Christmas period,
0:27:02 > 0:27:05it's starting to rise, and will probably continue to rise.
0:27:07 > 0:27:10It's a bit like trading on the stock market.
0:27:12 > 0:27:15Mark and Keith store their goods until it's the right moment to sell.
0:27:18 > 0:27:21Sometimes it means we have to sit on stock for six months,
0:27:21 > 0:27:23so we're investing our capital,
0:27:23 > 0:27:26but with a longer term aim that we'll make a profit on that.
0:27:26 > 0:27:30Sometimes it's a bit of a lottery, but it normally pays off.
0:27:30 > 0:27:33If you've got the space to keep hundreds of games,
0:27:33 > 0:27:38gadgets and toys, Keith and Mark say you can earn your keep like this.
0:27:38 > 0:27:43If you're looking at between £5-£7 a unit profit,
0:27:43 > 0:27:48then you've only got to be turning over, say, 15, 20 units in a day,
0:27:48 > 0:27:50and, over a week, over a month,
0:27:50 > 0:27:53over a year, that adds up to be quite a decent salary.
0:27:54 > 0:27:59That's about £100 profit a day, or about £37,000 a year,
0:27:59 > 0:28:02as long as you're open for business seven days a week.
0:28:05 > 0:28:08We've been labelled as a nation of shopkeepers,
0:28:08 > 0:28:13but, actually, Amazon's sort of taken that for us as small retailers,
0:28:13 > 0:28:16into the 21st century, where we can actually all sell
0:28:16 > 0:28:21our goods and our wares, but without the need of that physical premises.
0:28:27 > 0:28:31'The internet has been the most hyped industry of the century,
0:28:31 > 0:28:35'but now, as shares collapse, it could wreck the future for us all.'
0:28:37 > 0:28:40The stock market couldn't rise for ever.
0:28:42 > 0:28:46At the start of the new century, nervous investors started to panic.
0:28:48 > 0:28:51Well, all good parties come to an end.
0:28:51 > 0:28:56And so, bang, stocks would go from 50 to five, in a month.
0:28:56 > 0:28:58And that was the end.
0:28:59 > 0:29:03Amazon staff, who'd watched with amazement as the stock price rose,
0:29:03 > 0:29:07now saw it lose 98% of its value.
0:29:08 > 0:29:11I lost millions of dollars of paper worth.
0:29:11 > 0:29:14And that's the way it goes.
0:29:14 > 0:29:16You know, there's just no way around that.
0:29:16 > 0:29:20Only the very earliest joiners had enough share options to enjoy
0:29:20 > 0:29:23the rewards that everyone had been hoping for.
0:29:23 > 0:29:27- Was it then that you actually didn't need to work again?- Yes.
0:29:28 > 0:29:31Yeah, I retired when I was 37.
0:29:34 > 0:29:38For less fortunate staff, there was a harsh new reality.
0:29:39 > 0:29:40Amazon.com this is Lance.
0:29:40 > 0:29:43Instead of hiring, for the first time,
0:29:43 > 0:29:45Bezos was forced to lay people off.
0:29:45 > 0:29:47And he had to persuade those that remained that,
0:29:47 > 0:29:50whatever Wall Street said, Amazon would continue to grow,
0:29:50 > 0:29:53and would one day make money.
0:29:53 > 0:29:56Top executives from that time say that frankly there was
0:29:56 > 0:29:59nobody inside Amazon who believed that this would one day be
0:29:59 > 0:30:02a 50 billion, let alone 100 billion revenue company.
0:30:02 > 0:30:05But they also say that Jeff never blinked once.
0:30:05 > 0:30:07That he has ice water running through his veins,
0:30:07 > 0:30:10and that he saw that internet shopping
0:30:10 > 0:30:13is convenient, that prices can be lower when you centralise inventory.
0:30:13 > 0:30:15And he just refused to blink.
0:30:17 > 0:30:20Alongside the customer-centric mantra,
0:30:20 > 0:30:23there's a toughness in Amazon's corporate culture.
0:30:24 > 0:30:26Leaders...
0:30:28 > 0:30:30And...
0:30:35 > 0:30:37Hm. Curious.
0:30:38 > 0:30:40He really is a tough boss.
0:30:40 > 0:30:45He has driven that company and drives those people very hard.
0:30:45 > 0:30:48And you either survive there because you buy into that culture,
0:30:48 > 0:30:50and it's a culture that he has created,
0:30:50 > 0:30:54or you leave because it's nothing you have any desire to be around.
0:30:54 > 0:30:58Dave Cotter left Amazon after four years to set up his own business.
0:31:00 > 0:31:03It's a social network for families, beginning with his own.
0:31:05 > 0:31:08Amazon can be a very difficult place to work.
0:31:08 > 0:31:11But I actually look back, super, super fondly
0:31:11 > 0:31:14and revere the intellectual challenge that it provided.
0:31:14 > 0:31:17It still can be really hard on a day in, day out basis to have
0:31:17 > 0:31:23kind of everything that you do or everything that you're surrounded by,
0:31:23 > 0:31:26kind of, be open for attack.
0:31:28 > 0:31:32Nadia Shouraboura also left Amazon to launch a start-up,
0:31:32 > 0:31:34bringing online technology to shops.
0:31:36 > 0:31:39It could hardly be more intense than her old job.
0:31:40 > 0:31:43Amazon was really the way of my life.
0:31:43 > 0:31:46I lived at Amazon and I lived within Amazon.
0:31:46 > 0:31:48I was married at Amazon,
0:31:48 > 0:31:52and every hour of my waking day I was thinking about Amazon.
0:31:52 > 0:31:56Here's one kind of crisis that all Amazon executives dread -
0:31:56 > 0:31:59Bezos gets a customer complaint.
0:31:59 > 0:32:03He forwards it to the person responsible, with a single,
0:32:03 > 0:32:04cryptic addition.
0:32:04 > 0:32:07You get an e-mail message and there is just a question mark in it.
0:32:07 > 0:32:08I got one.
0:32:08 > 0:32:11For me at the time it was just scary and terrifying
0:32:11 > 0:32:13only because I hadn't been at Amazon very long.
0:32:13 > 0:32:17So, immediate things - sweaty palms, panic, anxiety.
0:32:17 > 0:32:21It's just drop everything, all hands on deck, we've got to address this.
0:32:21 > 0:32:25What Jeff wants you to do is to go down, and not only fix it,
0:32:25 > 0:32:26but fix it for ever.
0:32:26 > 0:32:30Have a mechanism in place that that screw-up never, ever happens again.
0:32:32 > 0:32:35Many companies might say this one customer had this one issue.
0:32:35 > 0:32:38Jeff takes a very different perspective, which is
0:32:38 > 0:32:40maybe there's a way to improve the system.
0:32:40 > 0:32:41However long it takes,
0:32:41 > 0:32:45you work away until that particular failure is impossible.
0:32:45 > 0:32:46And then...
0:32:46 > 0:32:48And then you report back.
0:32:48 > 0:32:51And you get usually a smiley face after that, saying that,
0:32:51 > 0:32:53yes, thank you.
0:32:56 > 0:33:01Amazon survived the dot com crash - just - thanks to having borrowed
0:33:01 > 0:33:03enough millions to stay afloat.
0:33:03 > 0:33:07But Bezos always had ambitions way beyond mere survival.
0:33:07 > 0:33:12The big ideas in business are often very obvious.
0:33:12 > 0:33:15But it's very hard to maintain a firm grasp
0:33:15 > 0:33:17of the obvious at all times.
0:33:17 > 0:33:21In the mid 2000s, Bezos set the company on a new path,
0:33:21 > 0:33:25using its existing assets to move beyond retail.
0:33:27 > 0:33:31Just as it had offered warehouse space to outside sellers,
0:33:31 > 0:33:35Amazon created a huge new business called Amazon Web Services
0:33:35 > 0:33:39which rents out its computing power to outsiders.
0:33:39 > 0:33:43The company also drew on its techy expertise to create an e-reader,
0:33:43 > 0:33:46Amazon's first consumer product.
0:33:46 > 0:33:51Selling it direct to its customers made the flywheel spin even faster.
0:33:54 > 0:33:56The e-reader was created
0:33:56 > 0:33:59in a secretive Amazon lab in Silicon Valley.
0:34:00 > 0:34:03Amazon's new direction was a response to the success
0:34:03 > 0:34:07of Apple's iTunes, played through its iPod.
0:34:07 > 0:34:10Jeff had seen what had happened with music.
0:34:10 > 0:34:14We were buying our ipods, they were very pretty, but then what we were
0:34:14 > 0:34:17really buying was the music that went on top of them, the software.
0:34:17 > 0:34:20And Jeff said, "Well, I'm not going to let that happen to books.
0:34:20 > 0:34:23"Books is our core business, it's central to us.
0:34:23 > 0:34:25"I'm going to get ahead of that."
0:34:25 > 0:34:28And that's why he introduced the Kindle. so we would begin to buy
0:34:28 > 0:34:32our books, and now our movies, and our other content, on the Kindle.
0:34:32 > 0:34:36The first version of the Kindle was launched in 2007,
0:34:36 > 0:34:39looking a bit like the poor relation of an Apple product.
0:34:41 > 0:34:45But two years later, there was a new model that Bezos went out to sell.
0:34:45 > 0:34:49Very few technologies have a lifetime of 500 years.
0:34:49 > 0:34:51The physical book has had a great run.
0:34:51 > 0:34:53- So that's it? Death of the physical book?- I think
0:34:53 > 0:34:55there will always be books.
0:34:55 > 0:34:58It's not death, but if you look over some period of time,
0:34:58 > 0:35:02it makes sense for it to continue to evolve.
0:35:02 > 0:35:06So, if you believe, as I do, that long form reading is important,
0:35:06 > 0:35:09then a device like Kindle
0:35:09 > 0:35:11is important because it makes that easier.
0:35:11 > 0:35:15The Kindle doesn't only let Amazon sell books electronically.
0:35:17 > 0:35:19It's created a publishing business, too,
0:35:19 > 0:35:22because anyone can use it to upload their own writing.
0:35:24 > 0:35:29It's really democratising the ability to start and grow a business
0:35:29 > 0:35:33as an author, turning authors, in a sense, into entrepreneurs.
0:35:34 > 0:35:36This couple have done well
0:35:36 > 0:35:39from Amazon's new self-publishing business.
0:35:39 > 0:35:41Nick Spalding worked as a press officer for the police.
0:35:41 > 0:35:44But he'd always wanted to be a writer.
0:35:44 > 0:35:47Three years ago, he gave himself a final chance.
0:35:47 > 0:35:49I set myself the challenge to see
0:35:49 > 0:35:52if I could write an entire book in one sitting.
0:35:53 > 0:35:58So I sat down on a Saturday morning and just started writing.
0:35:58 > 0:36:00I had no idea how long I'd go for.
0:36:00 > 0:36:02But I managed 30 hours
0:36:02 > 0:36:06and had 50,000 words plus written at the end of it.
0:36:09 > 0:36:13After a bit of editing, Nick's book was ready for the world.
0:36:13 > 0:36:17He uploaded it to Amazon, for sale to Kindle owners.
0:36:17 > 0:36:20If you've got all your ducks in a row before you sit down to do it,
0:36:20 > 0:36:22it takes ten minutes.
0:36:23 > 0:36:25You need to give your book a price.
0:36:25 > 0:36:27If you keep it cheap, you'll sell more
0:36:27 > 0:36:29and earn 35% of the sales price.
0:36:29 > 0:36:34At some higher prices, you'll get a generous 70% in royalties.
0:36:35 > 0:36:38Click, Save, and Publish, and that is the end of the process.
0:36:38 > 0:36:41Initially, I was a little bit sceptical.
0:36:41 > 0:36:45Not that I doubted his writing ability but, as it was a new idea,
0:36:45 > 0:36:48I just wasn't sure how it was going to work.
0:36:48 > 0:36:51You sell one, you sell two, and it's a thrill.
0:36:51 > 0:36:53Somebody you've never met, somebody you'll never meet,
0:36:53 > 0:36:57has bought your book and is potentially reading it right now.
0:36:57 > 0:36:59He would spend a lot of time in the evening
0:36:59 > 0:37:02checking his sales figures on the laptop.
0:37:02 > 0:37:05And I would be there, sort of rolling my eyes,
0:37:05 > 0:37:08as he went, "I've sold another copy. I've sold another copy."
0:37:08 > 0:37:10Gemma had to change her tune
0:37:10 > 0:37:14when Nick followed up his first effort with a bawdy comic novel.
0:37:14 > 0:37:18"Annika was a goddess, a blonde perfect, golden-skinned
0:37:18 > 0:37:23"creature of myth. Or Sweden as they apparently call it these days."
0:37:23 > 0:37:27It started to sell, and it started to sell more and more.
0:37:27 > 0:37:29"Sean thought I'd be the perfect candidate,
0:37:29 > 0:37:32"given that he knew I was horrifically single..."
0:37:32 > 0:37:36For it to go to 1,000 over the course of an afternoon
0:37:36 > 0:37:39was head-spinning, to be quite honest with you.
0:37:39 > 0:37:45That year, Nick sold 430,000 books on Amazon.
0:37:45 > 0:37:48And now he's sold the books to a traditional publisher -
0:37:48 > 0:37:51- cashing in a second time.- Um, yes, it was a six figure advance,
0:37:51 > 0:37:55which is a lot for a first-time author.
0:37:55 > 0:37:58Nick resigned from the police to write full-time.
0:37:58 > 0:38:02He and Gemma have already made use of his new earnings.
0:38:02 > 0:38:05I love Amazon. They've bought me a house.
0:38:10 > 0:38:13If you look at the best-seller list, typically you'll find
0:38:13 > 0:38:17nowadays that about one in five of our Kindle bestselling books
0:38:17 > 0:38:20are self-published books via the Kindle Direct Publishing platform.
0:38:23 > 0:38:26That's a worry for these publishers, gathering in London
0:38:26 > 0:38:28to discuss the future of their business.
0:38:30 > 0:38:33Amazon are undoubtedly the most important player in
0:38:33 > 0:38:37the book world today, whether e-books or print books.
0:38:37 > 0:38:40They really are the central platform around which the whole
0:38:40 > 0:38:44publishing industry is operating these days.
0:38:44 > 0:38:46There's no shortage of speakers to offer
0:38:46 > 0:38:48views on the future of the business.
0:38:48 > 0:38:50But none from Amazon itself.
0:38:52 > 0:38:54Amazon is notoriously secretive.
0:38:54 > 0:38:56We'd like to have Amazon speakers here.
0:38:56 > 0:38:58But the way they operate,
0:38:58 > 0:39:01they tend to not want to do things as part of an industry conversation
0:39:01 > 0:39:04or as part of a dialogue, which I think is a shame.
0:39:04 > 0:39:07Despite the threat from self publishing,
0:39:07 > 0:39:10whether they like it or not, for many of these publishers,
0:39:10 > 0:39:12Amazon remains their top sales channel.
0:39:12 > 0:39:16They're torn between gratitude and fear.
0:39:16 > 0:39:19The general feeling is that it is terrifying
0:39:19 > 0:39:22and wonderful in equal measure.
0:39:22 > 0:39:25There's no escaping the fact that Amazon is a dominant force.
0:39:25 > 0:39:28And monopoly is never good for business,
0:39:28 > 0:39:30and certainly never good for the consumer.
0:39:30 > 0:39:33They're not in business to support publishers.
0:39:33 > 0:39:35They're in business to make Amazon as successful as possible.
0:39:35 > 0:39:39And some of the things that they do are contrary to the things
0:39:39 > 0:39:41we would like. So you fight back.
0:39:41 > 0:39:43And that's what I'm doing with HarperCollins.
0:39:43 > 0:39:46And I think we are doing, as a business, very well.
0:39:46 > 0:39:48And, you know, bring it on.
0:39:49 > 0:39:53There's plenty of fighting talk to keep the spirits up.
0:39:53 > 0:39:57We are an industry that has survived hundreds of years.
0:39:57 > 0:40:01We are going to be here in hundreds of years.
0:40:01 > 0:40:03APPLAUSE
0:40:03 > 0:40:06But Amazon, and its founder Jeff Bezos,
0:40:06 > 0:40:08are never far from people's minds.
0:40:08 > 0:40:10Publishers think about Jeff Bezos
0:40:10 > 0:40:13sort of like how they might think about God -
0:40:13 > 0:40:16as a kind of very distant, inaccessible figure,
0:40:16 > 0:40:18who is all-powerful and all-knowing.
0:40:18 > 0:40:20But God loves us.
0:40:20 > 0:40:22Yes, but God is vengeful.
0:40:24 > 0:40:27The Amazon universe keeps on expanding.
0:40:27 > 0:40:30The new Kindles still download books.
0:40:30 > 0:40:32'Let's rehearse, huh?'
0:40:32 > 0:40:35They also play Amazon's new TV and film productions.
0:40:35 > 0:40:36Action!
0:40:36 > 0:40:40There's a new set-top box, to watch them on TV.
0:40:40 > 0:40:42We've packed in loads of entertainment.
0:40:42 > 0:40:44Or play Amazon games.
0:40:45 > 0:40:48ROARING
0:40:48 > 0:40:52And now, in some American cities, there are Amazon grocery deliveries
0:40:52 > 0:40:56from vans advertising Amazon productions.
0:40:56 > 0:40:59'With Amazon Prime, you get something truly amazing...'
0:40:59 > 0:41:02And there's Amazon Prime, a subscription service for
0:41:02 > 0:41:06free delivery which cross-promotes other Amazon businesses.
0:41:06 > 0:41:09'You'll get access to the Kindle Owners' Lending Library
0:41:09 > 0:41:12'where Amazon Prime members can borrow bestselling books for free.'
0:41:18 > 0:41:19DOORBELL RINGS
0:41:19 > 0:41:23The Carelli family in Seattle live the complete Amazon lifestyle.
0:41:23 > 0:41:25All right, thank you.
0:41:25 > 0:41:30My parents use always use it for groceries and stuff, and sometimes,
0:41:30 > 0:41:33if we're out of snacks for school, we ask, "Mom, did you order Amazon?"
0:41:33 > 0:41:36And she's always, "Yep, it's on its way."
0:41:36 > 0:41:39They're fed, entertained and provided with literature,
0:41:39 > 0:41:43toys and almost anything they might want to buy, all by one company.
0:41:46 > 0:41:49- Mum, who's this for?- Everybody.
0:41:49 > 0:41:53With our hectic schedules and the kids' different activities,
0:41:53 > 0:41:56we always need things right away, kind of, on-demand shopping,
0:41:56 > 0:41:59it's just been a really good service for us.
0:41:59 > 0:42:02The Carellis are living proof of the flywheel effect.
0:42:02 > 0:42:07Every Amazon service they use increases their use of the others.
0:42:07 > 0:42:10I have to say that Amazon Fresh, because I liked it so much,
0:42:10 > 0:42:14it made me want to use Amazon.com even more.
0:42:14 > 0:42:17And the family's media consumption centres
0:42:17 > 0:42:20on their membership of Amazon Prime.
0:42:20 > 0:42:22You can watch movies if you're a Prime member,
0:42:22 > 0:42:26stream it to your devices, and also if you have a Kindle,
0:42:26 > 0:42:28you can borrow books if you have a Prime membership.
0:42:28 > 0:42:30You don't have to pay.
0:42:30 > 0:42:33- Do you have Kindles? - We do, we have four.
0:42:33 > 0:42:36Well, there's different types of Kindles,
0:42:36 > 0:42:41like basic Kindle, a Kindle Fire, which is basically like a mini-iPad.
0:42:41 > 0:42:45For the Amazon generation, visiting shops is just a waste of time.
0:42:46 > 0:42:48It's a pain in the neck.
0:42:48 > 0:42:51You just go into a grocery store and you have to look for everything.
0:42:51 > 0:42:54On Amazon you just search it up with the press of a button.
0:42:54 > 0:42:55It's easier.
0:42:55 > 0:42:59Jeff Bezos isn't finished yet.
0:42:59 > 0:43:00Let me show you something.
0:43:00 > 0:43:03He recently revealed something on American TV that caught
0:43:03 > 0:43:05the imagination of the world.
0:43:05 > 0:43:08These are effectively drones,
0:43:08 > 0:43:11but there's no reason they can't be used as delivery vehicles.
0:43:11 > 0:43:13Take a look up here so I can show you how it works.
0:43:13 > 0:43:16- We're talking about delivery here? - We're talking about delivery,
0:43:16 > 0:43:19so there's an item going into the vehicle.
0:43:21 > 0:43:24I know this looks like science fiction. It's not.
0:43:24 > 0:43:26Wow!
0:43:30 > 0:43:34Amazon isn't claiming its drones will be operating any time soon.
0:43:34 > 0:43:37But its eye-catching video just happened to be released
0:43:37 > 0:43:41ahead of Amazon's peak pre-Christmas sales period.
0:43:43 > 0:43:46Of course this is a completely impractical way of actually
0:43:46 > 0:43:49delivering products but it meant that everyone was talking about
0:43:49 > 0:43:52Amazon and so people would go to the Amazon website and then buy stuff.
0:43:53 > 0:43:57It's only 20 years since Amazon sold its first book.
0:43:57 > 0:44:01Today, the company's valued at 170 billion
0:44:01 > 0:44:05with an empire that caters for more and more of its customers' needs.
0:44:05 > 0:44:09But some of its early staff think it's getting too powerful.
0:44:09 > 0:44:11They're going to own the book, they're going to own the
0:44:11 > 0:44:15information that goes in the book, they're going to own the shipping.
0:44:15 > 0:44:16They can't own it all, you know.
0:44:16 > 0:44:19So, I have mixed feelings sometimes about Amazon.
0:44:21 > 0:44:25Sometimes I feel like, surely there are consumer items
0:44:25 > 0:44:28that I should simply go downstairs and buy from the store
0:44:28 > 0:44:30around the corner.
0:44:30 > 0:44:33And not do the easy thing which is find the laundry bags on Amazon
0:44:33 > 0:44:35and hit One Click.
0:44:35 > 0:44:39You know, there's an element of guilt in there.
0:44:39 > 0:44:41Do you think you're turning us into lazy
0:44:41 > 0:44:44and perhaps slightly guilty consumers?
0:44:44 > 0:44:45No, I don't think so at all.
0:44:45 > 0:44:49I think that anything we can do to make consumers' lives easier,
0:44:49 > 0:44:52including the shopping they need to do, is giving time
0:44:52 > 0:44:55and money back to consumers they can spend doing something else.
0:44:55 > 0:45:00You can't actually have the company that Amazon is,
0:45:00 > 0:45:03and have it care about what it's doing to the ecosystem.
0:45:03 > 0:45:06Because it's actually designed from the ground up to be a shark.
0:45:06 > 0:45:11Like, it's designed to dissolve and destroy other businesses
0:45:11 > 0:45:13by, like, undercutting them.
0:45:18 > 0:45:22Whether because of how it works, or because of its sheer scale,
0:45:22 > 0:45:26Amazon is increasingly on the radar of politicians and regulators,
0:45:26 > 0:45:28especially in France.
0:45:28 > 0:45:32For decades, French law has stopped books being discounted
0:45:32 > 0:45:35by more than 5%, and that applies to Amazon too.
0:45:38 > 0:45:40The novelist Aurelie Filippetti
0:45:40 > 0:45:44has a second life as France's Minister of Culture,
0:45:44 > 0:45:47with a particular passion for protecting the nation's bookshops.
0:46:09 > 0:46:13Government and opposition are united in believing the existing
0:46:13 > 0:46:16restriction on book discounting isn't enough to restrain Amazon.
0:46:22 > 0:46:24Now a new law will also restrict
0:46:24 > 0:46:28Amazon's free postage and packing offers.
0:46:28 > 0:46:31But nobody in this Paris book shop seemed to mind.
0:46:49 > 0:46:52The minister accuses Amazon of trying to eliminate competition
0:46:52 > 0:46:54in the book business.
0:47:07 > 0:47:09No, I certainly wouldn't accept that charge.
0:47:09 > 0:47:12I don't think we're trying to eliminate the competition.
0:47:12 > 0:47:16I think that UK customers, if I focus on the UK, which I know best,
0:47:16 > 0:47:19have access to a lot of different choices
0:47:19 > 0:47:22and price is one dimension on which retailers compete.
0:47:25 > 0:47:29But books are only one industry which has complaints about Amazon.
0:47:36 > 0:47:40Mark Constantine's Lush shops sell soap and other products the company
0:47:40 > 0:47:44invents and manufactures from its headquarters in Poole, Dorset.
0:47:46 > 0:47:50Here's a typical Honey I Washed the Kids.
0:47:50 > 0:47:53You can cut this, have whatever size you like.
0:47:53 > 0:47:56Made with English honey. Beautiful smell.
0:47:59 > 0:48:02There are no Lush products on Amazon.co.uk
0:48:02 > 0:48:05because Lush decided it wanted to control
0:48:05 > 0:48:07all aspects of its retailing.
0:48:08 > 0:48:09What upset Constantine
0:48:09 > 0:48:13was what happened when customers tried to find them.
0:48:13 > 0:48:16When you type in "Lush" inside Amazon,
0:48:16 > 0:48:19you're then taken to products from a competitor,
0:48:19 > 0:48:23so similar products to our own, but they are not ours.
0:48:23 > 0:48:27Constantine was so incensed he took Amazon to court.
0:48:27 > 0:48:30They have traded off our name. They have then damaged our reputation.
0:48:30 > 0:48:33And then we lose business because the customer thinks
0:48:33 > 0:48:36that we are not providing the quality that they expect from us.
0:48:36 > 0:48:39Lush won its case.
0:48:39 > 0:48:43Amazon declined to comment but says it intends to appeal.
0:48:43 > 0:48:46But Constantine has a bigger objection to Amazon.
0:48:46 > 0:48:48While Lush employs people
0:48:48 > 0:48:50in its British factories and high street shops,
0:48:50 > 0:48:53and pays corporate tax to the British government,
0:48:53 > 0:48:57Amazon's UK operations pay a lower rate of corporate tax
0:48:57 > 0:49:00through an Amazon subsidiary based in Luxembourg.
0:49:00 > 0:49:03It's saying to society, "Here's a marketplace,
0:49:03 > 0:49:07"but we're not going to make a contribution to you financially,
0:49:07 > 0:49:11"unlike other marketplaces like the high street.
0:49:11 > 0:49:15"We're going to reconfigure that and this is our business model."
0:49:15 > 0:49:19So I think that's a fundamental attack on society.
0:49:19 > 0:49:22The choice of having a single European headquarters
0:49:22 > 0:49:24has nothing to do with tax or anything else.
0:49:24 > 0:49:26It's simply the only way we could operate
0:49:26 > 0:49:28a business of this complexity and scale.
0:49:28 > 0:49:31For the choice to be in Luxembourg, tax was one consideration.
0:49:33 > 0:49:37The French are also concerned about Amazon's tax arrangements.
0:49:56 > 0:50:00What we've said very consistently is that we pay all of the taxes we are
0:50:00 > 0:50:05obligated to pay everywhere in the world and we will always do so.
0:50:05 > 0:50:07However people may feel in Europe,
0:50:07 > 0:50:11back in Seattle, Amazon's tax affairs hardly raise an eyebrow.
0:50:12 > 0:50:13In the United States,
0:50:13 > 0:50:17tax avoidance is generally applauded.
0:50:17 > 0:50:20You know, this is a country that happened to throw a whole
0:50:20 > 0:50:25bunch of tea into the Boston harbour when the British wanted to tax them
0:50:25 > 0:50:27on something that they thought was unfair.
0:50:27 > 0:50:29And, so, it is not surprising at all
0:50:29 > 0:50:32to, I think, most people who follow Amazon,
0:50:32 > 0:50:36that it is doing what it can to pay as little in taxes as possible,
0:50:36 > 0:50:38both in the US and abroad.
0:50:40 > 0:50:44For a successful business, Amazon has one unusual feature.
0:50:44 > 0:50:46It doesn't actually make money.
0:50:46 > 0:50:48BEZOS LAUGHS
0:50:48 > 0:50:50Well, we're a famously unprofitable company.
0:50:52 > 0:50:56Since its founding, Amazon's sales have grown spectacularly.
0:50:59 > 0:51:02But its profits have been minimal.
0:51:03 > 0:51:05Bezos says that's deliberate
0:51:05 > 0:51:09because he's still investing in new warehouses and new businesses.
0:51:11 > 0:51:14It's very hard to beat a non-profit business.
0:51:14 > 0:51:18Other companies have to make a profit or their investors will be angry.
0:51:18 > 0:51:21Erm, Jeff has successfully made people want to support
0:51:21 > 0:51:24a company that doesn't need to make a profit,
0:51:24 > 0:51:28and that's an incredible business advantage.
0:51:28 > 0:51:30However well Amazon's persuaded the markets
0:51:30 > 0:51:32it doesn't need to make profits
0:51:32 > 0:51:35or governments that it doesn't owe more taxes,
0:51:35 > 0:51:39the company insists it's still a good corporate citizen.
0:51:39 > 0:51:42We've collected and remitted more than a billion pounds of VAT
0:51:42 > 0:51:46on behalf of the exchequer, we have purchased many billions of pounds
0:51:46 > 0:51:49of products from UK suppliers, we've spent over a billion pounds
0:51:49 > 0:51:52in the past five years just on the delivery companies who do
0:51:52 > 0:51:56the last mile delivery, and we've created many thousands of jobs.
0:52:00 > 0:52:02There are new jobs in this warehouse,
0:52:02 > 0:52:04which only exists because of Amazon.
0:52:08 > 0:52:13AwesomeBooks was started in a spare room in Reading just seven years ago
0:52:13 > 0:52:15by Mubin Ahmed and his brother.
0:52:16 > 0:52:18For us it was really just getting the supply,
0:52:18 > 0:52:21and almost, Amazon could take care of the marketing and everything
0:52:21 > 0:52:25that would attract the sales that we needed.
0:52:25 > 0:52:28They get books from libraries, charities, publishers,
0:52:28 > 0:52:31anyone who wants to get rid of large numbers.
0:52:31 > 0:52:33The company's software tells its staff
0:52:33 > 0:52:36whether each book is worth listing on Amazon,
0:52:36 > 0:52:39keeping to sell elsewhere, or can only be thrown away.
0:52:41 > 0:52:45Awesome processes 18 million books a year, and sells around
0:52:45 > 0:52:50five million to individual buyers, with Amazon the dominant outlet.
0:52:52 > 0:52:55Ultimately, we wouldn't exist without Amazon.
0:52:55 > 0:52:58And, so, our profits are their profits in a way,
0:52:58 > 0:53:01and it's only fair that we have that symbiotic relationship
0:53:01 > 0:53:04where, as we grow, they grow.
0:53:04 > 0:53:06200 new jobs have been created here.
0:53:06 > 0:53:10Mubin has adopted Amazon's customer-centric ideas.
0:53:11 > 0:53:12At the end of the day,
0:53:12 > 0:53:16the customer has dictated that online is more convenient,
0:53:16 > 0:53:18and the price points are better for them,
0:53:18 > 0:53:20and so the market has to adjust.
0:53:30 > 0:53:34That adjustment has created losers as well as winners.
0:53:34 > 0:53:39Your friendly local shopkeeper may feel the efficiency of online retail
0:53:39 > 0:53:43comes with a high price in terms of our relationships.
0:53:43 > 0:53:46We will become more insular as a society.
0:53:46 > 0:53:51We will sit at home in our rooms and we will type in what we need.
0:53:51 > 0:53:55We won't talk to anybody, we won't communicate,
0:53:55 > 0:53:58our communities will become smaller.
0:53:58 > 0:54:01And we won't see people. And I don't want that.
0:54:01 > 0:54:05- Take care.- Thank you.- Bye-bye, now. - Thanks, bye-bye.- Bye, Jack.
0:54:05 > 0:54:09Linda decided she had to stop using her own money to support
0:54:09 > 0:54:12the business, and the book shop has now closed.
0:54:12 > 0:54:15Is it in Amazon's interest that book shops go out of business?
0:54:15 > 0:54:17No, I don't... No, I don't think so.
0:54:17 > 0:54:20I think that Amazon does best in an environment where there's
0:54:20 > 0:54:22a lot of thriving competition.
0:54:22 > 0:54:25We're a company that appreciates competition
0:54:25 > 0:54:27and it challenges us to do even better.
0:54:29 > 0:54:32Can anything stop Amazon?
0:54:32 > 0:54:36Well, competition between online and the high street may be taking
0:54:36 > 0:54:39a new turn that could leave Amazon playing catch-up.
0:54:39 > 0:54:41It's to do with Smartphones.
0:54:41 > 0:54:43At the moment people go into shops
0:54:43 > 0:54:45and they can check prices on their app,
0:54:45 > 0:54:47check it on Amazon, find it cheaper and buy it.
0:54:47 > 0:54:51So try something on in the shop but then buy it through a competitor.
0:54:51 > 0:54:54And I think that retailers are waking up to this fact
0:54:54 > 0:54:57and trying to create better experiences in the store.
0:55:00 > 0:55:04In Silicon Valley, eBay believes we're about to witness
0:55:04 > 0:55:07a blurring of on and offline shopping.
0:55:09 > 0:55:11It wants to partner with traditional retailers
0:55:11 > 0:55:15and has a whole demo area to show what's possible.
0:55:15 > 0:55:17So Lisa clicks on these shoes, loves them,
0:55:17 > 0:55:20looks at some of the photos, says, "You know what?
0:55:20 > 0:55:22I'm going to get these, "they're right down the street."
0:55:22 > 0:55:26This idea is click and collect, with a new personal touch.
0:55:26 > 0:55:29And she notices she can check in automatically
0:55:29 > 0:55:31when she gets to the store.
0:55:31 > 0:55:33Fantastic. So she places the order.
0:55:33 > 0:55:35And she knows when she then walks into the store,
0:55:35 > 0:55:39the store assistant's going to say "Hey, Lisa, welcome to the store,
0:55:39 > 0:55:40"we've got your pair of shoes ready."
0:55:40 > 0:55:43We can do things with technology in the physical store
0:55:43 > 0:55:46to make people understand, find and discover
0:55:46 > 0:55:49and then purchase product in a far better way.
0:55:49 > 0:55:53Some of these ideas are already out there, such as giant touch screens
0:55:53 > 0:55:57to encourage customers to buy online even when they're out shopping.
0:55:57 > 0:56:00Think Minority Report, right? The movie.
0:56:00 > 0:56:02This is the possibility, right, of sort of...
0:56:02 > 0:56:05You take these vertical surfaces and turn them into engagement,
0:56:05 > 0:56:08where the consumers can actually interact.
0:56:09 > 0:56:11And according to eBay,
0:56:11 > 0:56:16Amazon's business model may not be as efficient as it looks today.
0:56:16 > 0:56:20Having your own Fulfilment Centres, and many of them, is one way to go.
0:56:20 > 0:56:25It's expensive. It makes you become a physical logistics company.
0:56:25 > 0:56:27eBay's vision reminds us
0:56:27 > 0:56:32that old-fashioned shops weren't actually such a bad idea after all.
0:56:32 > 0:56:35Guess what? They have product sitting there.
0:56:35 > 0:56:38So why then build another warehouse that's all around those?
0:56:38 > 0:56:40Yet another place for trucks to show up and drop product
0:56:40 > 0:56:43and that kind of thing, and instead take the inventory that's already
0:56:43 > 0:56:47moved close to that consumer and get it to them right from that point.
0:56:51 > 0:56:55Anyone trying to challenge Amazon will find its business is protected
0:56:55 > 0:56:57by its massive investment in technology,
0:56:57 > 0:57:01especially as it expands into media and tech services.
0:57:01 > 0:57:05Today it's taking on much fiercer competition than shops.
0:57:06 > 0:57:08In reality Amazon is competing with
0:57:08 > 0:57:11Netflix and Facebook
0:57:11 > 0:57:13and Apple and Google.
0:57:13 > 0:57:17And those are the companies that have the ability to undermine
0:57:17 > 0:57:19what Amazon has built all over those years.
0:57:19 > 0:57:22I think the next ten years are going to be fun to watch
0:57:22 > 0:57:26as all these little battles take place to see who's going to win.
0:57:28 > 0:57:31Whatever happens, Jeff and MacKenzie have done OK.
0:57:31 > 0:57:36He's now worth 27 billion according to Forbes Magazine.
0:57:36 > 0:57:38She's become a novelist.
0:57:40 > 0:57:44And he's bought a prestigious newspaper, the Washington Post.
0:57:45 > 0:57:49Four, three, two one, ignition.
0:57:52 > 0:57:55Oh, and he's started his own rocket company, Blue Origin,
0:57:55 > 0:57:57to bring space travel to the masses.
0:57:59 > 0:58:03Maybe one day, it'll deliver Amazon packages to the moon.
0:58:03 > 0:58:06At this moment in time, boy, it looks like Amazon is
0:58:06 > 0:58:08hitting on every cylinder.
0:58:08 > 0:58:11But it is a moment in time, and I think it is entirely possible
0:58:11 > 0:58:15as we go two years, five years down the road, things will change.
0:58:15 > 0:58:18- Amazon will be disrupted one day. - And you worry about that?
0:58:18 > 0:58:21I don't worry about it cos I know it's inevitable.
0:58:21 > 0:58:22Companies come and go.
0:58:22 > 0:58:25And the companies that are the shiniest
0:58:25 > 0:58:27and most important of any era,
0:58:27 > 0:58:29you wait a few decades and they're gone.
0:58:29 > 0:58:33And your job is to make sure that you delay that date?
0:58:33 > 0:58:35I would love for it to be after I'm dead.
0:58:35 > 0:58:37THEY LAUGH
0:58:40 > 0:58:43The Open University delves further into how
0:58:43 > 0:58:45businesses like Amazon continue to boom.
0:58:45 > 0:58:47To discover more, go to...
0:58:50 > 0:58:52..and follow the links to the Open University,
0:58:52 > 0:58:55where you can also take part in an online survey.