How To Think Competitively
By Melanie Warner

(Business 2.0) – Amazon has always gone into highly competitive businesses: first books, then electronics, then ... you name it—anything retail. Now, with A9, you've entered the search engine fray. Are you trying to out-Google Google?

I think that's the wrong way to think about it. We made the choice a long time ago that we were going to be customer-obsessed rather than competitive-focused. And that's a choice. There are a lot of very successful companies that are competitive-focused, and there's nothing wrong with that strategy. In fact, one type of competitive-focused strategy that can be very effective is called "close following," and it has a lot of advantages. You don't have to go down as many blind alleys. You watch and let a competitor go down a bunch of blind alleys, and when it finds something successful, you try to copy it very quickly and out-execute them. It's a perfectly valid strategy—it just happens not to be who we are. Pioneering is in our corporate DNA, so we'd rather go down those blind alleys ourselves. In my opinion, there are strong rewards for being a pioneer that more than compensate us for all the blind alleys. Plus, me-too strategies don't work very well on the Internet. You can look around at the environment and see things that are interesting, and you can learn from those things and be inspired by them, but you shouldn't try to copy them.

Well, what are the ways in which you think search needs to evolve?

It's still very hard to find what you're looking for. If you're looking for something popular, then it's easy. But if you're looking for something more obscure, then it's very hard. For me, in a focus group of one, I find that all the time. It's an unsolved problem, and there's undoubtedly a lot of room for innovation. It's going to be a big space with lots of winners. It's a big world. There are going to be lots of successful search companies over time. There isn't just going to be one kind of solution.

How do you respond to what's happening throughout the online marketplace?

Tactically, but not strategically. We may look at what others are doing with respect to pricing. If competitors are charging less for a certain DVD player, we need to change our price. That's tactical. But if you base your strategy on what competitors are doing, then—because the competitive environment changes so rapidly—you'd have to change your strategy all the time.

Where do you fit in to this style of competition?

I spend the vast majority of my time on the customer experience, which I believe is the most important driver of our business. I'm focused on fulfillment, reliability, reducing defects. I work to make sure that each of these groups has standards that are unreasonably high. We've gotten more sophisticated and more capable every year, and that needs to continue. For instance, we've had discussions about the trade-offs of new features. We thought about having a feature where people can cancel their own orders. But then we thought, maybe our sales will go down. Then we have to ask, Will people like it if they can cancel their own orders? The answer is yes, so then we say, Let's let them cancel their own orders. In the long term, if you provide a feature that customers like, that's going to help your business.

So it takes a leap of faith.

It does, though I don't think a gargantuan one. What it takes, more than faith, is patience.

And constant fiddling?

Yeah. On Saturday mornings, I start playing around with the site and make a list of 10 things that are wrong, and then come in Monday morning and work on fixing them. That divine discontent leads to invention and makes things better. — M.W.