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In recent years, Amazon has erected a series of huge buildings in cities around Stockholm. The reason is a basically random development that took place at Amazon more than a decade ago, but still says a lot about how the Seattle bookstore became the largest company in the world.
For a few years in the early 2000s, Amazon was a company under pressure. Old, with old Internet standards, founded as early as 1994, before Google was even a hobby project at Stanford University. Amazon was also lagging behind, on the way to being completely abandoned by companies like Google.
Compared to Google and the others in the new generation of Silicon Valley tech companies, the Seattle e-retailer seemed to have nothing to object to. But founder Jeff Bezos desperately wanted to see Amazon as a top-of-the-line tech company, not a mossy reseller on the web. Then Amazon started to change, in a strange way.
To manage your own growth e-commerce, Amazon needed larger and more advanced IT systems. Storage, databases, everything you need under the hood to make it work. So Amazon built and when Jeff Bezos addressed his board with a proposal: All this server technology that we build for ourselves, surely there will be someone else who is interested in it? Can’t we just sell it as a service? If we need it, there will be more people who need it. It was a very strange adventure, so far from what Amazon had been. A long shot that was greeted with skepticism at his own board, driven in part by the fact that a middle manager wanted to move to South Africa and needed something to work with there, which can be read in the book “The Everything Store” by Brad Stone.
Everything, that’s the keyword. Jeff Bezos tries to create the company that sells everything.
So Amazon engineers started creating the technology they needed, and within a few years the company was selling both server capacity and hardcover books. And consumer electronics. And hiking boots, e-books, and detergent.
The buildings around Stockholm are server rooms that run Amazon Web Services, as the server services are called. Today they are the engine of Amazon’s profitability. A staggeringly large part of the internet runs through them, from Netflix to oil companies to banks.
As they grew up, Amazon bought the supermarket chain Whole foods for the equivalent of just over SEK 100 billion. So now you can add fresh carrots to that list of everything Amazon sells.
Everything, that’s the keyword. Jeff Bezos tries to create the company that sells everything. This is something that generally causes most businesses to lose focus, but for whatever reason – skill, lots of capital, and a dose of ruthlessness – you can sum it up, it works.
It is an amazing developmentFrom booksellers to one of the most powerful companies in the world, all categories. When Amazon enters the market, it is like a steamroller starting up.
The dominance is so total that many have agreed to be swallowed by the giant and try to live with him.
In some parts of the United States, you can more or less live your life through Amazon. You can get your food, your entertainment, your shopping, your Internet services, your books, your mobile from this one company. In the kitchen, Amazon’s listening assistant Alexa takes voice commands. Delivery times are hard to beat. And in the future, the order can be delivered directly with a drone. If you want to visit a physical store instead of shopping online, then Amazon Go already exists, stores where you can choose what you need and go, without even visiting a checkout. Payment is done automatically.
The dominance is so total that many have agreed to be swallowed by the giant and try to live with him. Small book publishers trust Amazon and dream of independent booksellers, but they keep selling there. Smaller electronic retailers are leaning in, ditching their own online store and becoming part of Amazon.com, which has long served as a front for independent retailers as well.
That it happens so late says something about how low the Swedish market is on the priority list.
It is not obvious that the same something’s going on in Sweden. The fact that the giant took so long to get here has meant that Swedish e-commerce has had a kind of sheltered workshop to develop and refine its business. Today, some of them have incredibly fast deliveries. The Klarna payments company was able to grow into the multi-million dollar company that it is. Habits and patterns have been established, where Amazon has been on the fringes for most Swedes.
This gives Amazon a different and more difficult situation than if it had entered ten years ago. That it happens so late says something about how low the Swedish market is on the priority list. Perhaps it should be interpreted as that entry becomes more cautious here, simply because it is not worth as much to dominate a small market like the Swedish one.
But it’s hardly something to trust. Especially not for companies, retailers in general and e-commerce in particular, which will soon have the worst competitor imaginable. If the investment becomes substantial and Amazon invests resources to become dominant in the Swedish market, no one will escape being affected by the steamroller that has been rolling.
Read more:
Amazon is a certain part of everyday life for American families
Four questions to the experts about Amazon’s entry into Sweden
