- This is a modified excerpt from the book “Winner Sells All – Amazon, Walmart, And The Battle For Our Wallets”, written by Jason Del Rey.
- He explains Amazon’s efforts to increase Amazon Prime subscriptions by using its physical stores.
- One former store employee said digital subscriptions, device sales and book sales are more important.
For years, Walmart and Amazon operated mainly in separate spheres – one a massive brick-and-mortar retailer, the other an online giant. But by the end of 2010, both began aggressively expanding into the domains of the other. Amazon’s prospects of physical retail success seemed high to many in the tech industry.
Amazon’s DNA is akin to Walmart’s, which has blinded the company from adopting tactics that would allow it to thrive in online retailing. This excerpt reveals how Amazon attempted to utilize its physical bookstores to bolster Amazon Prime and its other digital subscription services — in sometimes unethical ways.
Amazon’s long-term goal seemed to be building an Everything Retailer. This was evident by the shift in where customers were shopping. Store sales are rebounding. E-commerce growth plateaued.
It was therefore a bit surprising when Amazon announced, in March 2022, a major reduction in the physical retail sector: Close 68 of its physical storesThis store sold books, electronic devices, and general merchandise throughout the US and UK. It was built as a part of a 7-year experiment.
Amazon Books was one of them. First opened to the public on 2015. The stores were created to bring the advantages of buying books from Amazon.com in the real world. For example, the customer ratings of a book.
They were also about — even more so, according to some former store employees — selling customers on Amazon gadgets such as Kindles and Alexa-powered Echo smart speakers and tablets.
The stores also served as a place to sign customers up for trial subscriptions to services such as Amazon Prime or Audible, an audiobook service.
After the pandemic, store leaders encouraged store managers to encourage more customers to sign up for a trial at the checkout.
The prodding did not work. Shady turnsIn some cases,
Customers could see the trial offer on the screen before the pandemic. To reduce the risk of customers spreading germs when the pandemic struck, the bookstore cashiers also had the option to sign up the customer for a free trial after explaining the offer and asking permission from the client.
Some employees at Amazon Books on the East Coast said that their managers were not always honest with them.Automatically signed up customers for free subscription trialAudible as an example, but without giving the option.
They would say, “This is your subscription.” A former employee of a bookstore told me that they would tell customers, “You can cancel it at any time.” Instead of giving the option to click “No thanks,” they would say, “You can cancel it anytime.” “I’m not sure customers knew it.”
Jason Del Rey
Some didn’t notice until months later when they returned to their local store bewildered or angry to ask why they were charged for a subscription which they couldn’t recall registering for.
Chris Garlock, assistant manager at one of Amazon Books’ stores in October 2020, sent an email to a regional manager explaining how a former co-worker had seen store employees accept a free trial for a customer, without their consent. Garlock also checked internal data which showed that certain colleagues were signing store customers up for free trials in an abnormally high rate compared to previous performances and those of other employees.
He wrote: “A pattern of this kind can do real harm to the reputation and business of a brand.” “But, more importantly, this is unethical. It is wrong to trick or fraud a person into getting something they didn’t select. This is something that we shouldn’t tolerate or allow at Amazon.”
Internal data showed that, for a few more months, salespeople and managers at several stores still signed up customers to free trials in an abnormally large number. In early 2021, the store managers were reminded of the correct way to offer free trials to their customers.
Garlock told Garlock, “Good job to them for doing that. But this is something they could have done months ago.”
Jordan Deagle, spokesperson for Amazon, told me there was no corporate mandate mandating that more people sign up for Amazon subscription free trials. The spokesperson stated that in early 2019, after Amazon Books customers complained of being signed up for a free trial, division leaders reviewed the training and instructed associates on how to better explain to customers the terms and conditions associated with the subscription trials.
Deagle refused to comment about how or why the behavior persisted well into next year.
Managers would also offer discounts on the spot to move Amazon devices in order to meet their internal sales goals. Rumors circulated among staff at some stores about managers who bought merchandise to boost sales and then returned it.
Another former store associate stated that “digital subscriptions and device purchases were more important than book sales.” Our manager made sure that we understood this.
Even in a physical setting, the e-commerce titan couldn’t get away from its digital DNA.
Store leaders received a notification before Amazon made the announcements public. The message instructed them to close their storefronts at 1 pm local time on that particular day.
They received an email as soon as the shop was closed with the bad news. All Amazon Books stores are closingAt the end of April.
The announcement came shortly after Amazon hired Tony Hoggett, a veteran retail executive from UK supermarket giant Tesco to oversee the physical store operations. Although the decision to close down the Books stores as well as the smaller chain 4-star, which sold general merchandise, had been made before the new executive arrived, some Amazon employees were not surprised that this happened.
One corporate employee working in the store division said to me, “It was lacking in direction and differentiation.”
The meager revenues generated by the stores were a source of frustration for those who led the much more important e-commerce businesses. In some ways, this resentment is not that different from the Walmart battles between store and ecommerce leaders.
Amazon’s plan to become the Everything Retailer has hit a snag. This is a huge pothole.
Adapted From Amazon, Walmart and the Battle for Our Wallets,Jason Del Rey. Copyright © 2023 by Jason Del Rey. Published by Harper Business/HarperCollins Publishers. Reprinted by permission.
Editor’s note: Federal Trade Commission released a press release on Wednesday. sued AmazonThe lawsuit was the result an investigation by the Federal Bureau of Investigation into Amazon Prime. The lawsuit was a result of an Insider investigationEarly 2022. An Amazon spokesperson said in an email to Insider’s Eugene Kim on Wednesday that the FTC claims are false. “The truth is, customers love Prime and we make it easy for them to sign up or cancel their Prime membership.” Read Insider storyClick here to read the entire statement.
