Andy Jassy will be leading Amazon through a pivotal period when he takes the e-commerce giant's helm from founder and CEO Jeff Bezos this summer. On the one hand, the pandemic has further expanded Amazon's impact on consumers, businesses, and governments. It's little wonder that the company ended the fourth quarter of 2020 with more than $125 billion in sales, its biggest quarter ever.
At the same time, Amazon is facing unprecedented scrutiny, including in regard to how its actions affect small businesses and third-party sellers on its platform. The company is facing multiple antitrust lawsuits and may face more regulatory action this year in the U.S. and the E.U. How Jassy handles it will have important consequences for small businesses trying to compete with Amazon. And regardless of the outcome, his selection as CEO will also influence the fortunes of private companies hoping to get acquired by Amazon, as well as those that rely on it for their sales.
Bezos's long-favored successor was Jeff Wilke, Amazon's CEO of worldwide consumer business, who announced his retirement last year. The ascension of Jassy, who built the company's AWS arm into one of the biggest cloud service providers in the industry, is a signal of where Amazon's priorities now lie.
"I don't think you can overlook the fact that the person chosen to be the CEO was Andy Jassy and not Jeff Wilke," says Sucharita Kodali, principal analyst at Forrester. "That suggests that the 'invention' side of the business is more likely to be its future versus the traditional retail side."
While it's safe to assume that Amazon will continue to rely heavily on AWS, that will hardly be its only area of attention. "AWS is certainly more profitable than much of the rest of the business and that would be a reason to continue investing in it, regardless of who is the CEO, but I'm sure lots of focus is on finding new, exciting bets," Kodali says.
One of Jassy's challenges will be to fix Amazon Marketplace, the company's e-commerce platform for third-party sellers. The new CEO "inherited kind of a mess on the Marketplace," says Dr. Robin Gaster, author of the upcoming book Behemoth--Amazon Rising: Power and Seduction in the Age of Amazon. Amazon's efforts to crack down on third-party sellers who hawk counterfeit goods or engage in price-gouging have led to legitimate sellers regularly being booted from the platform.
Many third-party sellers also have run into problems with Amazon's Fulfillment by Amazon service, or FBA, which allows sellers to send their products directly to Amazon warehouses to handle shipping and customer service. Sellers complain about mishandled items, delayed processing times, and Amazon's fulfillment fees. Gaster expects that hostile conditions for third-party sellers will lead some to alternatives, like selling their goods directly to consumers.
Still, Gaster and other Amazon experts point out that Amazon has no incentive to improve FBA or other services for its continually growing network of small-business users. "In regards to how they treat third-party sellers--there won't be a change. And that's a shame," says Jason Boyce, an advocate for third-party sellers and author of the book The Amazon Jungle.
Boyce also expects that small businesses will see fewer takeover offers under Jassy's regime. "They're going to be very careful and much more conservative about who they acquire because of antitrust concerns," he says.
Gaster adds that Amazon may slow its long acquisition spree because of a need to scale back the company's less-profitable arms. He points to its decision last year to expand Amazon Fresh and its brick-and-mortar grocery stores--an example of a high capital, low margin business where Amazon had no natural advantage.
"I think Amazon is suffering from bloat," he says. "They've eaten too much, and it's causing indigestion."