Jeff Bezos poses on a lorry after handing over a two billion dollar cheque to Indian Vice President and Country Manager of Amazon.in, Amit Agarwal, in Bangalore. Photo: Manjunath Kiran/AFP/Getty
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The party is over for Amazon

The retail giant was unstoppable – until this year. What happened?

At Business Insider’s annual Ignition conference Tuesday, CEO Jeff Bezos explained why Amazon’s stock price keeps rising despite almost zero profits: the company continues to invest in new businesses, and Amazon’s investors are OK with that. “If you’re going to take bold bets, they’re going to be experiments,” he said. “And if they’re experiments, you don't know ahead of time if they're going to work. Experiments are by their very nature prone to failure. But a few big successes compensate for dozens and dozens of things that didn’t work.”

But Amazon hit a road bump in 2014: its stock is down 18 per cent, and investors are no longer optimistic about the company’s outlook. This year has exposed the limitations of Bezos’s business strategy.

For most of Amazon’s existence, the company has been barely profitable. From 2007 through 2013, its revenues quintupled from $14.8bn to $74.45bn, but profits dropped from $436m to $273m. Note: that's billions in revenue, and just hundreds of millions in profits. Meanwhile, Amazon’s stock has consistently risen because investors didn't care about the dwindling profit margins. Bezos’s strategy worked: Amazon is now the US leader in online retail. It’s so big that the editor of the New Republic, Franklin Foer, wrote a cover story declaring the company a monopoly.

Then 2014 hit, and investors turned on the company. When Amazon announced on Monday that it would issue new unsecured debt, Moody’s downgraded the company’s outlook to negative. There are two reasons for this change in investor sentiment.

1. Revenue growth has slowed from 40 per cent in 2010 and 2011, to 27 per cent in 2012, to 22 per cent in 2013. This year it is projected to be between 16 and 20 per cent.

2. Amazon’s newest investments aren’t paying off. The most notable failure has been the Fire phone, which has received terrible reviews. In October, the firm took a $170m write-down loss as its inventory piled up and the company cut the cost of the phone from $200 to 99 cents. The Fire’s failure, at least so far, does not necessarily reveal a flaw in Bezos’s strategy. After all, if you make big bets, you’re going to have some major failures as well. “What really matters is that companies that don’t continue to experiment – companies that don’t embrace failurethey eventually get in a desperate position, where the only thing they can do is make a ‘Hail Mary’ bet at the very end,” Bezos said on Tuesday. Of course, not all of Amazon’s recent investments have failed. Fire TV, for instance, has been a success. But investors get nervous when those bets fail to pay off at the same time the core business’ growth slows. And the Fire phone was a big bet that has not worked.

Matt Yglesias, then writing for Slate, predicted this in January. “Amazon gets away with relentlessly investing in the future only because, for now, investors have faith in Bezos and his strategy,” he wrote. “But that faith has been tested in the past, and it’s likely that some future convulsion in markets will cause it to wane again.” Yglesias didn’t see any reason for this strategy to fail soon, much less this year. “For the foreseeable future, the party can – and willgo on, crushing everything in its path and generating mighty gains for consumers.”

On that point, Yglesias was wrong: investors have turned the lights on. The party is over. And yet, if his comments on Tuesday are any indication, Bezos isn’t planning to change his strategy anytime soon. That’s good news for Amazon’s penny-pinching customers, but could mean a rocky 2015 for the retail giant.

This article first appeared on newrepublic.com

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David Osland: “Corbyn is actually Labour’s only chance”

The veteran Labour activist on the release of his new pamphlet, How to Select or Reselect Your MP, which lays out the current Labour party rules for reselecting an MP.

Veteran left-wing Labour activist David Osland, a member of the national committee of the Labour Representation Committee and a former news editor of left magazine Tribune, has written a pamphlet intended for Labour members, explaining how the process of selecting Labour MPs works.

Published by Spokesman Books next week (advance copies are available at Nottingham’s Five Leaves bookshop), the short guide, entitled “How to Select or Reselect Your MP”, is entertaining and well-written, and its introduction, which goes into reasoning for selecting a new MP and some strategy, as well as its historical appendix, make it interesting reading even for those who are not members of the Labour party. Although I am a constituency Labour party secretary (writing here in an expressly personal capacity), I am still learning the Party’s complex rulebook; I passed this new guide to a local rules-boffin member, who is an avowed Owen Smith supporter, to evaluate whether its description of procedures is accurate. “It’s actually quite a useful pamphlet,” he said, although he had a few minor quibbles.

Osland, who calls himself a “strong, but not uncritical” Corbyn supporter, carefully admonishes readers not to embark on a campaign of mass deselections, but to get involved and active in their local branches, and to think carefully about Labour’s election fortunes; safe seats might be better candidates for a reselection campaign than Labour marginals. After a weak performance by Owen Smith in last night’s Glasgow debate and a call for Jeremy Corbyn to toughen up against opponents by ex Norwich MP Ian Gibson, an old ally, this pamphlet – named after a 1981 work by ex-Tribune editor Chris Mullin, who would later go on to be a junior minister under Blai – seems incredibly timely.

I spoke to Osland on the telephone yesterday.

Why did you decide to put this pamphlet together now?

I think it’s certainly an idea that’s circulating in the Labour left, after the experience with Corbyn as leader, and the reaction of the right. It’s a debate that people have hinted at; people like Rhea Wolfson have said that we need to be having a conversation about it, and I’d like to kickstart that conversation here.

For me personally it’s been a lifelong fascination – I was politically formed in the early Eighties, when mandatory reselection was Bennite orthodoxy and I’ve never personally altered my belief in that. I accept that the situation has changed, so what the Labour left is calling for at the moment, so I see this as a sensible contribution to the debate.

I wonder why selection and reselection are such an important focus? One could ask, isn’t it better to meet with sitting MPs and see if one can persuade them?

I’m not calling for the “deselect this person, deselect that person” rhetoric that you sometimes see on Twitter; you shouldn’t deselect an MP purely because they disagree with Corbyn, in a fair-minded way, but it’s fair to ask what are guys who are found to be be beating their wives or crossing picket lines doing sitting as our MPs? Where Labour MPs publicly have threatened to leave the party, as some have been doing, perhaps they don’t value their Labour involvement.

So to you it’s very much not a broad tool, but a tool to be used a specific way, such as when an MP has engaged in misconduct?

I think you do have to take it case by case. It would be silly to deselect the lot, as some people argue.

In terms of bringing the party to the left, or reforming party democracy, what role do you think reselection plays?

It’s a basic matter of accountability, isn’t it? People are standing as Labour candidates – they should have the confidence and backing of their constituency parties.

Do you think what it means to be a Labour member has changed since Corbyn?

Of course the Labour party has changed in the past year, as anyone who was around in the Blair, Brown, Miliband era will tell you. It’s a completely transformed party.

Will there be a strong reaction to the release of this pamphlet from Corbyn’s opponents?

Because the main aim is to set out the rules as they stand, I don’t see how there can be – if you want to use the rules, this is how to go about it. I explicitly spelled out that it’s a level playing field – if your Corbyn supporting MP doesn’t meet the expectations of the constituency party, then she or he is just as subject to a challenge.

What do you think of the new spate of suspensions and exclusions of some people who have just joined the party, and of other people, including Ronnie Draper, the General Secretary of the Bakers’ Union, who have been around for many years?

It’s clear that the Labour party machinery is playing hardball in this election, right from the start, with the freeze date and in the way they set up the registered supporters scheme, with the £25 buy in – they’re doing everything they can to influence this election unfairly. Whether they will succeed is an open question – they will if they can get away with it.

I’ve been seeing comments on social media from people who seem quite disheartened on the Corbyn side, who feel that there’s a chance that Smith might win through a war of attrition.

Looks like a Corbyn win to me, but the gerrymandering is so extensive that a Smith win isn’t ruled out.

You’ve been in the party for quite a few years, do you think there are echoes of past events, like the push for Bennite candidates and the takeover from Foot by Kinnock?

I was around last time – it was dirty and nasty at times. Despite the narrative being put out by the Labour right that it was all about Militant bully boys and intimidation by the left, my experience as a young Bennite in Tower Hamlets Labour Party, a very old traditional right wing Labour party, the intimidation was going the other way. It was an ugly time – physical threats, people shaping up to each other at meetings. It was nasty. Its nasty in a different way now, in a social media way. Can you compare the two? Some foul things happened in that time – perhaps worse in terms of physical intimidation – but you didn’t have the social media.

There are people who say the Labour Party is poised for a split – here in Plymouth (where we don’t have a Labour MP), I’m seeing comments from both sides that emphasise that after this leadership election we need to unite to fight the Tories. What do you think will happen?

I really hope a split can be avoided, but we’re a long way down the road towards a split. The sheer extent of the bad blood – the fact that the right have been openly talking about it – a number of newspaper articles about them lining up backing from wealthy donors, operating separately as a parliamentary group, then they pretend that butter wouldn’t melt in their mouths, and that they’re not talking about a split. Of course they are. Can we stop the kamikazes from doing what they’re plotting to do? I don’t know, I hope so.

How would we stop them?

We can’t, can we? If they have the financial backing, if they lose this leadership contest, there’s no doubt that some will try. I’m old enough to remember the launch of the SDP, let’s not rule it out happening again.

We’ve talked mostly about the membership. But is Corbynism a strategy to win elections?

With the new electoral registration rules already introduced, the coming boundary changes, and the loss of Scotland thanks to decades of New Labour neglect, it will be uphill struggle for Labour to win in 2020 or whenever the next election is, under any leadership.

I still think Corbyn is Labour’s best chance. Any form of continuity leadership from the past would see the Midlands and north fall to Ukip in the same way Scotland fell to the SNP. Corbyn is actually Labour’s only chance.

Margaret Corvid is a writer, activist and professional dominatrix living in the south west.