Amazon’s Genius: How Even The Bad News Is Really Good News

January 3, 2014 Leave a comment

Amazon’s Genius: How Even The Bad News Is Really Good News

JAY YAROW

JAN. 2, 2014, 8:07 AM 2,240 2

Amazon is the most secretive company in tech by a mile. Sure, Apple has the most hype for being secretive, but the frustrating truth for Apple is that most of its news leaks ahead of time. This is because Apple is so revered and so watched that it has hundreds of people trying to pry its secrets from every nook, cranny, and source possible. It’s just not possible to keep a lid on everything. 

And, ironically, for a company that strives for secrecy, it’s incredibly open about its business performance.

In plain detail it tells the world how many iPads, iPhones, Macs, and iPods it sells. Beyond that, it goes into detail about sell-in to the channel, it talks about traffic to its retail sites, and iTunes sales.

No other company in tech lays out its business in such clear detail.

Amazon is the exact opposite in just about every way possible.

Details on its products leak, but not quite as comprehensively as they do for Apple. As for product sales, Amazon gives you bupkis.

Sure it says Kindles had a “record” holiday, but that’s vague.

We once asked Amazon why it never reveals Kindle sales. Its answer: “We have a long history of not giving out those types of numbers. We think it’s competitively useful.” We countered with the fact that Apple reveals its numbers and is doing just fine. Amazon didn’t respond to that comment. Which is fairly standard. Amazon generally delivers a “no comment” to reporters on stories about Amazon.

But there is one very smart exception to Amazon’s rule of silence, notes analyst Benedict Evans — its warehouses.

A company that doesn’t want you to know how many Kindles its selling, or how big its web services business is, is thrilled to open the doors of its warehouses to reporters from TV, print, and the web.

Evans says there are two reasons for this: 1. It feeds into the narrative that Amazon provides good value to consumers and 2. It feeds into the narrative that Amazon is impossible to compete with.

Here’s Evans explaining those two points in more detail:

Price is obviously a large part of the consumer story, but talking about logistics is a competitive weapon just like not talking about Kindle sales. Every story about how Amazon has built an amazing, incredibly efficient, incredibly low-cost distribution platform is another ecommerce start-up that doesn’t get funded, or even started. Jeff Bezos famously said that he was happy for Amazon to be misunderstood for long periods of time, but no-one is in any danger of underestimating the scale of Amazon’s distribution.

Even apparently negative stories, for example about how hard the workers are driven, benefit Amazon, much like a mobster’s reputation: ‘don’t try competing with these guys’. Hence, one could suggest that even if a journalist sets out to make Amazon look bad, the result is generally something that looks and feels negative but still actually helps the company.

This last point is a good one we’ve never thought of. Even the negative stories about working conditions feed a narrative that Amazon is ruthlessly trying to get prices lower for you.

Basically, Amazon’s PR strategy is so good that even when the news is bad, the news is good for Amazon.

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Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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