Business Insider has a long profile of Doug Herrington, Amazon's new retail CEO, which seems to conclude that while he is a smart, out-of-the-box, entrepreneurial thinker, he is someone without "a giant success story on his résumé. While he's responsible for helping grow Amazon's retail business, which sold an estimated $600 billion worth of products last year, his big ideas for the grocery and private labels have not found any smash-hit success so far."
The profile - which seems to have been done without Herrington's or Amazon's cooperation - suggests that Herrington has succeeded at Amazon because of his ability "to pursue ambitious ideas," something that was valued by company founder, former CEO and current chairman Jeff Bezos. "But many of Herrington's initiatives still remain works in progress," Business Insider writes.
Here are some excerpts from the piece.
• "From at least 2015, Doug Herrington, who became Amazon's new retail CEO last month, pushed the idea of launching an online-pharmacy business to the company's senior leadership team, including founder Jeff Bezos.
"He would argue pharmacy was another large market bogged down by inefficiencies and pitched an online service that could quickly deliver prescription medications, according to people familiar with the matter. At one point, his team even drew up potential partnerships with Pfizer and Johnson & Johnson to help screen for counterfeit products, as Insider previously reported.
"In those meetings, other participants would often lean in to hear Herrington talk because he spoke in such a low voice, one of the people said. Bezos, who was a fan of Herrington's entrepreneurial streak, one former direct report said, bought into the idea, approving the $750 million Pillpack acquisition in 2018.
"But four years after buying Pillpack, which was later rebranded as Amazon Pharmacy, Amazon is struggling to add new customers to its prescription business, according to people familiar with the team. Some say it's emblematic of Herrington's work at Amazon: big, bold ideas with mixed results."
• "Part of Herrington's success at Amazon has to do with his ability to pursue ambitious ideas. He's considered the de facto founder of Amazon's Fresh grocery segment, and ran other major projects, like its private-label business and a task force to catch counterfeit sellers. More recently, he oversaw the launch of Buy with Prime, a new service that is going after Shopify's turf … But many of Herrington's initiatives still remain works in progress, and some he's championed, like the questionable Dash button, are already dead."
• "Though Herrington hasn't directly managed it in recent years, Amazon's Fresh grocery business accounts for a tiny sliver of the market, even after spending over 15 years in the space and billions of dollars in investments, including $13 billion to buy Whole Foods. As of March, Amazon and Whole Foods accounted for just 1.6% and 1.3% of the US grocery market, respectively, falling way behind Walmart's 21.3% share and Kroger's 10.2%, according to the research firm Numerator.
"And it still hasn't figured out a way to sell groceries profitably. An internal financial report, reviewed by Insider, shows Amazon's physical stores and grocery business recorded an operating loss of $1.1 billion in the first quarter. The grocery business itself, excluding ad-related revenues, generated about $900 million in first-quarter sales, one person said.
"With Herrington's promotion, Amazon will likely double down on growing its grocery business going forward, people who worked close to Herrington said."
• "Herrington is also known for his out-of-the-box thinking. He was a strong advocate for the Treasure Truck, a bizarre blue truck that drives around cities to sell limited-quantity products, such as inflatable paddleboards and 24-ounce porterhouse steaks. While the truck added some fun and engagement with customers, it has yet to drive huge revenue to Amazon, a person familiar with the business said.
"Internally, Herrington is famous for a 2012 presentation he gave to the leadership team titled 'Amazon's future is CRaP.' In his memo, Herrington argued that Amazon had to sell CRaP products — CRaP stands for 'can't realize a profit' and includes low-margin items like grocery items — more profitably if it wanted to compete with the world's largest brick-and-mortar retailers, which rely on the sales of frequently shopped, low-priced products to gain market share."
The Business Insider story notes that "some executives defend Herrington's track record. His teams have always had to compete in established categories, like groceries, apparel, and pharmaceuticals, making it hard to scale against large incumbents in a short period of time. He has also been a key member of Amazon's market-leading e-commerce business since 2005, which now accounts for almost 40% of the US market.
"Some of his other bets, like Amazon's business marketplace, reached $25 billion in annualized sales last year. It's why Amazon continues to pour money into his teams and give long runways to prove themselves."
- KC's View:
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I'm sure that there will be a lot of stories in coming weeks, months and even years about Amazon's new operational leadership, but from where I sit, it does not seem like there are enormous cultural shifts taking place there. Each of the people in command seem to reflect various elements ofJeff Bezos' character and approach to doing business … they may not have the Bezos mystique - much of that has to do with being the founder - but they're taking the company in the direction that Bezos has laid out for them.
The basic business plan seems intact - lots of initiatives with strong potential, the willingness to fail, the ability to see the long game, and an overarching goal of making Amazon not just a sales platform, but an inevitable presence involved in every element of people's lives. In some ways, huge, fast successes work against that goal … better to be stealthy and gradual, and to accumulate financial, emotional, intellectual and emotional market share in a way that is achieves dominance even before anyone has realized what has happened.
