run ads on their own websites. He drew more and more partners to
Amazon. Bezos broke out of the narrow world of books and DVDs and
into... everything. This kind of experimentation and aggression is
what the military calls the OODA loop: “observe, orient, decide, and
act.” By acting quickly and decisively, you force the enemy—in this
case, other retailers—to respond to your last maneuver as you’re
entering the next one. In Amazon’s case, this was done with a ruthless
focus on the consumer.
It also helped that, for the better part of Amazon’s first fifteen
years in existence, traditional retail CEOs were apt to remind people
that e-commerce only accounted for 1, 2, 3, 4, 5, 6... percent of retail.
There was never a concerted effort to respond to the threat until
Amazon had enormous fangs and unlimited capital—it was too late.
Fast-forward to 2016—U.S. retail grew 4 percent, and Amazon
Prime grew 40 percent plus.^32 ,^33 The internet is the fastest-growing
channel in the largest economy in the world, and Amazon is capturing
the majority of that growth.^34 In the all-important holiday season
(November and December 2016), Amazon captured 38 percent of
online sales. The next nine largest online players captured 20 percent
combined.^35 In 2016, Amazon was considered America’s most
reputable firm.^36
Zero Sum
With retail growth essentially flat across the American economy,
Amazon’s growth must be coming from somewhere. Who’s losing?
Everyone. The graph below, describing ten-year stock appreciation of
major U.S. retailers (2006–2016), says it all: