German CEO Ralf Kleber talks Amazon
Ralf Kleber: "We deliver the answer"
Perhaps this is because the $100bn-revenue, Seattle-based company has learned that there is a downside to becoming increasingly omnipresent in the lives of consumers, providing the online customer with books, music, films, dry goods and, increasingly, fresh produce. Tax authorities lour over your every domicile; EU bureaucrats and US presidential candidates attack you for being monopolistic; and you become a prey to lobbyists.
This was clearly seen at the annual meeting in its home town on Tuesday. While activist shareholders tried to censure a variety of issues, ranging from the quality of environmental reporting to human rights along the supply chain, inside the venue, feminists flew a plane overhead in protest at the sale of Donald Trump licensed products on Amazon platforms.
No wonder they watch their step. Fortunately for journalists, however, Amazon Prime Now's launch of a one- or two-hour fresh food delivery service in Berlin last week seems to have lured the low-profile retailer out of the woodwork – at least temporarily. So now we know, for instance, that German CEO Ralf Kleber made the very first customer delivery on an e-bike.
The former Reno and Escada manager joined Amazon Germany in 1999, one year after its creation. Such is Amazon's youth cult that this makes him its longest-serving country manager.
Under Kleber's leadership, Amazon Germany, which posted sales of around €10bn last year, has become the company's largest foreign market.
"We Offer the Customer Everything"
Herr Kleber, Amazon prides itself on being a customer-centric company, but how can you know what tomorrow's consumer will want?
Either I can predict the future, which is difficult, or I can create a company that knows everything changes and that it must adapt to changing customer needs.
Of course it is immensely useful to have 300m customers who actively use your shop. Their purchasing data is anonymised and used to make suggestions. Obviously, there are some very logical connections which can be made. A customer who buys a coffee machine, for example, is more than likely to want to buy coffee.
But there are cases where we really ask ourselves what the connection is between two product choices. We simply don't know the answer, and only customers know why they choose in the way they do. In this respect we are different from specialist retailers who have a mental picture of their typical customer and who select their assortments accordingly. Instead, we try to offer the customer everything.
So in other words, you don't know what consumers will want tomorrow, they will always find what they want because you have everything anyway?
Exactly. Offering everything means that we don't have to wrack our brains about what the customer might want. So we offer as much as possible. For example, we already sell 7,000 different kinds of pasta. No shop in the whole world is currently able to provide its customers with such a variety of products as we do.
Obviously we then have to build programmes which help customers navigate around such a huge offer, which is why we provide recommendations and write-ups on our site.
In Munich you have started doing your own deliveries for the first time. This gives you a direct interface with the German customer. What further interaction potential do you see in, for instance, service?
This is really the first time that Amazon has gone the last mile and started to build our own logistics capability while still using our existing delivery partners. It is certainly true that this gives us one more chance to get to know the customer better. We shall have to see where this leads to, but service is an area where one learn and innovate a lot.
Could you give our readers an example?
My favourite service is offered by Amazon China. Shoes are not only delivered to the customer's door in the correct size. They also bring a smaller and a larger pair so that customers can try them out on the doorstep.
I made one of the first deliveries myself on an e-bike. Customers simply love the service because no customer orders something just for the privilege of waiting around to receive it.
There are so many occasions when you need something fast. There's no bubbly, when the guests come. Or you find your airbed has a puncture when one of your guests unexpectedly needs to stay the night. This is why we are extending our logistics capacity to other regions in Germany where I should also be happy to make the first delivery!
Studies regularly confirm, however, that customers generally care more about receiving the right order than delivery times per se. So why is such a customer-centric company speeding things up?
We don't force our customers to accept same-day delivery or to order within a one-hour timeframe. But consumer expectations are constantly evolving, and consumers will soon take fast delivery for granted in the same as they have come to accept online shopping.
So could home delivery become even quicker?
There will come a point in the future when consumers who have grown up with online shopping will be in the majority. We don't know what this generation will need or expect in terms of speed. This is why we are becoming quicker and quicker and experimenting with, for instance, drones.
Come on, be honest, do you really believe that Amazon will be delivering with drones by the time you retire?
It depends on when you think we are going to retire in the future! No, we don't believe that there will be hundreds of thousands of drones flying over Munich any time soon. We should leave that idea to fantasy films, but there is obviously a clear need for such quick deliveriers. Think, for instance, of urgent medicine or spare parts. So we are experimenting in this direction and gauging customer response.
Let's turn the debate the other way around. When customers go to their local shop they usually get what they want immediately. Do you really believe that bricks & mortar retailers will become obsolete any time soon?
I wouldn't reduce bricks & mortar retailing just to the mere function of handing goods over the counter, there is far more to conventional retailing than that. Also, we don't believe in a world where there will only be online shopping. Human beings have gone to shops from time immemorial because retailers select assortments for the customer, and I don't think this is going to change in the future.
Some incredible possibilities and some very exciting concepts arise if you let the customer speak. In our first store, for example, we have a shelf of books that are particularly frequently bought by online customers in Seattle. If you want, that's a different way of interpreting regionality, and something which we could also offer to German customers, if they want.
Getting back to fresh produce, isn't it one of those categories where consumers have shown little interest in ordering online?
No habit is as strong as the way we shop for food, and little has changed here since the dawn of history. It is certainly harder to get customers to shop for fresh produce online than in other categories. However, Amazon Fresh experimented for a long time with various different concepts in the US before we found the present model which customers like.
What did you learn?
It is important not to try and do everything yourself, that isn't part of our DNA. In Seattle we asked food specialists such as fishmongers to make their offer available via Amazon Marketplace.
Isn't this like asking the retailer to commit suicide?
Not at all. Let me give you an example. I often eat fish, but I only buy it at the traditional farmer's market (Viktualienmarkt) in Munich once or twice a month because of the time it takes to park there. If, however, a customer can order the same fish via Amazon logistics, he or she is likely to buy it a lot more frequently from the same retailer.
All retailers in Germany are on tenterhooks as to when you are going to start with Amazon Fresh in Germany...
I don't focus on the competition, and I don't need consumer research to tell you that our customers also eat fresh food. So, as our goal is to provide our customers with everything they could possibly want, then my task is clear: We will also offer freshly packed fruit & vegetables, deep frozen lines and ambient food as well as personal hygiene products, toys, entertainment electronics lines, books, DVDs and stationery.
Come on, we've heard that you are starting Amazon Fresh in Berlin as early as September...
Those are rumours. We know that we can take our ime. It is important that we start with something which is fun for our customers and retail partners. It is also important that it works and that all the infrastructure is in place.
I know that one isn't regarded as a food retailer in Germany, if you don't also offer salads and sliced cheese, but we already offer 530,000 ambient food lines on our website. I think anyone would call that a pretty big supermarket! A great many people already buy food from us, so we are already well and truly on most people's shopping map, but you'll have to give us a little bit more time on the salad!
Related article in German: Interview by Jens Holst on pages 76 & 77 of Lebensmittel Zeitung, no. 20, 20.05.2016