Chris Blackhurst meets the head of Amazon UK
Busy tapping into London’s talent, the online retailer boasts millions of happy customers
‘Four years ago, we had 15 people in our tech team [in London]. Now we’re up to 350’ ‘We pay tax in accordance with the law. If the law changes, we pay under that new system’
CHRISTOPHER NORTH Amazon UK
CHRISTOPHER NORTH wants to show me the new headquar ters of Amazon UK. They ’re not in a science park or on an industrial estate or even in Slough, where Amazon has been for the past 16½ years. They’re on Holborn Viaduct, right in the centre of town.
“We went to Slough because we took over Bookpages, the online bookseller, and we stayed there,” North says. “We’ve grown so rapidly since that now we need to access the talent of London. We moved here at the end of April. There are 2500 people here.” He laughs. “The building is full already.”
Amazon will move again in 2017, to new premises in Shoreditch. They’ll be big enough to house 5000 people. The company is on a relentless march. If I wanted to go all soppy and patriotic, I’d say that as a result the country we know and love is changing forever. But then I’d be a hypocrite, because while characterful, independent stores, and some large chains, are struggling against a seemingly unstoppable force, Amazon parcels regularly arrive at my house.
On the way to see North, I realised we’re at a point where it will soon be impossible to remember life without Amazon, so ubiquitous is his company, so much do we now take it for granted. We assume that virtually whatever it is, Amazon will have it — and it will deliver the following day.
“Our software development centre here in London has 350 people in it. They’re looking at device integration for the Amazon Kindle, Amazon Fire TV,” North says. “Four years ago, we had 15 people in our tech te a m. Now we’re up to 350. They’re producing the best device integration ever seen in the world.”
Amazon also employs tech people in Scotland and has eight “fulfilment centres” in the UK. I look at him as he says this. There’s not a flicker of a smile. You and I might call them warehouses or depots. In Amazonian, they’re fulfilment centres. You and I, presented with that phrase, might think of a restaurant or even, God forbid, a brothel. But no. They ’re giant halls full of shelves and robotic machinery.
But they get the job done — hence the name: “The eight in the UK and 21 in Europe enable us to sell 120 million products in the UK. Seven million are in stock for next-day delivery.” My mind rushes back to the small, strapped High Street retailer. Seven million for next-day delivery!
North, 44, is highly personable. He grew up in the suburbs of New York. At Harvard, he studied economics and specialised in game theory. Then he did a masters in philosophy of science at New York University. He’s married to Sophie and they have three young children. His wife, who is French, worked in media and now lectures at the Wallace Collection. She likes 18thcentury French art, he prefers 17thcentury Dutch drawings. They live in Notting Hill, with “23,000 books” and presumably the occasional Kindle.
His first job was as a management consultant for Booz Allen: “I worked on media companies, advising on strategy.” He took time out, “bummed around Europe, drank a lot of wine and vowed I’d be back”. He joined publisher HarperCollins and ran its digital operation, becoming its chief operating officer in Canada in 2003. That was followed by two years as managing director of Phaidon, producer of those gorgeous art books. In 2006, he moved to amazon.co.uk as head of books.
North can’t help gushing about the company: “Do you know we’re the number two employer of MBAs from London Business School and Insead, after McKinsey? We’ve got more than Goldman Sachs from these schools.”
I confess I didn’t. These brains are working on pushing Amazon UK in its key areas, one of which he describes as “the physical consumer business” — that’s selling and delivering. The company aims to push that 120 million-item sales total up to 200 million in the next two years.
Then there’s Marketplace, which enables third parties to sell via Amazon: “About 40% of all units purchased worldwide on Amazon are not from Amazon but from third-party sellers. Some two billion units worldwide were purchased from third-party sellers.”
The facility is being used by British businesses to sell their goods abroad. Last year, more than £1 billion worth of British goods were sold overseas on Marketplace. “We’ve got two million sellers worldwide. There are about 20,000 to 30,000 professional sellers in the UK using Marketplace, many of them with turnover of more than £250,000 per annum,” North says. “It’s growing by one-third year on year. And they find it’s cheaper using us than if they tried to sell direct, themselves.”
Another strand is “building technolo gy on our platforms”. Again, he stresses, it’s not exclusively for Amazon to use. He rattles off brands that use the platforms: Zoopla, Spotify, and FT.com. Then there’s Kindle, which not only sells books from established publi shers but also direc tly from the authors: “Twenty-one out of 100 publishers on Kindle are authors direct publishing. They can get a 70% royalty, which is two or three times more than they’d get from going to a publisher. Fourteen of them have sold more than one million copies; 150 have sold more than 100,000.”
The company is working with Royal Mail and other carriers to meet the Amazon Prime next-day delivery prom- ise: “There’s a lot of pressure in the UK because of slow delivery.” The beneficiaries, he emphasises, won’t only be Amazon but all the other carriers. “We’re experiencing an inexorable march to faster and faster delivery. We do same-day delivery in the US in 19 cities. Soon it will be available here.”
The message is clear. Amazon has created thousands of jobs in the UK, supplied millions of satisfied customers, benefited exports, boosted other retailers, helped tech companies, given authors an opening and lifted the mail industry. We should embrace the beast, not oppose it.
So is it winning the PR battle? “We’ve done a good job of delighting our customers,” North says. That must be a no, then? “Tech companies are bound to be disruptive to traditional companies. We can be great employers, we can pay our taxes, but questions are asked about us. It’s right we should be scrutinised — but it’s also right the scrutiny should move from one company to lots of companies.”
He adds: “Our impact on the UK is positive, and not because we employ lots of people and deliver lots of items but, because our platforms can be used by other entrepreneurs, we’re creating a lot of good for the UK as a whole.”
BUT how can he feel comfortable working for a company that has sales of several billion in the UK ye t pays hardly any tax? “We pay tax in accordance with the law. We always have and we always will. If the law changes, we pay under that new system.”
The channelling of UK sales though Luxembourg, he argues, is necessary because Amazon cannot stock 120 million items in the UK alone — it needs warehouses and staff in Europe. The company needs a single headquarters covering the whole of Europe, including the UK, and that headquarters is based in Luxembourg.
It’s coincidence that Luxembourg happens to be a low-tax jurisdiction but that’s the corporate line and the company is sticking to it. “People forget as well that this is an industry with low barriers to entry,” North says. “And at Amazon, we take all our proceeds and reinvest them in new technology and new platforms.”
Where will Amazon end — is there nothing it won’t do? “We don’t sell cars and real estate.” But that may only be a matter of time. “I’ve learned never to say never at Amazon. We will always do what the customer wants. Jeff Bezos [the founder] was once asked what we’d never sell, and he said, ‘brooms — they’re long, they’re uneconomical, and they’re expensive.’ Today we sell lots of brooms.”
I wonder how often the brooms story has been told in Amazon. If I was him, I’d tell it. And I’d trot out all the other mind-numbing statistics. Why not? It’s one hell of a business story. There’s pre-Amazon and there’s post-Amazon. The parcels in my hallway are just one indication of how far we’ve come.