How Amazon's MBAs Rise into Lucrative E-Commerce Careers
This year at New York University’s Stern School of Business, about twenty MBA graduates will probably accept job offers from Amazon—the largest number of jobs for a single recruiter at the school. And that’s not an unusual proportion at a school for Amazon, the hottest MBA employer in the world.
As we’ve previously pointed out in our BSchools articles, Amazon now hires more MBAs worldwide than any other employer. The Seattle-based e-commerce giant continues to hire MBAs at about double the rate of McKinsey & Company, the next largest MBA employer.
We’ve also written at length at BSchools about the advantages of working for Amazon. The compensation isn’t quite as high as at consulting firms like McKinsey, but it’s close—and comes without all the consulting firm travel. Furthermore, typical new MBAs at Amazon don’t work schedules that approach the 80-hour weeks still demanded by many investment banks.
There is another advantage to working for Amazon that we haven’t yet covered. And it’s a significant one that deserves attention from MBA applicants, students, and graduates along with business school placement advisors.
Amazon’s Valuable Inside Information
Working for Amazon provides an opportunity to acquire inside information that is highly scarce, extremely valuable, and readily monetizable—even early on in one’s career. That inside track can rapidly enable an MBA to become a successful independent consultant.
What’s more, that knowledge can also enable one to become a CEO of their own firm that would be an attractive acquisition target for an advertising agency.
For example, in 2017 the British ad agency conglomerate WPP bought Seattle-based consulting firm Marketplace Ignition. Marketplace was founded by Eric Heller, a Washington University business administration graduate who spent seven years at Amazon, finishing his career there as a merchant category manager.
Although terms weren’t disclosed, industry analysts told Adweek they estimated Marketplace’s price at between $10 and $40 million. A similar acquisition took place late in 2018 when the London-based ad agency Ascential spent $60 million to acquire the Baltimore e-commerce advisory firm Flywheel Digital, an Amazon specialist.
Amazon’s Revolving Door
Amazon appears to be having trouble hanging on to managers because so many of them are leaving to accept lucrative jobs with e-commerce consulting firms or to launch their own ecommerce consulting businesses. The firm is starting to resemble a “revolving door,” much like professionals cycle between government and private industry in Washington, D. C. and in the U.S. state capitals.
But why? What factors have contributed to this emerging trend? And more specifically, how has Amazon left itself open to this kind of leadership attrition?
Intense Demand from Overwhelmed Brand Managers
The Seattle behemoth is now the third-largest online ad platform in the United States after Google and Facebook, the two leaders who together currently account for about three-quarters of every advertising dollar.
Amazon’s rapid advertising growth clearly poses a threat to Google and Facebook. According to eMarketer, Amazon earned about $4.6 billion for sponsored advertising in 2018—a 155 percent increase from 2017’s $1.8 billion, and should earn almost $11 billion in 2020.
Furthermore, Consumer Intelligence Research Partners (CIRP) estimate that as of July 2019, the Amazon Prime loyalty program now serves 105 million members. That’s 82 percent of households in the United States.
An increased presence of ads on Amazon first appeared in 2018 and reportedly intensified over the Black Friday/Cyber Monday holiday shopping weekend in late 2019. The additional advertising seemed confusing and even deceptive to some Amazon shoppers—and to some commentators as well.
Professor Erik Gordon of the Ross School of Business at the University of Michigan said placing ads above search results implies that the products advertised are those most popular. An attorney, Professor Gordon told USA Today:
It is not misleading in the legal sense, but it borders on a breach of trust with visitors. Amazon is gambling that it will make enough money off the ads to offset the loss from visitors who notice that products at the top are sponsored.
But because of Amazon’s rapid advertising growth, firms who want to sell online can’t ignore Amazon any longer. “Brands are overwhelmed,” said Jason Burby, an advertising executive with WPP’s Possible division.
Brands Feel Frustrated with Amazon
Surging demand isn’t the only reason for all the opportunities former Amazon executives enjoy. Amazon’s relationships with their customers differ from the relationships between customers and more traditional retailers like Target or Walmart. Unlike Amazon, those retailers provide buyers who photograph, price, and promote customer products on their online platforms.
One former Amazon senior manager holds an MBA from Vanderbilt University’s Owen Business School and a PhD in marketing with a concentration in business-to-business pricing and distribution from Northwestern University’s Kellogg School of Management. On top of that academic work, he has seven years of experience at Amazon. That former executive, James Thompson, explained to Business Insider:
Brands are used to having partners at other retailers, having an account executive who actually helps you, and so on. They’re used to going to [a] market and saying, “We want to sell into this channel.” We’ll call up the channel and say, “Hey, can we be in Bed Bath & Beyond? Can we be in Target?”
At Amazon, it’s one-sided help. It’s not really, “We’ll help you and you’ll help us, and we’ll all grow together.” It’s more like Amazon says: “This is what we want from you. Can you give it to us?” And the brand says yes or no.
If they say yes, great. If they say no, then Amazon says: “That’s fine. We’ll find another way to get your product on our site.”
It doesn’t take long for brands to get very frustrated with Amazon because they play by a different set of rules than every other channel. You just need to learn how to play the game, whether you want to play the game or not.
A Culture Encouraging Secrecy and Confusion
Additionally, Amazon’s executive defectors are profiting handsomely because of the way Amazon has built secrecy and confusion into their culture and business practices.
Another consultant, Chris McCabe, also told Business Insider that Amazon deliberately communicates with sellers in vague, euphemistic language:
They keep it vague because they want to reserve the right to interpret things as they see fit. People need somebody who worked there to explain this stuff because this isn’t really how business works out in the rest of the world. Amazon is just its own unique ecosystem and that’s, you know, not just a cliché. It’s really true in this case.
As a result, large brands who pay the company hundreds of thousands or even millions of dollars each year often have no idea what to do if Amazon suspends or bans one or more of their products. Moreover, some sellers can find themselves targeted by adverse reviews, sometimes staged by competitors.
Because Amazon can sometimes punish sellers after even a single complaint, brands in such circumstances can find the support provided by Amazon to be completely insufficient. These customers have little choice but to turn to the cottage industry of third-party consultants like Thompson and McCabe who have first-hand knowledge of Amazon’s inside operations.
Lack of Competition
How many McKinsey consultants have years of experience working inside Amazon? Probably not many. And that’s another reason encouraging Amazon executives to defect: a hole in the competitive space big enough to drive an eighty-foot Amazon Prime big rig truck through.
Multinational consulting firms like McKinsey at present don’t offer Amazon e-commerce advisory services as part of their consulting practices. As long as firms like McKinsey stay out of the market, clients are increasingly likely to seek advice from consultants who are former Amazon managers.
Lucrative Consulting Fees
That first-hand exposure to Amazon’s inner workings doesn’t come cheap. Consultants with substantial experience inside Amazon can charge their clients hourly equivalents that are substantially greater than they earned from the company. Yet some of those consultants can also set their own hours and even work from home.
For most, e-commerce consulting provides the best of both worlds: lucrative pay combined with career independence and personal freedom. It’s a new career option that didn’t exist even five years ago. And it’s no wonder that so many of Amazon’s executives find themselves defecting from the company to pursue this new direction instead.