Geeking Out at Amazon
Jeff Wilke, SM ‘93, is genuinely passionate about the art–and science–of keeping customers happy.
Talk to Jeff Wilke, SM ‘93, for five minutes about his eight-year career at Amazon.com, and you will feel as if you have met Earth’s biggest talking billboard. “The beauty of our model is that we want to give our consumers whatever they want,” he might say. “When the technology changes, we also will give consumers what they want.” Ask if it surprises him that your last purchase from the Internet retailer was not a book, DVD, or CD but a solar-powered bird bath, and his response will be, “First, just let me say, ‘Thank you.’” This is a man who will tell you with a straight face that he sometimes wakes up in a cold sweat “worried about the customer experience we’re creating.” His demeanor does not shout “salesman,” though he may work a subtle pitch for Amazon Prime, which offers unlimited free shipping for $79 a year, into the conversation. He is a man who uses the first person plural when he talks about his work, his earnestness almost palpable when he insists, “We want to be, and think we are, among Earth’s most customer-centric companies.” It’s no stretch to imagine the mantra “There is no ‘I’ in ‘team’ ” running like a news ticker around his frontal lobe.
Wilke, who came to Amazon in 1999 as vice president and general manager of worldwide operations, is now the company’s senior vice president of North American retail. It’s not hard to imagine the boyish 40-year-old as a grown-up Harry Potter–and he is indeed a bit of a wizard, says Erik Brynjolfsson, PhD ‘91, director of MIT’s Center for Digital Business. When Wilke first visited the now-defunct Seattle distribution center eight years ago, all he saw was chaos. “There were people, product, carts with product, moving randomly about all over the place,” he says. “Too much hustle and bustle. I thought it was underautomated, chaotic, not enough focus on safety.” But he made that chaos disappear.
Brynjolfsson credits Wilke with being the behind-the-scenes guy largely responsible for streamlining Amazon’s operations, an achievement that helped propel the company’s annual sales from $1 billion in 1999 to an estimated $14 billion today. “A huge part of Amazon’s success is the logistics, and Jeff was the secret ingredient behind that,” Brynjolfsson says: in focusing on getting goods to customers efficiently and inexpensively, Wilke took the model to a new level, dealing with a new set of issues and an unprecedented scale. “He figured out the logistics puzzle almost like it was a manufacturing problem,” Brynjolfsson says. “Jeff Wilke is recognized as the whiz at pulling together multiple components and delivering them on time in as few shipments as possible.”
Brynjolfsson will also tell you that Wilke is “very generous with time, both in terms of research and teaching.” Wilke, who earned a master’s in chemical engineering and a master’s in management through the Institute’s Leaders for Manufacturing (LFM) program, tries to come back to MIT to work with students each year. Brynjolfsson recalls a moment in the classroom when a student asked a question about operations research, and Wilke, who says that he’s a “fan of mathematics,” launched into a long, complicated, quantitative answer. Eventually, he caught himself and apologized for being such “a nerd,” pressing his spread thumb and forefinger to his forehead in the time-honored “loser” symbol. “But the reality,” Brynjolfsson says, “is that every student in that room wanted to be just like him, working at one of the coolest Internet companies in the world.”
“I probably skew toward the nerd side,” Wilke readily admits. “People usually geek out on something in their life. For some people, it’s beer, or music, or football, and for other people, it’s direct-to-consumer fulfillment. I happen to like beer, music, football, and direct-to-consumer fulfillment. If I am going to geek out, I’m proud to be at a company that is filled with nerds.”
It was “with the eye of an operations nerd” that Wilke says he went after the chaos in Amazon’s distribution center. He adds, “To be clear, LFM graduates operations nerds, no question. Those nerds think operations is cool, too. I approached it in a pretty systematic way. It’s the way I’ve thought about assembly and manufacturing processes for the last 16 years. LFM is the place that gave me the playbook.”
Part of Wilke’s systematic approach was to make road trips to different fulfillment centers, sometimes rolling up his sleeves and wrangling merchandise himself. When he was in charge of worldwide operations, he and Jeff Bezos, Amazon’s president and CEO, spent a week each year visiting different sites to help devise ways to speed up the process of filling and delivering orders.
One Christmas season a few years after Wilke joined Amazon, the two Jeffs traveled to Kentucky, where they helped pack folding chairs into cardboard boxes that took 20 minutes each to assemble. Wilke says, “After we made three or four of them, we asked the associates on the floor if this is what they did for each one of the chairs, and they said, ‘Yes, it’s pretty stupid, isn’t it?’ We came back and launched a program called ‘Get the CRAP out.’” Getting the CRAP (which stands for “can’t realize any profit”) out of Amazon’s inventory meant looking at all the items that weren’t making any money; if the company couldn’t figure out how to change the process to make an item profitable, it got rid of the item. “With the case of the chairs,” Wilke recalls, “the vendor came back and said, ‘Of course we can package the product in a preconstructed cardboard box that will meet your needs.’ Hence, the problem went away.”
The Christmas season is by far the busiest for the Internet retailer, and something it plans for year round. According to Wilke, on the peak day in 2006, Amazon shipped more than 3.4 million units worldwide–an average of more than 140,000 items per hour. “We’ve gotten to the size now,” he says, “that we actually influence the air capacity for freight around the world.” He remembers one year getting a call at midnight on the 22nd of December from Amazon’s head of transportation, who wanted approval to rent a jumbo jet to fly all the orders waiting at the fulfillment center in Reno to the Louisville distribution center for UPS pickup. “We found a 747 somewhere in the California desert,” he says, “and got all those packages delivered by Christmas.”
The last week before Christmas at Amazon is like “having your family over for the holidays–always crazy and boisterous,” Wilke says. “You’re tired, but there’s also a lot of adrenaline, excitement, passion, and pride.” On the last shipping day before the holiday, he says, workers in the warehouse invariably find that the last items needed to fill some orders are broken. “What we’ve done is send a small team of people to the mall to buy items,” he says. “For those few customers, it could make the difference between having a perfect Christmas and not.” Wilke has noticed that people are waiting later and later to finish their shopping each year. “We’ve trained customers to wait until the last minute, and that it’s okay,” he says. “It becomes a foundation for trust, and it’s hard to imitate.”
In his new position at the company, Wilke focuses on pricing, merchandising, buying, and marketing. Now, he’s weighing whether Amazon’s prices are low enough. “Can the consumer go to the Web and find a better price and say that Amazon is not competitive and go somewhere else?” he says. “We use every means at our disposal to understand how the marketplace is competitive.” When asked if he was responsible for the recent price slashing at Amazon, he insists, “It’s not me, it’s us. The management team and the company decided several years ago that we were going to focus on low prices. I participated with my peers in making that decision. Now it’s my turn to execute it.”
He’s also intent on executing Amazon’s North American retail-marketing strategy, which in 2007 included a push to promote Amazon Prime. After multiple interviews for this story, Wilke learned that he had convinced an initially reluctant reporter to purchase the service. “Ding! Ding! Ding!” he cried. “Are you addicted to it?” Upon hearing that the lure of free shipping had already steered several sales Amazon’s way, he responded like a reassuring coach. “Good,” he said. “It’s okay. It’s just like rappelling. At some point, you have to let go of the rope, just let go. You’re getting a low price and great product, and you’re getting it in two days. It works.”
That unwavering conviction and sincerity may well be the magic behind Wilke’s operational wizardry.