The Customer Trap: How to Avoid the Biggest Mistake in Business

CHAPTER 4

When Sales Channels Get Hijacked

I had nothing to offer anybody except my own confusion.

—Jack Kerouac

It was not until Amazon’s Jeff Bezos met the “Yoda” of the Customer Trap that he learned how to deal ruthlessly with suppliers. In early 2001, Bezos’s intuition that a key to business success is to gain leverage over suppliers became the fundamental business strategy of Amazon. What had been only a gut feeling was transformed into an operating paradigm through a conversation over coffee with Jim Sinegal, the founder of Costco Wholesale Corporation. The Costco model is based on customer loyalty garnered by offering a limited selection of products at rock-bottom prices. Costco buys in bulk and uses a standard markup of 14 percent. ...