What the UK public sector can learn from Amazon
Unlike taxpayer-funded monopolies, Amazon uses technology to put customers first
John Redwood is a former Secretary of State for Wales and MP for Wokingham. He writes regularly at his diary
The UK has long been feted as a nation of shopkeepers. We have some great retailers with strong brands. Amazon came to the UK to take on one of the most advanced and efficient retail sectors in the world.
The sector has luckily avoided nationalisation and the more extreme forms of government intervention. As a result we have avoided rationing of food and clothes. Meanwhile the NHS rations non urgent health care by long waiting lists. Councils and government limit the supply of nationalised roads to keep drivers fuming in congestion, suffering from peak hour road works and closures. You do not see free enterprise Heathrow airport closing the main runway for repairs at the busiest time for landings during the day. We have plenty of choice of shops, with market leaders like Tesco and Next achieving fast growth and high standards. We do not have a bread shortage, though state regulated water monopolies give us a water shortage. This summer, as with the nationalised water industry in 1976 and 1995, we have to sit and watch our grass and flowers wither and die, as it would be anti social to turn on the hose.
Despite the impressive UK competition Amazon has gone from a startup US business selling books in 1995 to having 30 per cent of the UK online shopping market today. 85 per cent of all UK consumers use Amazon for some of their purchases. It is true Tesco dominates online groceries, with Sainsbury and Asda also important. Next Directory is a great business success selling clothes and household goods. Amazon has only been able to make such a dent in the general retail market place by the excellence of its technology, the ease of access and use, and the high quality of delivery and service. Some more traditional UK retailers have struggled to come up with a good enough online offer to compete.
Amazon has advanced its competitive foothold in the UK by being fast and flexible in understanding customer wishes and responding to customer needs. It has greatly expanded the range of what it sells, to give customers maximum choice at the click of a mouse. It has two mega warehouses and many other distribution points so it has the stock to rush goods to people as soon as they buy them. It expanded its delivery system at record pace when covid lockdowns caused many more people to want to shop online. When other retailers were having to limit our access to their shops to conform with government health advice, and were rationing access online for lack of capacity, Amazon seized the opportunity for major expansion.
Great companies listen to all their customers and seek to cater for all of them. I myself as an Amazon user refuse to pay for Amazon Prime. Amazon tried to shock people like me into paying the subscription with large increases in the delivery charges. Clearly enough of us objected and withdrew custom, as they soon stopped that and said sorry. Tesco who built my loyalty to buy many of my household basics from them through sensible price promotions and good whole basket discounts went too far, only offering a discount on a much larger shop than I needed. They have decided not to bother to win me back. It is easy to lose customers, difficult to get them to return.
Amazon handle complaints and returns well. They keep your retail history to make re ordering so easy and to remind you what you bought and what it cost. They have built total global sales to more than last year’s $775 bn, branching out into crucial new business areas in digital technology. They generate an impressive $500,000 of sales per employee and now employ 1.6 million people worldwide. They daily strive to improve, looking to provide better value and quality with everything they do. They adapt and adopt new technologies to get things to people cheaper and faster. Their online shop is easy to use, making it simple to choose and to specify where and when you want it delivered. Some other retail sites are much harder work trying to get through all the stages to finally complete a transaction, or even to see the goods and read their design details and specification. They often lack the detailed product information Amazon supplies.
The UK public sector has so much to learn about great online access and great customer service. State computers threaten you if you cannot make them work, often fail to offer choices you like and are out to serve their owners, not their clients. How often do you have to puzzle to choose between three of or four options which do not fit? You may have to find a box which allows you to tell them the truth, as the selected options you need to use to proceed do not often tell the whole or true story. The public sector does not think about your convenience but theirs. It does not ask what we the customers would like, but what they are willing to provide. They want to stress the rules. Amazon stresses the convenience and the product they can supply. The public sector seems at times to think up difficult rules to give them the pleasure and the revenue from fining someone for failure to comply.
Amazon knows it can only hold its current success and expand its sales if it continues to improve daily what it supplies, keeps its prices keen, and sustains fast deliveries. There is a good UK retail sector left, ready to take back some of that lost market share. It is competition which drives the innovation, the quality and the better service. The Uk public sector usually insists on monopoly provision, backed up by taxes, rules, and fines to make people conform with what it is prepared to supply.
The nationalised railway concentrates on building a new line that will be more than a decade delayed and billions over budget. It could spend that money on improving punctuality and capacity on main routes which is what travellers want. If Amazon ran trains they would arrive on time and would use the latest technology for signals and safety. They were too sensible to offer to do so on a nationalised badly run track system with a regulator dictating many of the terms for a train service.
The nationalised roads concentrate on making it more difficult for vehicles to get about, pursuing a policy of wanting contraction in the vehicle fleet and in usage of the network. The nationalised Post Office fails to capitalise through its network of counters on the demand for in person banking and services as other business automate too much. The Post Office prefers to lose lots of money and claim a grant from taxpayers.
We need more of the Amazon touch in our public services. Put customers first. Always ask what they want. Look to use latest technology in a customer friendly and accessible way. Use staff to deliver the service to people promptly and efficiently. Go for growth and help your customers achieve and enjoy more. We could save billions and cheer us all up as government turned from being a bad hectoring presence to being our friendly supporter.
Last year I took a friend to one of the two large hospitals in the county; a not inconsiderable journey, and subsequently visited several times. Parking was difficult: on one occasion I and others parked on a kerb, being unable to find a marked space. On driving off the car sustained minor damage, and wouldn't have been alone that day. There are notices everywhere threatening visitors with video surveillance and detailing the car parking charges and penalties for non-payment. The clear message is that visitors are a bloody nuisance.
After she had waited over three years for resolution via the NHS, I prevailed upon my wife to get treatment at a private hospital, which has proved efficient and effective. The first thing I noticed on pulling up on the first visit was a sign: "Customer Parking" (free of charge) - a different mind-set altogether.
My friend was diagnosed with a brain tumour and given six to twelve months to live. Steroids, used successfully to alleviate the symptoms, locked up his intestines. His pleas for help were ignored by staff in the two hospitals and he died after a couple of months of severe pain, the death certificate stating "perforated bowel" as cause of death. So much for listening to customers, in his case a staunch defender of the NHS - a bitter irony.
There is a long and tortuous road ahead, not helped by an ill-informed and subdued population, but I support the work of the IEA, believing that things can and should be much better, and that this country's continued decline is not inevitable.