WSJ: Inside Amazon’s Secret Operation to Gather Intel on Rivals

post by trevor (TrevorWiesinger) · 2024-04-23T21:33:08.049Z · LW · GW · 5 comments

This is a link post for https://www.wsj.com/business/retail/amazon-secret-operation-intel-rivals-eb82ea3c

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The operation, called Big River Services International, sells around $1 million a year of goods through e-commerce marketplaces including eBay, Shopify, Walmart and Amazon AMZN 1.49%increase; green up pointing triangle.com under brand names such as Rapid Cascade and Svea Bliss. “We are entrepreneurs, thinkers, marketers and creators,” Big River says on its website. “We have a passion for customers and aren’t afraid to experiment.”

What the website doesn’t say is that Big River is an arm of Amazon that surreptitiously gathers intelligence on the tech giant’s competitors.

Born out of a 2015 plan code named “Project Curiosity,” Big River uses its sales across multiple countries to obtain pricing data, logistics information and other details about rival e-commerce marketplaces, logistics operations and payments services, according to people familiar with Big River and corporate documents viewed by The Wall Street Journal. The team then shared that information with Amazon to incorporate into decisions about its own business. 

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The story of Big River offers new insight into Amazon’s elaborate efforts to stay ahead of rivals. Team members attended their rivals’ seller conferences and met with competitors identifying themselves only as employees of Big River Services, instead of disclosing that they worked for Amazon. 

They were given non-Amazon email addresses to use externally—in emails with people at Amazon, they used Amazon email addresses—and took other extraordinary measures to keep the project secret. They disseminated their reports to Amazon executives using printed, numbered copies rather than email. Those who worked on the project weren’t even supposed to discuss the relationship internally with most teams at Amazon. 

An internal crisis-management paper gave advice on what to say if discovered. The response to questions should be: “We make a variety of products available to customers through a number of subsidiaries and online channels.” In conversations, in the event of a leak they were told to focus on the group being formed to improve the seller experience on Amazon, and say that such research is normal, according to people familiar with the discussions.

Senior Amazon executives, including Doug Herrington, Amazon’s current CEO of Worldwide Amazon Stores, were regularly briefed on the Project Curiosity team’s work, according to one of the people familiar with Big River.

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Virtually all companies research their competitors, reading public documents for information, buying their products or shopping their stores. Lawyers say there is a difference between such corporate intelligence gathering of publicly available information, and what is known as corporate or industrial espionage. 

Companies can get into legal trouble for actions such as hiring a rival’s former employee to obtain trade secrets or hacking a rival. Misrepresenting themselves to competitors to gain proprietary information can lead to suits on trade secret misappropriation, said Elizabeth Rowe, a professor at the University of Virginia School of Law who specializes in trade secret law.

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The benchmarking team pitched “Project Curiosity” to senior management and got the approval to buy inventory, use a shell company and find warehouses in the U.S., Germany, England, India and Japan so they could pose as sellers on competitors’ websites.

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Once launched, the focus of the project quickly started shifting to gathering information about rivals, the people said.

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The team presented its findings from being part of the FedEx program to senior Amazon logistics leaders. They used the code name “OnTime Inc.” to refer to FedEx. Amazon made changes to its Fulfillment by Amazon service to make it more competitive with FedEx’s new product as a result of the information it learned from the partnership, according to one of the people.   

For such meetings, the team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies, the people said. 

Amazon took other measures to hide the connection with Big River. Staffers were instructed to use their second, non-Amazon email address—which had the domain @bigriverintl.com—when emailing other platforms to avoid outing their Amazon employment. 

“We were encouraged to work off the grid as much as possible,” said one of the former team members, about using the outside email. 

Amazon’s internal lawyers reminded Big River team members not to disclose their connection to Amazon in their conversations with FedEx, according to an email viewed by the Journal. 

Staffers, who worked in private areas of Amazon offices, were told not to discuss their work with other Amazon employees who weren’t cleared to know about the project. In the early days, some Big River team members had to take time away from their Amazon desk jobs to go to the warehouses to fulfill orders and pack them in boxes to send out. 

When gaining access to rival seller systems, Big River members were instructed to take screenshots of competitor pricing, ad systems, cataloging and listing pages, according to the people. They weren’t allowed to email the screenshots to Amazon employees, but instead showed the screenshots to the Amazon employees on the Marketplace side of the business in person so they didn’t create a paper trail, some of the people said. Amazon then made changes it believed improved the seller experience on its site based on the information. 

The Amazon spokeswoman said the team was secretive so that it wouldn’t get any special treatment as a seller on Amazon.com. 

Still, there were telltales. Registration documents filed with the Washington Office of the Secretary of State for Big River Services, while not mentioning Amazon, list a management team made up of current and former Amazon employees, including lawyers. The management team lists its address as 410 Terry Ave. in Seattle, which is Amazon’s headquarters. 

Corporate filings for Big River in the United Kingdom and other foreign countries also named officials who are senior Amazon employees and lawyers. In one U.K. disclosure, Amazon is named as owning more than 75% of the company. 

Amazon officials felt confident that competitors wouldn’t look up filings to see who was behind the company, some of the people said.

Some team members were uncomfortable with the work they were doing, according to some of the people.

Among the anxiety-inducing activities was representing themselves as employees of Big River in person while attending conferences thrown by rivals. For instance, team members attended eBay’s Las Vegas conference for sellers, according to some of the people. EBay describes the event as a way for sellers to meet with eBay management and learn of planned big changes coming for sellers and “exclusive information.” 

Benchmarking-team leadership ordered up what Amazon calls a PRFAQ that would outline what to do if competitors or the press discovered the project. In the event of a leak, leadership was to say that the group was formed to improve the seller experience on Amazon.com, and that Amazon pays attention to competition but doesn’t “obsess” over it. They were also told to act like this was normal business behavior in the event of a leak, according to one of the people. 

In 2017, Amazon formally changed the name of Project Curiosity to the Small Business Insights team to make it sound less cryptic, some of the people said.

The Big River team invented its own brands to sell on the competing sites, including “Torque Challenge” and “Crimson Knot.” 

Teams often changed the brand name once they sold out its inventory, creating new brands when they received new products.

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The endeavor wasn’t designed to make money. In 2019, for instance, the Indian Big River team projected revenue of $165,000 while it expected costs of $463,000, according to an internal company document. 

Each of the five countries operated a little differently to better test different programs. Globally, in total, Big River gained access to rival marketplaces including Alibaba, Etsy, Real.de, Wish and Rakuten, among many other platforms. In 2019, the team set a goal to get onto 13 additional new marketplaces, according to an internal company document.

The overall impression that I got from the program was that as it proved profitable and expanded, it took on a larger workforce and it became harder for leaders to detect when employees were following their individual incentives to cut corners and gradually accumulate risks of capsizing the whole thing.

However, it's hard to tell fundamental principles from this, because the programs that end up getting articles like these written aren't necessarily representative of the greater space of large secret projects e.g. maybe the most incompetence-bloated, poorly-managed (as their best executives gradually left or focused their attention elsewhere) or unusually controversial secret projects are more likely to leak (perhaps even by orders of magnitude more likely) and end up overrepresented in the news.

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