Fulfillment by Amazon is a huge part of Amazon’s business now, but in the early 2000s it was stuck on the drawing board. The way it finally launched ended up changing Amazon completely.
Amazon had long believed in the potential of what was then called “Self-Service Order Fulfillment (SSOF)”—an initiative that would allow third-party sellers to send their inventory to Amazon’s warehouses, where Amazon would handle storage, picking, packing, and shipping.
It was a big idea, and leaders in both the retail and operations teams were excited about it. However, for over a year the project made little headway. It was always “coming soon,” but never actually launched.
That changed in 2005, when Jeff Wilke asked Tom Taylor (then a VP managing a huge portion of Amazon’s Operations org) to drop all of his other responsibilities and focus solely on SSOF. With Wilke’s backing, Taylor was also given the authority to build a business plan and hire a dedicated team.
Only then did the project take off—and eventually morph into Fulfillment by Amazon (FBA).
What we know as “FBA” officially launched in September 2006 and quickly proved its value. Sellers loved it because it turned warehousing into a variable cost instead of a fixed one, and it allowed them to tap into Amazon Prime’s fast shipping benefits. Customers loved it because it improved the selection of Prime-eligible items.
Why was this great idea stuck for so long, and how did it get unstuck? SSOF was stuck because it was one of many priorities on a long backlog of new initiatives for the Amazon Operations team.
It wasn’t that the leaders who had worked on SSOF before Tom Taylor weren’t capable. It was because the team and leader failed to meet what would become a standard 3-question test for any significant new business or product idea at Amazon:
1. Who is the most senior leader working full time on this initiative and no other?
2. Does this leader have the organizational skills and capabilities to make this initiative a reality?
3. Does this leader control the resources necessary to achieve the desired results?
If the answers to these questions are an individual’s name, “Yes,” and “Yes,” then you have a Single Threaded Leader (STL) and Single Threaded Team (STT). If any of the answers are “no one,” “no,” or “no,” then you do not.
FBA was one of the first examples of Amazon’s organizational structure concept of STL and STT.
In retrospect, it is insane that we thought we could build a multi-billion-dollar business with a handful of functional team members working on the project as one of many.
For more stories about how Amazon developed the STL model, check out our book.
