Amazon's Head Of Prime on Tariffs, Alexa Plus Rollout, and AI Differentiation — With Jamil Ghani

0:00What is Amazon seeing in the early days of the trade war? And how will Alexa Plus change shopping and perhaps much more? That's coming up with the head of Amazon Prime in a very busy week in Amazon land right after this.

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0:43Welcome to Big Technology Podcast, a show for cool-headed, nuanced conversation of the tech world and beyond. We're joined today by Jamil Ghani. He's the VP of Amazon Prime in an exceptionally busy week in Amazon land, where the company seems like it's at the center of the news cycle in the trade war. We're going to touch on that, but we're really going to have a conversation about the future of shopping in AI bots and whether Alexa Plus will live out that vision and maybe compete with ChatGPT one day. So it's going to be a fascinating conversation, and I'm so glad to welcome you to the show. Welcome, Jamil.

1:17Great to see you. Great. Great to see you. Thank you so much for having me. Yes, definitely. Great to have you here. We're going to talk all about what's going on with Alexa Plus and Amazon Prime. But of course, I would be remiss to start this interview without a mention of what's going on in the news. We're recording on Tuesday, April 29th for a publication date of Wednesday, April 30th. So this is right when the news is happening. Kind of a crazy moment for Amazon. And honestly, when you logged on today, I was glad to see your face. I'm glad that you decided that this was still worth doing because this is what's happening for listeners and viewers.

1:52So first of all, Punchbowl News, a publication in Washington, D.C., reported that Amazon is going to start displaying how much an item's cost is derived from tariffs right next to the product's total listing price. The White House then responded. White House spokesperson Caroline Levitt told a group of reporters, told the White House briefing room, that Amazon's decision to label tariff price hikes was hostile in political action. And then another report showed up moments later where an Amazon spokesperson said this was never under consideration for the main Amazon website. And it was something discussed for Amazon Hall, which is Amazon's Shein and Timu competitor.

2:35Basically, if you want to buy something for$20 or less, some products, you might get that notification. Um, Jamil, could you just confirm with us here that that is indeed what the story is going to be, that the main Amazon site is not going to have those, uh, tariff, uh, prices. And if they are going on haul or if they are under consideration for haul, what's the thought behind that? Yeah. Um, thanks for the question. So just to be super clear, the team that runs our ultra low cost Amazon Hall store considered the idea of listing import charges on certain products. This was never approved and it's not going to happen.

3:15So this isn't happening at all? No, it's the information's incorrect. OK, so I'm just going to make sure I'm clear. whether it's Amazon Hall, whether it's Amazon's main site, we're never going to see tariff charges anywhere on Amazon. You know, this is an incredibly dynamic situation and never and always are difficult questions. But this was considered for our ultra low cost store alone, Amazon Hall. It was considered. It was not approved. It's not happening. It was not considered for our main site. OK, well, thank you again. It's always great to be able to speak with people in your position because we can sort of make sense of the headlines.

3:57When it's true, we'll find out. And when it's a little off or a lot off, we'll also find out. So I appreciate you clarifying that for us right off the bat. Now let's talk about tariffs more broadly. I'm just curious from your perspective. I mean, right now we're in this position where we have this 90 day pause before a lot of the global tariffs are going to go into place, but there is 145 % tariff coming in from China. You're the head of Amazon Prime. What are tariffs doing right now to the Amazon marketplace and the Amazon first-party sales? Yeah, I think the important thing is to ground in first principles.

4:29Our objective always has been, will continue to be serving customers, having an exceptional customer experience. In order to do that over the last many years, we've been offering our services in the U.S. since the mid-'90s. We've been diversifying our supply chain. And so that is not related to the current situation. That's been a kind of gradual process we've led through in order to work with sellers and vendors all around the world. And that's just good business in order to ensure that superb customer experience. The current situation is super dynamic, to say the least. And so we're navigating it to make sure that we serve customers really well.

5:11We're working closely with our seller and vendors all around the world to ensure that there's as minimum disruption to the customer experience as possible. You know, the economic situation is uncertain. And so you see that in consumer spending behavior. But the good thing is that Amazon continues to be focused on the three key principles that have mattered to customers always. And we think will continue to matter to customers, which is, you know, largest selection possible at the most compelling prices delivered as fast as possible and as conveniently as possible. And, you know, that's what we're focused on at Amazon in our store and in particular for our Prime members who are our most engaged customers.

5:52OK, so I definitely want to talk about the flywheel because I have some questions about that regarding tariffs. But first of all, you mentioned that you're diversifying, you've diversified your supply chain. And I've got some numbers that I'm looking at, and I'm kind of curious if you could comment on them about how much of Amazon's supply chain is stemming from China. So the numbers I see is that a decade ago, there were 20 % of third-party Amazon sellers based in China. Today, it's 65%. So I'm curious if you could share whether that is ballpark accurate or accurate in and of itself. And when it comes to diversifying your supply chain, is that large of a reliance on China a good thing?

6:34Yeah, I can't comment on the specific numbers right now, but I can tell you that we work with sellers and vendors all around the world. Over that period, our business has also grown substantially, right? And we have more ways for customers to get access to more categories, 35 categories of products across our store in the U.S. And so we work with sellers and vendors based in China, but we work with sellers and vendors all around the world. And so we feel like we can navigate the current situation to ensure that superlative customer experience. Okay. I won't hammer home on this too much, but I just want to ask you one more question about that.

7:16I think the experience from a lot of shoppers, you know, when you're, I'm an Amazon shopper, we have many listening. I think it's more popular than cable in the United States, definitely than church. So when you're an Amazon shopper, you have noticed that there's definitely been an increase in Chinese vendors. And I just wonder if there's going to be if there is like some liability from putting having so many Chinese sellers on Amazon. Not that I have anything against Chinese sellers. I bought lots of stuff from them. But if China and the United States can have this moment where they're sort of peeling away their trade agreements, how does a company like Amazon deal with that?

7:56Yeah, I think our company is founded on the fundamental belief that customers value choice. That is true in the selection we offer. That's true in the vendors and sellers in which they engage. Any one item oftentimes has multiple buying options that might meet different needs that customers have. Same is true with the speeds we offer, et cetera. And so, yeah, I think the current moment is what it is. We're going to continue to have a marketplace that has a diversity of product selection available a variety of ways. And that might ebb and flow given sort of macro external kind of factors. But we think that we have a resilient business because we give customers so much choice.

8:42You just go to any category. And I think customers are universally better off because they can use search, use recommendations, find exactly the item they want, but also have that to compare against all the different options available to them. And so that might ebb and flow given the current situation. But that fundamental belief in giving customer choice and having a great customer experience kind of, I think, is enduring. So you don't think that Amazon has over indexed on China? And even if these tariffs stay in place, do you think the experience is going to basically stay the same? I think we have sought to meet customer demand and what does well in the store is what customers want to engage with.

9:25And so we're reacting to that. We have a store that we want to work for, that we've set up that we think has efficient search, great navigation, great personalization, a fantastic supply chain to make the post-purchase experience fantastic. And what shows up in the store is a result of customer interest and customer demand. And so, you know, we on the back end of it diversified that to be resilient as a business and as a supply chain. But I think the experience is meeting customer needs and it will continue to do so. That's what we're focused on is making sure that we have the right selection in the store to meet that customer demand.

10:07Okay. So let's talk a little bit about the Amazon flywheel, right? the best selection at the best price delivered to you in the best possible way. And probably in the speediest time. I wonder what's going to happen with the sellers in this moment, because I'm sure you've seen there's the report that came out in Reuters a couple days ago, talking about how some sellers are not going to participate in Prime Day, where they traditionally give discounts, because they see that they're they want to make their inventory last and they're less interested in discounted discounting because if this holds, then they're going to need basically everything that they've brought in pre-tariffs.

10:46Are you going to, and I think Prime Day is coming up in July, so there's still some time. Any concern about the robustness of Prime Day because of a trend like this from sellers? Yeah, the signals so far, Alex, are strong. The kind of work we've been doing with sellers and vendors to get ready for Prime Day is off to a great start, pacing exactly where we want it to pace. I've seen the reporting as well. There's always going to be situations and it is an unprecedented moment that all of us are navigating here. But so far, the signals are that it's going to be a fantastic Prime Day and we're looking forward to having record-setting deals, attracting a record-setting number of Prime members to join Prime like we have in previous times with Prime Day and Prime Big Deal Days in the fall.

11:38Okay. So now I kind of have to get to some of the vibes questions. What is the vibes among sellers? I mean, are they feeling like this is going to shake their business up? Or I mean, I imagine there's a lot of disruption right now. Yeah, I think the sentiment amongst sellers is much like where we started this conversation, which is it's a complicated, rapidly changing environment. It's hard to know at any given moment where things stand. But the sellers and vendors we work with are aligned with us on making sure that we have a great customer experience in the store. And so we're working productively together to make sure that we have the selection available, inventory's available, the event is gonna be fantastic, and every day as well.

12:25It isn't just about Prime Day, although Prime Day is really important to them and to us. it's also ensuring we have a good everyday shopping experience on the the three aspects that you highlighted before so you know everybody's everybody's sort of navigating as the situation develops and what about the vibe among consumers i'm kind of curious it sounds like there might have been a rush to buy stuff before the liberation day tariffs went into play did you see that and And have you seen any pullback since? Yeah, we haven't seen anything material in the numbers as yet. Not yet. There's been sort of like variations that are hard to tell from just normal variations you'd see in the business.

13:11I think if Prime Day this year operates like Prime Day in recent years where there are sort of other macroeconomic factors like during the pandemic, I would expect that you will see consumers stocking up to take advantage of deals. I know in my household, I have an eight-year-old, a four-year-old, and a 10-month-old daughters. Our household needs a lot of things to run. And so we definitely take advantage of the Prime exclusive savings to stock up on stuff that we know that we're going to end up needing for our household or for our family. And so I'd expect that the same will be true for Prime Day this year, if not more so for the reasons that you cited.

13:51But let's take Prime Day out of it. I mean, what is the current vibe among consumers? You know, Amazon touches so many millions of consumers. And that's a sort of jargony way to say people shopping for stuff. Yeah. Are you seeing any hesitance to show up in the numbers given the uncertain economic climate right now? I think we continue to see strength in the part of the business that's growing the fastest, which is our everyday essentials and our groceries and have you, which is a push we've been making for years now, speeding up how quickly you can get the things you need to run a busy household.

14:29So that continues to be really robust. And you see strength across the store because our prices are very competitive. The speeds continue to be very, very strong. So the business is robust. Prime membership continues to grow all around the world, including the US. So we're seeing resilience as of today. But there's a lot of macro factors on consumers' minds. But Amazon, against that backdrop, tends to do quite well because we've organized our business to make sure that we have the best selection at the lowest prices delivered really fast, like you said earlier. So just to sum this part up, and then we can move on to the more fun stuff.

15:12it seems like what you're saying is even if we see an enduring trade war and I'm kind of skeptical that we'll see much more of this Amazon should be in a good place because it sources from countries outside of China because it's able to sort of shift things within the business quickly and could even gain where you see maybe some others who don't have that much flexibility struggled to make sense of it is that the right way to read this I think that's a good summary I think it's a great summer. We have a very resilient business that's focused on, first and foremost, serving customers. And in doing so, we sort of engineered our business behind the scenes to make that possible.

15:49And whether it's trade disruption or the pandemic or economic softness for other reasons, the businesses tended to do well because customers can trust Amazon to give them the selection at the best prices and deliver it really fast. Yeah, well, you're good at saying that slogan. But that has been what's worked for Amazon for so long. All right. Look, Jamil, I know you have to be very careful on some of these answers. Seems like a misreported nugget in Punchbowl sent the White House steaming at Amazon just a few hours ago. That being said, I appreciate you being willing to field these questions and to speak with me about it.

16:30So thank you for that. Of course. Thank you for the questions. All right, let's talk about AI, Alexa Plus in particular. Where is Alexa Plus? Because I was at the event, as were you, in February, I think it was February 26th. And on stage, we heard Panos talk about how this is coming out in, you know, next month, which would be March. And we're here at the end of April. And I know Alexa Plus has rolled out for some people, but not the masses yet. So what's going on with that product? Yeah, we're rolling it out. We're being really deliberate about that rollout. It's like we talked about then and I can overview now.

17:15It's an incredibly significant rethink and re-architecture of a service enjoyed by 500, 600 million devices around the world. And so we want to do that really, really well. And we don't want to disrupt the experience that customers have come to rely on. The feedback has been positive. We're finishing up the product and we're looking to scale that in the coming weeks to significantly more customers. But it's underway. But we want to get it right. We want to have a superlative experience. So it's going to plan. so i probably should have asked this question when panos was in um when do you think that we can expect to see a full rollout of this product i mean i understand the desire to get it right but i think i and many people who watch that event were like oh like i'm gonna get alexa plus next month and it's not it's not with us yet so um the full rollout is that months away is that next year what do we what can we expect on that front um i don't have a specific date to offer you today because we're adjusting the timelines and, you know, according to the rollout.

18:28But in the in its months, it's not next year. Okay, so this year, what have you guys learned in testing Alexa Plus? I mean, what in the early moments? Can you talk a little bit about what's resonated? And maybe give a little explanation since I've like now, you know, cited it, but let's we could also take a step back and talk about what exactly it's going to do. Yeah, so that's a good place to start. In my own words, the way I describe Alexa Plus, it's the new version of Alexa, which is much more conversational, much more intelligent, and it's more action-oriented. I can talk about all of those pieces.

19:07It's conversational in that it can go back and forth with you engaging on a topic of interest, on a task of interest, all the things you want to do. And I'll talk about all the things you can do with it in just a minute. It's more intelligent because it has been trained on a corpus of knowledge, world knowledge, Amazon-specific knowledge about the product catalog, about Prime Video's catalog, music, et cetera, et cetera. And it's more action oriented. It can do things on your behalf, whether it's on one end sort of making it really simple to manage your calendar to using the other prime benefits, shopping, video, music, et cetera, et cetera, to doing things out in the quote unquote real world.

19:55book you an Uber, get you a handy person to come to your house to fix something and everything in between. And so I look forward to telling you about how my household has been using it because it's sort of like they're the best anecdotes of like what we're learning because the bottom line is we're learning that our customers are using it for a whole host of things. And that's exciting because it is a very flexible, personalized experience, much more so than the classic Alexa. Okay, so how's it coming to use in your family's house? Yeah, so I am married. I have three young daughters, eight, four, and ten months, like I said before.

20:37So let's just say it's sort of like controlled chaos is the way to describe the household to working parents. And so I'll give you some anecdotes of real things. Rewind to October. my older two daughters were convinced that they wanted to be ninjas. And so they thought it'd be fun to go up to Alexa Plus and ask for suggestions on what the baby could be dressed up as. And so they described in their own parlance, I'm just listening, you know, in the kitchen while I'm doing something else. Hey, we're going to be ninjas. What would be really funny? Because of course, it's eight year old humor. It's like, what would be really funny for Juliana to be?

21:15and Alexa Plus came back and suggested that the baby should dress up like a sushi roll. And then I had a clickable link for same day delivery of the costume from Amazon.com. So close that loop very simply. I then said, oh, this is really interesting. So it's like, oh, what about a different idea that is more in the theme of ninjas as warriors? And so then it came up with a nether costume, which was a little shogun with a mustache for the baby. I'm like, we're rolling here. And I'm like, this is great. And we end up getting the sushi roll and the baby was a sushi roll for Halloween. So, you know, close that loop in, you know, it was like a delightful experience and also closed a to-do for mom and dad in the course of just a couple minutes.

22:00Another example, you know, lots of snacks in our household, as you would imagine, with growing kids. My wife walks out of the cupboards, searching around the cupboards, looking for this particular snack bar that they like called Go Macro Bars. And she turns to Alexa Plus and is like, Alexa Plus, let's order, or Alexa, let's order some Go Macro Bars. And so responds, it's like, oh, you've previously purchased this flavor. There's also these other two flavors. Oh, that's interesting. Let's do this third flavor. Great. It's like, you've previously purchased a six count box. I noticed that there's singles and there's also a case.

22:38For the other room, I say, oh, how much is the case per unit? Because I was like, I'd love to save some money. And it calculated it on the fly and told me that. My wife then said, continued the conversation. She said, oh, let's get a case of the, I think it's blueberry or something. And let's go ahead and check out. We checked out and it was at our doorstep by 5 p.m. that afternoon. That was like a minute. No phones were taken out. We could do that while we were helping the girls with other things. And those are just two of 100 examples like that where it's just sort of a much more assistive assistant.

23:13It's like able to do more and close the loop on fun things and also very practical things that a household needs to do. You know, it's interesting, Jamil, because when you told me that your daughters were talking to Alexa Plus, I was like, oh, maybe this newer version of Alexa is going to be something like a companion. because there are seemingly two different types of ways that people are building this. And I'm very curious to get your perspective on this. It seems like some are building these AI assistants as true assistants, things that will help you get stuff done, and others are trying to build it as a companion.

23:52It was very interesting. I had like back-to-back conversations with Panos and Daniel talking about Alexa Plus and then Mustafa Suleiman at Microsoft talking about Copilot. And it seems like Amazon's version or vision for this assistant is to be assistive and help you get stuff done, where Microsoft's vision is for it to be a personality. Do you see that both these types of visions diverging and some companies building this assistant style type of chatbot and others saying this is going to be a companion? Yeah, it's interesting you used a word there, personality. I think either can have personality.

24:30Alexa has a personality and Alexa Plus takes that to the next level. And it's fun. It's whimsical. It's got a sense of humor. But it is very helpful. Very, very helpful. And so, yes, we are absolutely building an assistant that is assistive, that is helpful, that is there to make life easier from, you know, lots of wants, lots of needs, definitely into wants as well. We can talk about kind of how it makes entertainment better. And others are choosing other paths. As a user of other services as well, from my own research and learning standpoint, I recognize the split. But I think it would be incorrect to say that Alexa being helpful means that she doesn't have a personality.

25:13She absolutely does have a personality. And one of the things I love most is the ability to prompt Alexa with memories, asking her to remember something. So for example, she remembers birthdays. She remembers that my eldest daughter prefers vegetarian food, but also does eat meat occasionally. And so when she makes recommendations for restaurants for us to go out to as a family or what have you or recipes to make at home, she takes that into consideration. That is being very helpful, but she does it in a way that it doesn't feel clinical. It feels very much like integrated into kind of our life.

25:52You made a point about the kids conversing. Alexa Plus also, we have Kids Plus for our kids, which is like books and content and what have you that they enjoy. There's a feature to create stories with Alexa. And we sit and do that, and it lets the kids kind of have an experience, a really safe experience with Generative AI, creating a story that's delightful for them. It's something we do together as a family. It's not a replacement, obviously, for the time we spend with them. It's adding a new dimension to that time. Let me ask the question in a better way. Yeah. So what Mustafa said straight up was that personality is going to be the differentiator for AI bots.

26:38and so I'm curious again do you believe that Alexa's personality is going to be the differentiator or the things that enables you to do ah uh thank you for the reframe I think that the personality is helpful but I think ultimately um uh I believe we believe that um uh Alexa will be indispensable because she's helpful, because she could get things done for you. She can help you with managing your calendar, reminders. She can help you get access to the right content. She can help you shop. She can help you do other services. And that list of services will grow and grow with time. You saw some of those in the demo for the early days.