1/ Good answer from @zackkanter to @HarkoCole’s question

Question - In car rentals, if customer doesn't return car with full tank (assuming they left with one), shouldn't they be charged a fee for not filling up? What’s so bad about Hertz charging fees? https://twitter.com/zackkanter/status/1264368649323728898

2/ Since Zack quoted Bezos here, here’s how I think Amazon would do it:

1) Customer can return with tank filled how much ever they want.
2) Amazon Car Rental will refill tank to full & charge customer’s credit card exactly the amount it cost for the remaining tank.

That’s it!

3/ Cusfomer need not know anything else, no extra fees, no hidden charges. Just a promise that we’ll charge only actual refill gas costs (clearly indicated up front). Since we’ve won their trust over several years, they’ll give us a chance. https://www.google.com/amp/s/www.barrons.com/amp/articles/jeff-bezos-customer-trust-is-what-allows-you-to-expand-1536095054

4/ Yes, there’s a cost for employees time to take it to nearest gas station and refill. Amazon will start tracking these costs, and look at the average per car refill cost (excluding fuel since that will be charged back to customer).

5/ Initially, Amazon will eat this cost and not charge to customer. Similar to car cleaning and washing, this is one more cost line item. You don’t see cleaning and washing charges/fees to the customer do you?

6/ As business scales, suddenly we are spending let’s say $50M in refill costs. Whatever that number is, look at it only when it’s a big enough number to start optimizing. Until then, just ignore, focus on getting the customer experience right. Keep winning their trust.

7/ Medium term, problem is essentially a delivery & fulfillment problem - deliver cars to gas station (either in premises or outside) & “fulfill” gas into them. Trust me, Amazon knows a thing or two about both. Will start optimizing routes, timing, perfectly staggered refills etc

8/ Longer term, even when it’s a big number, at least for non urban locations (like airports) Amazon can look at building a robotic refill and cleaning/washing unit that minimizes refill cost to the bare minimum. At $50M annual costs, many robotic solutions become viable.

9/ You may not even need employees to drop off car to the cleaning/refilling unit. Customer drops off car, a robotic unit takes car to on-premise renewing unit, it gets refilled automatically, goes through washing/cleaning and voila, ready for next customer. Focus on the Cx!

10/ There are real fixed costs with this, but magic is in reducing variable costs on a per unit basis to bare minimum. In current Fulfillment, there are real costs in pick, pack, ship. But at Amazon’s scale, cost per unit is so small that you can offer it to customers for free.

11/ So if variable costs are lower, only other thing that matters is payback period for the fixed cost investment. If it’s too high then work towards lower fixed cost solutions. But continue to invent because you want to improve Cx. Charging customers is not an option.

12/ At $50M-$100M employee refill costs, we are probably buying $B in fuel. We’ll negotiate with gas suppliers and ask them to bid on this $B contract. Then instead of keeping contract savings to ourselves, we’ll offer it to customers at the lower price.

13/ So even when competitors match our customer service eventually, it’s too late because now we have much better fuel prices than them.

14/ Worst case, after years of effort, if we’re unable to find robotic solutions, our better fuel costs may cover some of additional refill costs. And if business scales, we may have better rates on cars, insurance etc. All this should cover additional refill costs.

15/ Customer refill service charge is only but the last, absolute last resort. And even in such a case, our service charge is likely to be lower than others because we’ve covered some costs as I mentioned above. So customers will still prefer Amazon car rental over others.

16/ The mindset is on working hard to improve the Cx, inventing on behalf of customers. Not at looking for ways to extract more $ out of the customer. Instead, how can we save customers money, AND make their experience better.

17/ It’s tough to compete with a company like that whose culture is to obsesses over providing customers value much more than making more profit. Or rather, we know that providing more value will generate long term returns.

18/ And that is why “customer obsession” is a wonderful thing. There are indeed two types of companies - ones who work very hard to charge you more, and ones who work very hard to charge you less!