2014 – I Told You So

This is an “I told you so” letter from Amazon to it’s naysayers, in no uncertain terms. Marketplace, Prime, and AWS were all “bold bet[s] at first, and sensible people worried (often!) that they could not work.” Jeff highlights each of them in detail. This is a longer-than-usual letter, coming in at 5 pages.

Marketplace

The third time is a charm. First came Amazon Auctions, which morphed into zShops, which transformed into Marketplace. And now accounts for more than 2 billion units sold.

Prime

Making Prime happen required retooling of inventory processes and fufillment centers, including the acquision of Kiva. If you’re not famaliar with Kiva, it’s pretty cool – robot shelves! But all of this ultimately paid off. FCs expanded from 15 when Prime launched to 109. Prime Instant Video was added in 2011 and Fulfillment by Amazon was included. In 2014, 71% of FBA merchants said they saw 20%+ increase in unit sales after joining FBA, but as a customer that just makes sense. Why would I order from some place else via Amazon, when I can get it via Prime?

Amazon Web Services

AWS has a nice customer list including Pinterest, Dropbox, and Airbnb and is starting to add large enterprises that are seeing the benefits. AWS has more than a million active customers. AWS also has a strong leadership position in the cloud market right now.

“A dreamy business offering has at least four characteristics. Customers love it, it can grow to very large size, it has strong returns on capital, and it’s durable in time – with the potential to endure for decades. When you find one of these, don’t just swipe right, get married. Well, I’m pleased to report that Amazon hasn’t been monogamous in this regard. After two decades of risk taking and teamwork, and with generous helpings of good fortune all along the way, we are now happily wed to what I believe are three such life partners: Marketplace, Prime, and AWS.” — Jeff Bezos