This July marks the 20th anniversary of the founding of a little bookselling website called Amazon.com. In 1997, three years after founding Amazon.com, Jeff Bezos wrote in a letter to shareholders that it was Day 1 for the Internet and, he wrote, “if we execute well, for Amazon.com.”
Seventeen years later, Bezos still believes it’s Day 1, according to his latest letter to shareholders, where he also wrote that he feels “super lucky to be a part of the Amazon team.”
Each year, Bezos points out the company’s accomplishments to shareholders, but this year, criticism may have been ringing in his ears when he wrote the letter, including those lobbed in last year’s book about Amazon, The Everything Store, as well as criticism over Amazon’s treatment of workers.
In a section of his letter called Employee Empowerment, in addition to mentioning its tuition reimbursement program, Bezos revealed that the company had adopted a Zappos program called Pay to Quit in which each year, it offers to pay associates to quit.
“The first year the offer is made, it’s for $2,000. Then it goes up one thousand dollars a year until it reaches $5,000. The headline on the offer is “Please Don’t Take This Offer.” We hope they don’t take the offer; we want them to stay. Why do we make this offer? The goal is to encourage folks to take a moment and think about what they really want. In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”
He also described a program that allows employees to provide customer service support for Amazon and Kindle customers while working from home. “This flexibility is ideal for many employees who, perhaps because they have young children or for another reason, either cannot or prefer not to work outside the home.”
Fulfillment By Amazon, Amazon Prime
Some of the interesting factoids published in the Amazon shareholder letter are of interest to merchants, including the following:
- There are now tens of millions of Prime members worldwide, and over 20 million Prime-eligible products; “We have many ideas for how to make Prime even better,” Bezos wrote.
- The number of sellers using Fulfillment by Amazon (FBA) grew more than 65% last year.
- In a 2013 survey, nearly three out of four FBA respondents reported that their unit sales increased on Amazon.com more than 20% after joining FBA.
- Amazon has 96 fulfillment centers and are on its 7th generation of fulfillment center design.
- Sophisticated software is key in Fulfillment Centers. “This year, we rolled out 280 major software improvements across the FC network. Our goal is to continue to iterate and improve on the design, layout, technology, and operations in these buildings, ensuring that each new facility we build is better than the last.”
Interestingly Bezos revealed that Amazon offers fulfillment center tours open to the public, ages six and above – see more information on the Amazon website.
Fast Delivery, Amazon Fresh
Bezos also described the company’s grocery delivery service, Fresh Grocery. “After trialing the service for five years in Seattle (no one accuses us of a lack of patience), we expanded Amazon Fresh to Los Angeles and San Francisco. Prime Fresh members pay $299 a year and receive same-day and early morning delivery not only on fresh grocery items but also on over 500,000 other items ranging from toys to electronics to household goods. We’re also partnering with favorite local merchants (the Cheese Store of Beverly Hills, Pike Place Fish Market, San Francisco Wine Trading Company, and many more) to provide the same convenient home delivery on a great selection of prepared foods and specialty items. We’ll continue our methodical approach – measuring and refining Amazon Fresh – with the goal of bringing this incredible service to more cities over time.”
“Fast Delivery” was also on the CEO’s mind. “In partnership with the United States Postal Service, we’ve begun for the first time to offer Sunday delivery to select cities. Sunday delivery is a win for Amazon customers, and we plan to roll it out to a large portion of the U.S. population throughout 2014.”
He went on to describe international delivery systems. “We’ve created our own fast, last-mile delivery networks in the UK where commercial carriers couldn’t support our peak volumes. In India and China, where delivery infrastructure isn’t yet mature, you can see Amazon bike couriers delivering packages throughout the major cities. And there is more invention to come. The Prime Air team is already flight testing our 5th and 6th generation aerial vehicles, and we are in the design phase on generations 7 and 8.”
Apparel, Login and Pay with Amazon
Amazon Fashion is booming, Bezos told shareholders. “Premium brands are recognizing that they can use Amazon to reach fashion-conscious, high-demo customers, and customers are enjoying the selection, free returns, detailed photos, and video clips that let them see how clothes move and drape as the models walk and turn.”
- Amazon Fashion operates a 40,000 square foot photo studio in Brooklyn and shoots an average of 10,413 photos every day in the studio’s 28 bays.
- Amazon has over 2,000 manufacturers in its Frustration-Free Packaging program, including Fisher-Price, Mattel, Unilever, Belkin, Victorinox Swiss Army and Logitech, and is available on hundreds of thousands of products.
- Amazon is expanding “Login and Pay with Amazon.” Bezos cited the success of one merchant who saw an increase in new accounts and in conversions. “You should look for more in 2014,” he said.
Bezos told shareholders about new initiatives such as the Fire TV hardware device and its gaming studio.
And, he said, the Amazon Appstore now serves customers in almost 200 countries – selection has grown to include over 200,000 apps and games from top developers around the globe – nearly tripling in size over the past year.
You can read the fulltext of Jeff Bezos’ letter to shareholders on the Amazon Investor Relations page of its website.