In this letter, Bezos highlights the size of the market opportunity for Amazon and how Amazon is poised to capitalize on this opportunity.
Amazon’s revenue in 1999 was $1.64 billion even though the foundational technology on which the shopping experience was built was the “worst it will ever be”. Increased bandwidth and always-on-access would significantly improve the shopping experience. Adoption of online commerce was growing as millions of new consumers connected to the Internet for the first time. As the online shopping experience improves, consumer trust and confidence would increase, driving further adoption.
Hence, Amazon gets to participate in a multi-trillion dollar global opportunity where the underlying foundational technology improves every day.
Bezos describes what the Amazon.com platform is comprised of and why Amazon is well-positioned to capitalize on the huge market opportunity.
Bezos highlights the head-start that Amazon has over the competition – in its reputation for customer focus, e-commerce software systems, and a purpose-built distribution and customer service infrastructure. He specifies how Amazon’s e-commerce platform will provide a competitive advantage:
- Help Amazon to launch new e-commerce businesses faster
- Offer a higher quality of customer experience at a lower incremental cost
- A faster path to scale and profitability
- A higher chance of success
He shares Amazon’s six major goals for 2000:
- Growing the number of customers and strengthening customer relationships
- Number of customers who shop with us
- Number of products that they purchase
- The frequency with which they shop
- Level of satisfaction when they shop
- The rapid expansion of products and services that we offer
- Help customers find and discover anything that they want to buy, anytime, anywhere
- Makes Amazon more relevant to a wider group of customers and increase the frequency with which they visit the store
- Driving operational excellence in all areas of the company by
- Delivering continuous improvement in customer experience
- Driving productivity, margin efficiency, and asset velocity across all businesses
- International expansion
- Expanding our partnership programs
- Build partnerships with companies that shares Amazon’s passion for serving customers
- Driving profitability in each and every business
You can read Bezos letter here
This is the third post of this series. Bezos highlights a few of Amazon’s leadership principles in each of his letters
- Summary of the 1997 letter to shareholders – Obsess over customers, align decision making with long term goals
- Summary of the 1998 letter to shareholders – Customer-focused, not competitor focused
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