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Customer-focused, not competitor focused
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Customer-focused, not competitor focused

Pandith Jantakahalli
Dec 15, 2019
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Amazon’s capital efficiency and how it is different from other offline (physical) retailers is encapsulated in one single statement in the letter - A billion-dollar sales rate with $30 million in inventory and $30 million in net plant and equipment! (Generated $31 million in operating cash flow)

After summarizing the achievements and progress made in 1998, Bezos details Amazon’s approach to building the world’s most customer-centric company:

  • Focus on customers (not competitors)

  • Commitment to constant improvement, experimentation, and innovation in every initiative

  • Pioneering spirit

  • Differentiation through innovation and relentless focus on customer experience

Reiterating the importance of having a high bar for hiring, Bezos shares three questions that employees are asked to consider before making a hiring decision

Bezos shares key initiatives to support Amazon’s goals for 1999:

  • Build out distribution infrastructure to support sales

  • Expand systems capacity to support multi-billion dollar scale and tens of millions of customers

  • Build strong relationships with customers

  • Expand product and service offerings

  • Invest in teams, processes, communication and people development practices

Two recurring themes from the ‘97 and ‘98 letters:

  • Importance of continuously improving the customer experience to ensure repeat purchases, and positive word-of-mouth from existing customers (growth drivers)

  • The need to maintain high standards while hiring new employees

While selection, ease-of-use, low prices, and service forms the bedrock of Amazon’s customer experience, Bezos highlights some of the features added to the platform

To help new investors to understand Amazon’s long term investment approach, Bezos appends the 1997 letter to shareholders.

You can read Bezos’ letter here

PS: Summary of all the Amazon Shareholder letters from 1997-2018 are available as a Kindle book.

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