Help customers make better purchase decisions, price for trust

In this letter to shareholders, Bezos describes how long term thinking pervades all decisions - big and small at Amazon.

Bezos states that customer experience is the most important driver of Amazon’s business. He provides examples of long term thinking while making decisions related to customer experience. The reason Amazon allows negative reviews even though it may cost Amazon some sales in the short term - it helps customers to make better purchase decisions. This ultimately pays off for Amazon.

Amazon reduces prices even though it hurts current results, as it helps Amazon earn more of the customers business in the future (increased frequency of purchase or higher ticket price per order)

Amazon’s pricing strategy does not attempt to maximize margin percentages but instead seeks to drive maximum value for customers and thereby create a much longer bottom line in the long term.

You can read Bezos letter here

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