5 Things We Learned From Amazon’s 2018 Shareholder Letter

This year’s themes: small businesses, innovation, eBay and wages

In his annual letter, Bezos said he's proud of Amazon's culture of innovation. Getty
Headshot of Lisa Lacy

Like Mary Meeker’s annual internet trends report, Amazon CEO Jeff Bezos’ annual shareholder letter gets the industry all excited. Today, the internet behemoth’s 2018 shareholder letter is out.

Last year, Bezos disclosed the number of Prime members for the first time ever. And while there weren’t any comparable bombshells in 2018, it is perhaps notable as Bezos’ first-ever shareholder letter as a bachelor.

Here are our top five takeaways:

1. Amazon and small businesses are two peas in a pod.

In his letter, Bezos said the share of physical gross merchandise sales by independent third-party sellers on Amazon has grown from 3% in 1999 to 58% in 2018. He noted these third parties are mostly small- and medium-sized businesses, which have enjoyed sales with a compound annual growth rate of 52%, which bests Amazon’s own sales growth at 25%.

2. Amazon is better than eBay!

Bezos then openly took a shot at eBay and its paltry sales growth rate, which he said is just 20%.

“Why did independent sellers do so much better selling on Amazon than they did on eBay? And why were independent sellers able to grow so much faster than Amazon’s own highly organized first-party sales organization?” Bezos asked. “We helped independent sellers compete against our first-party business by investing in and offering them the very best-selling tools we could imagine and build.

That includes Fulfillment by Amazon and Prime.

“In combination, these two programs meaningfully improved the customer experience of buying from independent sellers,” he added.

3. Amazon gives consumers products they don’t even know they want.

Prime is a good example of one of the innovative offerings Amazon has come up with thanks to its corporate culture, which he said embraces experimentation.

“It’s difficult for most people to fully appreciate today just how radical those two offerings were at the time we launched them,” Bezos wrote of Prime and Fulfillment. “We invested in both of these programs at significant financial risk and after much internal debate … We could not foresee with certainty what those programs would eventually look like, let alone whether they would succeed, but they were pushed forward with intuition and heart, and nourished with optimism.”

Its $30 billion Amazon Web Services (AWS) division is another example.

“No one asked for AWS. No one. Turns out the world was in fact ready and hungry for an offering like AWS but didn’t know it,” he added. “We had a hunch, followed our curiosity, took the necessary financial risks and began building—reworking, experimenting and iterating countless times as we proceeded.”

And, of course, its checkout-free retail experience, Amazon Go, and voice-enabled Echo devices and the voice assistant Alexa also prove Amazon is a pioneer in its own right.

“No customer was asking for Echo … Market research doesn’t help,” Bezos said. “If you had gone to a customer in 2013 and said, ‘Would you like a black, always-on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions, that also turns on your lights and plays music?’ I guarantee you they’d have looked at you strangely and said, ‘No, thank you.’”

4. Amazon occasionally has multibillion-dollar failures.

Bezos said a company the size of Amazon requires experimentation that might occasionally result in multibillion-dollar losses. It’s just part of being a good corporate citizen, he added.

5. Bezos is challenging Amazon competitors to raise the minimum wage.

He noted Amazon raised its minimum wage to $15 an hour for more than 250,000 employees and 100,000 seasonal employees.

“We had always offered competitive wages. But we decided it was time to lead—to offer wages that went beyond competitive,” he said. Bezos then invited its “top retail competitors (you know who you are!)” to match Amazon’s minimum wage and employee benefits—or even “throw the gauntlet back at us” by raising their minimum wage to $16.

In response, Walmart’s evp of corporate affairs (and former George W. Bush spokesperson) Dan Bartlett did what we all do, which is use Twitter to throw haymakers at its competitor, tweeting:


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@lisalacy lisa.lacy@adweek.com Lisa Lacy is a senior writer at Adweek, where she focuses on retail and the growing reach of Amazon.
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