'Create Value for Everyone,' Says Bezos in Final Amazon Shareholder Letter
Staggering numbers stood out in Amazon founder Jeff Bezos’ final shareholder letter as CEO, in Thursday's posting, citing the e-commerce pioneer’s revenue growth, employee expansion and towering stock price rise from its opening $18 per share valuation when it went public 12 years ago next month. Bezos will transition in Q3 to executive chairman, relinquishing the CEO post to Amazon Web Services CEO Andy Jassy.
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Of the company’s $386 billion revenue in 2020, $301 billion was value created for consumer and AWS customers ($164 billion), employees ($91 billion), third-party sellers ($25 billion) and shareholders ($21 billion), said Bezos. The goal of a business “should be to create value for everyone you interact with,” said the outgoing CEO.
Bezos calculated value to customers in terms of time savings. Customers complete 28% of purchases on Amazon in three minutes or less, and half of all purchases are finished in less than 15 minutes, said Bezos. He compared that time with “about an hour” shoppers spend in the physical store experience, which he described as driving, parking, searching aisles, waiting in a checkout line, finding the car and driving home. He estimated a "conservative" $10 per hour in time savings, leading to “more than 75 hours a year saved.” After subtracting the cost of Prime membership for the loyalty program's some 200 million members, he pegged Amazon’s “value creation” for Prime customers at $630 per member, or $126 billion last year.
Bezos estimated the company’s value creation for customers using the Amazon Web Services cloud computing platform last year at $38 billion, based on the assumption that operating in the cloud delivers a 30% improvement in costs, along with the increased speed AWS provides in software development. AWS revenue was $45 billion.
In 2020, Amazon’s 1.3 million employees earned $80 billion, “plus another $11 billion to include benefits and various payroll taxes, for a total of $91 billion,” he said. Third-party seller profits from selling on Amazon were estimated at $25 billion-$39 billion, he said.
Bezos said he contributed an eighth of the $1.6 trillion of wealth Amazon has created for shareholders since the stock began trading. The remaining beneficiaries of Amazon’s prosperity include pension funds, universities, 401(k) plans and individuals, he said. The stock closed marginally higher Thursday at $3,379.09.
The executive addressed negative news reports on Amazon’s treatment of employees and last week’s vote at Amazon’s BHM1 fulfillment center in Bessemer, Alabama, in which less than 16% of employees voted to join a union. “Does your Chair take comfort in the outcome of the recent union vote in Bessemer? No, he doesn’t. I think we need to do a better job for our employees,” he said. Bezos said the company’s direct relationship with employees “is strong, adding: “It’s clear to me that we need a better vision for how we create value for employees -- a vision for their success."