Amazon CEO Bezos to Shareholders: No, We Are Not a Charity

×


​Amazon (AMZN) CEO Jeff Bezos insisted in his annual letter to shareholders that the company's low prices and razor-thin profits don't mean that the retail giant is a charity.

"Our heavy investments in Prime, [Amazon Web Services], Kindle, digital media, and customer experience in general strike some as too generous, shareholder indifferent, or even at odds with being a for-profit company," he acknowledged in a letter posted today to the site's investor relations page. He went on to quote journalist Matthew Yglesias, who described the company as "a charitable organization being run by elements of the investment community for the benefit of consumers."

Bezos strongly disagreed with that description.

"Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas," he writes. "Take a long-term view, and the interests of customers and shareholders align."


The notion that Amazon is more concerned with consumers than shareholders isn't entirely unfounded. Despite its billions in revenue, Amazon regularly posts tiny profits -- if it posts a profit at all. In its latest earnings statement, it projected a net loss for the first quarter of 2013.

But Bezos makes a compelling case that the company's reputation for customer service serves it well in the long run. He notes, for instance, that Amazon proactively monitors the price of preordered items and automatically lowers the price for the customer. While that means the company is giving its customers money they didn't ask for -- see where that "charity" accusation comes from? -- he insists that the boost to the company's reputation is worth it in the long-run.

"Our policy could be to require the customer to contact us and ask for the refund," he says. "Doing it proactively is more expensive for us, but it also surprises, delights, and earns trust."

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

Increase your money and finance knowledge from home

Intro to Retirement

Get started early planning for your long term future.

View Course »

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Add a Comment

*0 / 3000 Character Maximum

42 Comments

Filter by:
laugh

WOW - a company that cares more about consumers than shareholders?!?!
Now THAT'S news.

April 15 2013 at 8:27 AM Report abuse rate up rate down Reply
tryworkingatamazon

Sure wish all you people who LOVE Amazon would come and work here for a week. Bet you couldn't make it 2 days walking on cement floors 20 miles a day for 10 hours a day 4 days a week and most times 5 days a week. Having a company that treats you like a kid all the time writing people up for taking a break longer then 15 minutes even if your 10 seconds late. Writing people up for not making your numbers everyday. Expecting you to pick 240 items a hour even if you have to go from one end of the warehouse to the other and go up 3 flights of stairs. There pick pattern sucks and they don't care. They have a point system whether your kid is in the hospital or not they point you and will fire you if you get 6 points. They treat you like a number not a person. With the economy the way it is people can't quit and they know it. The only thing I have to look forward to is im a temp employee and once I work 1200 hours I will be laid off and get unemployment. The poor amazon employees have nothing to look forward too. 90% of employees are temps. They don't hire fulltime employees. So if you guys think its a excellent value and great opportunity think of us workers.

April 15 2013 at 12:35 AM Report abuse rate up rate down Reply
ga7smi

can't understand why anyone shops on Amazon - I do better with local businesses - and I always check Amazon before I buy - for examle I bought a kitchen appliance that was $75.00 on Amazon and 65.00 at COSTCO - and I get great return policy to boot

April 15 2013 at 12:04 AM Report abuse +1 rate up rate down Reply
Alison McElroy

I have moved all of my purchasing to Amazon including as much grocery as practicable. Prime is an excellent value. Keep up the good work!

April 14 2013 at 8:28 PM Report abuse -1 rate up rate down Reply
John Menapace

Amazon has benefited me in giving me the opportunity to self-publish and find distribution. Amazon is opportunity. ~ J.C.Menapace

April 14 2013 at 5:34 PM Report abuse -1 rate up rate down Reply
TINKDAY

No, Amazon is not a charity,but neither are the tax payers of this country and letting corporations that have hundreds of millions or billions in profits pay little or no Fed. income tax when government is raising taxes, wanting to cut SS.{ even though the only problem with SS. is that government has borrowed out of it} passing higher health care costs on to what's left of the middle class, but not to government employees and having every city, county, and state raising taxes,fees tolls and adding new taxes ,fees ,and tolls, but not touching outrageous benefits that they have, something really smells rotten.

April 14 2013 at 3:12 PM Report abuse -1 rate up rate down Reply
prietopage

I am one of the many customers that always looks at Amazon before I buy anything online because of these policies. I spend a lot more money at their site than I do anywhere else. My husband and I own 5 Kindles between us and not a week goes by that we don't purchase something for them. In addition most of my MP3 purchases are through Amazon. I have also bought big ticket items such as a lawn mower, a treadmill, a vacuum cleaner from Amazon. I buy books, movies, Christmas gifts, and I could go on and on. The stockholders that are complaining are foolish and short-sighted. If you treat customers right you build longterm loyalty. In this day and age there are not many companies that have earned my loyalty but Amazon is definitely one.

April 14 2013 at 2:37 PM Report abuse +1 rate up rate down Reply
weissguys

I am a 67 year old successful business man who has never written a comment on anything like this before. It is all very interesting. Here you have a company that posts profits, maybe not as high as some other companies as a percentage, but has a good long term outlook. They are not gouging the consumer because they want to be around for a long term. I know some shareholders are unhappy but many of these are the same people who on the other hand complain about the greed
in corporations today. They are doing business the old fashion way where the company makes money and the consumer gets a good deal. This is what America used to be about and why we as a country grew so strong. Conratulations Amazon

April 14 2013 at 1:26 PM Report abuse +1 rate up rate down Reply
pdbocc

The company is great, I agree. The part of the business I have a problem with is when they "subcontract" the warehouse operation to a independent company. These employees are not "amazon" employees who earn benefits, they typically earn close to minimum wage with no benefits and have to fill orders at breakneck speed. They can be let go at any time, even after years of employment, if their performance drops below established levels, with no allowance for age. I love the low prices but those low prices are at the expense of some poorly compensated, no benefit employees.. If Mr Bezos were truly concerned about the "customer" he would realize that without his employees, "contracted" or otherwise, he would have no business at all.

April 14 2013 at 12:29 PM Report abuse -2 rate up rate down Reply
joeomar

I buy so much stuff from them I'm surprised they haven't put in a distribution warehouse next door. Their prices are usually fine, their speed-of-delivery is terrific, but more than any other reason their range of products (including their partners) is phenomenal. My local camera shop couldn't sell me the high-end photo printer I wanted because they weren't licensed by Epson to sell "Pro Printers", so I bought it at Amazon. Obscure electrical circuit-monitoring equipment - Amazon. Pretty much any movie ever put to DVD - Amazon. I wanted a kitchen timer that would set "seconds" (in addition to hours and minutes), Target only carried ONE, that's ONE, brand, Amazon had dozens to choose from. I once drove to three JC Penneys store looking for just a couple pairs of Levi's 550 jeans and couldn't find them, so I went home, ordered thru Amazon, got them two days later. Now I don't go to JC Penneys anymore. In fact I don't understand why anybody bothers to spend hours driving around their city trying to find a specific item (and failing half the time) when you can just take 90 seconds to buy it online. If it's being sold anywhere at ALL, you can usually find it through Amazon.

April 14 2013 at 11:48 AM Report abuse -1 rate up rate down Reply