While growing Amazon from $1M to $1.6 trillion, Jeff Bezos wrote 23 letters to shareholders spelling out his plan each year. I printed and read them. In them, he wrote 'Amazon' only 430 times but 'Customer' 506 times. Nothing has changed my view of entrepreneurship more...
Jeff Bezos's entire CEO personality is 'customer obsession' 1. New hires are given a "customer-obsessed" sticker to put on their notebooks 2. Created an empty board seat in his meetings for the 'customer' 3. When customers faced video streaming pauses or buffering on Prime, they
At 22, I emailed Jeff Bezos to return a steamer I had bought on Amazon. My email: 11:02 PM. Next morning, I got a call at 8:45 AM. My father (linked number) got a call at 9:53 AM. We couldn't pick up. They took the loss on the non-refundable product to refund me the money
They emailed me several times. A new 'Executive Customer Relations' person emailed me with every new shift to basically chase me to refund the money and accept my return. The email signature read "Building Earth's most customer-centric company." I believed them ever since.
I've been a huge fan of Bezos and Amazon. So I printed all his letters and read them multiple times. In this thread, I will explain: 1. Why is Bezos so customer-obsessed? 2. How has he indoctrinated customer-obsession in every aspect of Amazon?
"Long-term, there is no misalignment between customer interest and shareholder interest" - Bezos In this last letter, Bezos calculated: Of all the value Amazon has created, how much value has it created for customers? Customer Obsession IS his business strategy.
Bezos identified that only 4 things matter in a customer's shopping experience: -Lower Prices -More Variety -More info to make a purchase decision -Faster delivery He would go on to spend 27 years and >$100B to become indisputably the best service across all four verticals.
Today: Amazon is synonymous with the lowest prices. It has the largest selection of goods (350 M+ products), the most trusted reviews of any website, and the fastest delivery speed.
How did he do it? Let me take examples of decisions he's made that hurt the business short term but are good for customers long-term.
Bezos saw a 100 best-selling books list from a bookstore. He sent teams to check the prices of all hundred titles across all their superstores to see if anything was cheaper than at Amazon. They found 3 books that were cheaper, and they reduced their prices on Amazon.
Jeff Bezos ordered to build automated systems to refund customers when they have anything less than a perfect experience with Amazon.
Customers were complaining about waiting 10+ minutes on Amazon's helpline. An Amazon employee said the average wait time is 60 seconds. Bezos said to every executive in the room, "Let's call and find out" https://youtu.be/aGkuPk94JNk?s...
Bezos would reserve one empty chair in every meeting for 'the customer.'
One of my cousins got a sticker pack from Amazon for recently joining them. There's a sticker called 'Customer Obsession"
To offer the widest selection of products on earth, Amazon made major bets: 1. Marketplace model: Allow third-party sellers to list their products on Amazon, dramatically increasing variety without Amazon investing in inventory.
2. Fulfillment by Amazon (FBA): Built warehouses and logistics for everyone on earth, just to enable more sellers to sell on Amazon, expand the product selection, and make customers happier.
3. Uses Customer Search Data to identify unfulfilled demand and expand into those categories with Amazon Basics.
Faster Deliveries: Amazon Prime: 2-day deliveries for customers, $7.2B in losses (and counting) for shareholders. In 2016, Amazon’s net shipping losses (what customers paid for shipping and what Amazon spent) had ballooned to $7.2 billion annually due to Prime.
Amazon was the only major seller to have reviews. Even though it hurt short-term sales. “We don’t make money when we sell things. We make money when we help customers make purchase decisions.”
"Amazon's legacy, I hope, is Earth's most customer-centric company.
If you're interested, I recommend reading all of the below. Read the 1997 letter first, then the 2016 letter.
I've a PDF version of all the letters with all my Kindle highlights:
Retweet the top tweet and you'll automatically get the PDF.
While editing this, I realized I used 'Amazon' 30 times and 'Customer' 26 times. Bezos wouldn't like that, so I fixed it.
Customer, Customer, Customer, Customer, Customer.
@ruchirjajoo loved the insights here.
@aaditsh thanks!
@ruchirjajoo Consider reading all of Buffett’s too.
@AdamDudleyX Lot left to go through but I enjoy his shareholder meetings more
@ruchirjajoo Great thread, the way to think about the durable competitive advantage that was built was the framework known as shared efficiencies/economies scaled. Anytime Amazon got efficiencies of scale they ensured it provided value directly to the customer via price, shipping time or
@varunv_malhotra Jim Senegal was a huge inspiration for Bezos actually
@ruchirjajoo Loved the breakdown.
@JivanshuSharma4 thanks Jivanshu