Amazon.com 2008 Annual Report Download - page 4

Download and view the complete annual report

Please find page 4 of the 2008 Amazon.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

Fast, reliable delivery is important to customers. In 2005, we launched Amazon Prime. For $79 per year,1Prime
members get unlimited express two-day shipping for free and upgrades to one-day delivery for just $3.99. In
2007, we launched Fulfillment by Amazon, a new service for third-party sellers. With FBA, sellers warehouse
their inventory in our global fulfillment network, and we pick, pack, and ship to the end customer on the sellers’
behalf. FBA items are eligible for Amazon Prime and Super Saver Shipping – just as if the items were Amazon-
owned inventory. As a result, FBA both improves the customer experience and drives seller sales. In the fourth
quarter of 2008, we shipped more than 3 million units on behalf of sellers who use Fulfillment by Amazon, a
win-win for customers and sellers.
Prudent Spending
The customer-experience path we’ve chosen requires us to have an efficient cost structure. The good news for
shareowners is that we see much opportunity for improvement in that regard. Everywhere we look (and we all
look), we find what experienced Japanese manufacturers would call “muda” or waste.2I find this incredibly
energizing. I see it as potential – years and years of variable and fixed productivity gains and more efficient,
higher velocity, more flexible capital expenditures.
Our primary financial goal remains maximizing long-term free cash flow and doing so with high rates of return
on invested capital. We are investing heartily in Amazon Web Services, in tools for third-party sellers, in digital
media, in China, and in new product categories. And we make these investments with the belief that they can be
of meaningful scale and can clear our high bar for returns.
Around the world, amazing, inventive, and hard-working Amazonians are putting customers first. I take great
pride in being part of this team. We thank you, our owners, for your support, for your encouragement, and for
joining us on our continuing adventure.
As always, I attach our 1997 letter to shareowners. Even as the rate of change accelerates, we hope and believe
our focus on what stays the same should serve us well.
Jeffrey P. Bezos
Founder and Chief Executive Officer
Amazon.com, Inc.
April 2009
1Prime is a global program. ¥3,900 in Japan, £48 in the UK, €29 in Germany, and €49 in France.
2At a fulfillment center recently, one of our Kaizen experts asked me, “I’m in favor of a clean fulfillment
center, but why are you cleaning? Why don’t you eliminate the source of dirt?” I felt like the Karate Kid.