(Bloomberg)—Amazon.com Inc. CEO Jeff Bezos said the e-commerce giant has exceeded 100 million paid Prime subscribers and will continue to invest to meet “ever-rising” customer expectations.
Bezos noted the milestone in his annual shareholder letter, published Wednesday. The letter is the founder’s opportunity to underline his long-term strategy for investors, seeking to bolster their confidence as he continues to plow Amazon’s money into expanding internationally, building a brick-and-mortar presence, and inventing new products like Echo speakers and the Alexa voice-activated digital assistant.
Bezos cited Amazon’s continued high marks from independent surveys, including the American Customer Satisfaction Index, as proof that the company continues to invent new ways to satisfy customers, giving them new things they didn’t realize they wanted.
“You cannot rest on your laurels in this world,” he wrote. “Customers won’t have it.”
The CEO also said that in 2017 Amazon shipped more than 5 billion items with Prime worldwide and more new members joined Prime than in any previous year. He added that 2017 was best year for hardware sales and that the company will continue to invest aggressively to expand its customer base, brand and infrastructure.
Amazon shares rose 1.5% in extended trading after the letter was published.
Investors aren’t drawn to Amazon for its profits. The company’s margins have been slimmer than 2% since 2011. They’re investing instead in Bezos’s ability to push into new markets and find fresh sources of revenue, which jumped 31% last year to $178 billion. Amazon shares are up almost 70% in the past year, nearly five times the gain in the Standard & Poor’s 500 Index.
Amazon has a big lead in cloud computing, a profitable and fast-growing market. It’s building an advertising business to capitalize on its consumer web traffic. And the Seattle-based company is betting the Alexa voice-activated platform will become the next wave of interactions between people and devices, supplementing the computer mouse and touch-screen interfaces.
The company also faces new threats. U.S. President Donald Trump has complained that Amazon doesn’t pay its fair share of taxes, claims the company is hurting traditional retailers, and says it gets a sweetheart deal from the post office — a complaint that could drive up Amazon’s delivery costs if it leads to new postal service package rates. And Amazon is locked in a costly price war with Walmart Inc. as the two retail behemoths fight for dominance of the $800 billion grocery business.
To maintain investor faith, Bezos always includes his 1997 shareholder letter to remind them of his ability to foresee the way the internet would change the nature of shopping. He also offers anecdotes, like him driving to the post office in his Chevy Blazer and dreaming of owning a forklift one day, to recall how far the company has progressed.
As the world’s wealthiest man, Bezos’s strategy and outlook have developed a cult-like following similar to that of Warren Buffett, whose annual letters to Berkshire Hathaway Inc. investors are must-reads for those looking to understand the economy and Buffett’s investment strategy. Buffett now ranks third on the Bloomberg Billionaires Index, behind Bezos and Microsoft Corp. founder Bill Gates.
Amazon is No. 1 in the Internet Retailer 2017 Top 500.