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When you’re the CEO of Amazon.com, you get to have fun at the shareholder’s meeting.
While many tech execs these days are sweating their way through the yearly ritual — facing grim forecasts and unhappy shareholders — Amazon (NASDAQ: AMZN) chief Jeff Bezos gave every indication of enjoying his day in front of the e-tail juggernaut’s investors.
During today’s shareholder meeting, Bezos shared wacky tales of live elephant births relayed using cloud computing, directed an on-stage contest to show off a new packaging feature, waxed poetic about his vision of a paperless society using Kindle DX and got nostalgic when talking about the days before the online giant sold thousands of windshield wiper blades.
But joking and storytelling weren’t the only highlights of the meeting: The company gave some tantalizing hints on where it might be heading next — and where it won’t be.
For instance, Amazon won’t have color displays for Kindles for at least several years (much to the chagrin, no doubt, of gadget gossip-mongers.) The company is pilot-testing food sales and delivery in Seattle, however, and it’s aiming to cash in on e-commerce in China through a partnership there.
Bezos and Amazon are afforded this kind of relative calm thanks to the company’s strong continued performance in one of the worst economic downturns in recent memory.
While competitors such as eBay struggle to maintain market share in the midst of significant restructuring, Amazon continues to fine-tune its core customer experience strategy, expand services for third-party online sellers and roll out successful new product lines, such as the Kindle series.
Bezos attributed Amazon’s success to a laser-focus on customer experience, and went on to tout the many offerings of the e-commerce giant — from the Kindle e-reader to its elastic cloud Web services.
“If you identify the key needs of customers, those are unlikely to change over a 10-year period, so if you base your strategy on those durable components, that energy pays off in dividends way into the future,” Bezos said.
Focus on customer service
To demonstrate his point, he held a contest between two staff members charged with unwrapping a toy pirate ship. The idea was to show off Amazon’s newly introduced “Frustration-Free packaging,” in which customers can choose to have select items, such as toys and consumer electronics, delivered without all the wire ties, plastic clamshell casings and other trappings found in traditional retail packaging.
“We introduced Frustration-Free Packaging last year, and it surprised us how much it delighted our customer base. Many holiday mornings were ruined by wire ties — there’s 36 inches of it on this [toy],” he said, joking that to even get the packaging open, “you need a small nuclear device.”
Amazon also has said it works with manufacturers to deliver products direct to its warehouse without any of the unnecessary packaging.
“It’s more environmentally friendly, it saves the manufacturer money, it saves the customer time — everyone wins,” Bezos said.
Focusing on such minute details of customer satisfaction indeed seems to be paying off, as Amazon continues to buck the recessionary trend with first-quarter profits and revenues well above analysts’ expectations — a 24-percent increase from the same period last year.
Part of that success is coming from Amazon’s core offerings of special shipping promotions and efforts such as Amazon Prime — a program that enables members to pay a yearly fee to get free two-day delivery on items, as well as other discounted shipping options.
Windshield wipers to Web services
Bezos also attributed the company’s growth to its effort to continue adding new categories of product to its vast inventory. He added that the company saw an 18-percent jump in third-party sellers compared to last year.
Presenting a slide of a windshield wiper blade, he told the audience it had sentimental value for special reasons.
“More than 10 years ago, when I would be asked what I envision Amazon selling, I would say it could even be windshield wiper blades,” Bezos said. “And two weeks ago, I saw a day when we sold more than 10,000 of these.”
But recent years have seen Amazon’s reach extending well beyond its core e-commerce business — efforts like Amazon Web Services (AWS) that Bezos also said have proven successful.
The Amazon chief touted the growth of AWS’s Elastic Computer Cloud (EC2) cloud computing offering, which allows companies to pay for server time in the cloud on a metered basis, instead of buying and maintaining their own.
“Using the Elastic Computer Cloud is not just a cost savings, it’s a whole new way to consume computational business resources,” he said.
The Kindle e-book reader also represents a relatively new area for Amazon — one that’s likewise paying off, it said.
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[cob:Special_Report]Bezos said the library of books compatible with the basic Kindle model has grown to 285,000 titles, and that for books available in both Kindle and in physical form, sales are now tracking at 35 percent for Kindle.
He reiterated the advantages of the Kindle’s wireless delivery of books, saying that’s largely why it’s so successful — and pointed out that the device’s uptake has come despite the lack of a marketing budget for the device.
“It’s a world-class product, and what’s driving Kindle sales is word-of-mouth,” he said. “That’s the highest compliment that can be paid to [the design team]. Advertising is the price you pay for having unremarkable products or services.”
Bezos sees the product being so remarkable that his vision for the future of Kindle includes the large-screen version — the new Kindle DX eventually serving not only as a way for people to read literature, but to transport documents, so printing them out no longer becomes necessary.
When asked during the end of the presentation when color screens would be offered on the Kindle, Bezos struck a more down-to-earth tone about the state of the current technology.
“I know it will be multiple years,” he said. “I’ve seen the color displays in the lab, and it’s not ready for primetime. I don’t know how many years, but it will be years.”
Another query pertained to sights of “Amazon Fresh” trucks on the streets of Seattle. The company is currently testing food delivery in that city, though it’s unclear what its next steps might be.
“It’s an experiment, a test just in Seattle,” Bezos said. “We need to see a combination of customer experience and financial success to expand the model, so for the foreseeable future, it’s just in Seattle.”
As far as expanding to China, Amazon is already delivering goods via bike messengers and allowing payment at the door to accommodate the needs of that market, he added.
“We’re planting a seed for 10 years out — in that time frame — so if we wait five years to start, it’s too late,” he said. “So we’re there now developing our relationships so we can enjoy those dividends one day. We bought a company there and co-branded it, and our strategy there is identical to everywhere else.”
