Amazon founder Bezos stepped down from Amazon as CEO on 5th July, a day before he blasted off to the edge of space. But Bezos remains associated with his company (Amazon) as Executive Chair to focus on innovation and other business and Andy Jassy, a trusted deputy of Bezos, took over the CEO role. As Amazon is a professionally managed company, Bezos stepping down as CEO should not affect the company in any way. Bezos will continue to play an important role at Amazon and will remain closely involved even after he moves into his new role for new product development and key leverage areas of innovation. Amazon was a startup founded by Bezos in 1995, which has become an e-commerce giant. Bezos will now focus on nourishing other such startup projects for the next leg of growth for Amazon.
In his February 2021 letter announcing his stepping down as Amazon CEO to the new role of Executive Chair, Bezos said:
“In my upcoming role as Executive Chair, I’m going to focus on new initiatives. I’m an inventor. It’s what I enjoy the most and what I do best. It’s where I create the most value. I’m excited to work alongside the large team of passionate people we have in Ops and help invent in this arena of Earth’s Best Employer and Earth’s Safest Place to Work. On the details, we at Amazon are always flexible, but on matters of vision, we are stubborn and relentless. We have never failed when we set our minds to something, and we’re not going to fail at this either.
In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. This journey began some 27 years ago. Amazon was only an idea, and it had no name. The question I was asked most frequently at that time was, ‘What’s the internet?’—Blessedly, I haven’t had to explain that in a long while.”
Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention to anything else. As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.”
Amazon’s business model:
Amazon’s services include products and content that it purchases for resale from vendors and those offered by 3rdparty sellers. Amazon also manufactures and sells various electronic devices including Kindle, Fire tablet, Fire TV, Echo, Ring, and other devices, and it develops and produces media content. Amazon primarily functions through three verticals: North America, Amazon Web Services (AWS), and International.
Almost 51% of Amazon’s revenue comes from online stores, 21% from 3rd party products and services, 12% from AWS, 7% from subscription services (Amazon Prime), 5% from physical stores, and the rest around 6% from miscellaneous products and services.
Amazon history:
In brief, Amazon is a great business model and a household name worth almost $2T. Amazon started in Bezos’ Seattle garage as a small startup venture in 1994 after Bezos quit his job in a Wall Street hedge fund. Bezos’ fascination with the internet at that time eventually led him to create Amazon.com. Amazon started as a humble online bookstore witha dozen employees, including Bezos’ wife and a couple of software programmers.
As the online book business grew, Bezos, the innovator and entrepreneur, ventured into another segment of online shopping and launched the ‘1-click’ purchase concept in late 1997. In 2005, Amazon Prime was launched, which is a subscription-based service for free delivery (same day/two day) along with some other value-added services like Amazon Instant Video, Prime Music, and Prime Photos, etc. Soon Amazon became part and parcel of the everyday American lifestyle, creating a trend followed by various countries globally. Amazon Prime has grown to become a membership program (OTT platform) that includes free shipping, access to streaming 3rd party content (various movies and television episodes), as well as Amazon’s own content.
Then in 2006, Amazon launched AWS(Amazon Web Services), a cloud computing division. AWS offers a set of technology services including data storage, database analytics, and AI application. The revenue of AWS is higher than Amazon’s e-commerce sales. After AWS, Bezos brought some blockbuster online gadgets and devices like the Kindle e-reader in 2007 and the Amazon Fire tablet in 2011, which gave the Apple iPad a lot of headaches. In 2014, Amazon launched Fire TV Stick, a dongle for flat-screen TVs to watch mobile video content like YouTube on a TV.
In 2013, Amazon launched Alexa, a virtual assistant (AI like Google assistant), first used in the Amazon Echo smart speaker and the Echo Dot, Echo Studio, and Amazon Tap speakers. Alexa can also control various smart devices using itself as a home automation system.
In September 2019, Amazon launched various new Alexa-enabled devices, achieving many records while competing with the world’s smart home industry. Alexa is in almost everything from smart TVs, watches, headphones, speakers and alarm clocks, to light bulbs, and even shower heads, as it has been licensed to other hardware manufacturers.
Inorganic expansion of Amazon group by Bezos:
Amazon also bought streaming platform Twitch in 2014, organic grocer Whole Foods in 2017, smart video doorbell and security camera maker Ring in 2018, and recently MGM, the movie and TV studio, for its streaming business.Bezos is also a big investor in various tech startups including Google, Twitter, Uber, and Airbnb. Bezos also owned the Washington Post and invested in various media platforms including Business Insider.Bezos now venturing into commercial space tourism through his new acquisition of Blue Origin, an aerospace exploration company, through which he flew to the edge of space recently.
Under Bezos, Amazon grew in both organic and inorganic ways, which will continue more robustly in his new role as Executive Chair of Amazon:
Bezos said: “How did that happen? Invention–invention is the root of our success. We’ve done crazy things together, and then made them normal. If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive.If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with. Any business that doesn’t create value for those it touches, even if it appears successful on the surface, isn’t long for this world. It’s on the way out.”
Bottom line:
As an innovator for the online shopping concept in the 1990s, Bezos’s digital innovation impacted the world during COVID lockdowns in the 2020s.Bezos will remain active as an innovator at Amazon for the next leg of the journey in this digital age; he is not going anywhere in this restructuring of Amazon. Amazon, being a digital tech company as well as a supplier of both essential and non-essential products & services, is a part and parcel of a ‘K’-shaped (uneven) economic recovery post-COVID. Bezos will now focus more on innovation and organic/inorganic expansion of the Amazon group as Executive Chair, as he will be less focused on day-to-day issues as CEO.
In brief, Amazon is a great business model and a household name with Bezos, the public face of the company, be it as CEO or any other role. During the COVID-19 pandemic, Amazon’s share prices experienced plenty of volatility, hitting a low of $1626 in March of 2020, followed by a lifetime high a year later of $3773 in July of 2021, a 132% increase. By 2022-2024, some analysts think Amazon share prices may even hit the $4270-5500 range. Amazon is currently trading around $3180.
