Amazon CEO Andy Jassy says in shareholder letter he’s confident he can get costs under control

Dear shareholders:

As I sit down to jot down my second annual shareholder letter as CEO, I discover myself optimistic and energized by what lies forward for Amazon. Despite 2022 being one of many tougher macroeconomic years in current reminiscence, and with a few of our personal working challenges besides, we nonetheless discovered a technique to develop demand (on high of the unprecedented development we skilled within the first half of the pandemic). We innovated in our largest companies to meaningfully enhance buyer expertise brief and long run. And, we made essential changes in our funding selections and the best way during which we’ll invent shifting ahead, whereas nonetheless preserving the long-term investments that we consider can change the way forward for Amazon for patrons, shareholders, and staff.

While there have been an uncommon variety of simultaneous challenges this previous yr, the truth is that if you happen to function in giant, dynamic, world market segments with many succesful and well-funded opponents (the situations during which Amazon operates all of its companies), situations hardly ever keep stagnant for lengthy.

In the 25 years I’ve been at Amazon, there was fixed change, a lot of which we have initiated ourselves. When I joined Amazon in 1997, we had booked $15M in income in 1996, had been a books-only retailer, didn’t have a third-party market, and solely shipped to addresses within the US. Today, Amazon sells practically each bodily and digital retail merchandise you’ll be able to think about, with a vibrant third-party vendor ecosystem that accounts for 60% of our unit gross sales, and reaches clients in just about each nation all over the world. Similarly, constructing a business round a set of know-how infrastructure providers within the cloud was not apparent in 2003 after we began pursuing AWS, and nonetheless wasn’t after we launched our first providers in 2006. Having just about each e-book at your fingertips in 60 seconds, after which with the ability to retailer and retrieve them on a light-weight digital reader was not “a thing” but after we launched Kindle in 2007, nor was a voice-driven private assistant like Alexa (launched in 2014) that you can use to entry leisure, management your good dwelling, store, and retrieve all types of knowledge.

There have additionally been instances when macroeconomic situations or working inefficiencies have offered us with new challenges. For occasion, within the 2001 dot-com crash, we needed to safe letters of credit score to purchase stock for the vacations, streamline prices to ship higher profitability for the business, but nonetheless prioritized the long-term buyer expertise and business we had been making an attempt to construct (if you happen to keep in mind, we really lowered costs in most of our classes throughout that tenuous 2001 interval). You noticed this kind of balancing once more in 2008-2009 as we endured the recession provoked by the mortgage-backed securities monetary disaster. We took a number of actions to handle the fee construction and effectivity of our Stores business, however we additionally balanced this streamlining with funding in buyer experiences that we believed may very well be substantial future companies with robust returns for shareholders. In 2008, AWS was nonetheless a reasonably small, fledgling business. We knew we had been on to one thing, nevertheless it nonetheless required substantial capital funding. There had been voices inside and out of doors of the corporate questioning why Amazon (recognized largely as a web based retailer then) could be investing a lot in cloud computing. But, we knew we had been inventing one thing particular that might create quite a lot of worth for patrons and Amazon sooner or later. We had a head begin on potential opponents; and if something, we needed to speed up our tempo of innovation. We made the long-term choice to proceed investing in AWS. Fifteen years later, AWS is now an $85B annual income run charge business, with robust profitability, that has remodeled how clients from start-ups to multinational firms to public sector organizations handle their know-how infrastructure. Amazon could be a unique firm if we might slowed funding in AWS throughout that 2008-2009 interval.

Change is at all times across the nook. Sometimes, you proactively invite it in, and typically it simply comes a-knocking. But, while you see it is coming, you must embrace it. And, the businesses that do that effectively over an extended time period often succeed. I’m optimistic about our future prospects as a result of I like the best way our staff is responding to the adjustments we see in entrance of us.

Over the final a number of months, we took a deep look throughout the corporate, business by business, invention by invention, and requested ourselves whether or not we had conviction about every initiative’s long-term potential to drive sufficient income, working revenue, free money move, and return on invested capital. In some instances, it led to us shuttering sure companies. For occasion, we stopped pursuing bodily retailer ideas like our Bookstores and 4 Star shops, closed our Amazon Fabric and Amazon Care efforts, and moved on from some newer gadgets the place we did not see a path to significant returns. In different instances, we checked out some packages that weren’t producing the returns we might hoped (e.g. free delivery for all on-line grocery orders over $35) and amended them. We additionally reprioritized the place to spend our assets, which finally led to the laborious choice to remove 27,000 company roles. There are a lot of different adjustments that we have made over the past a number of months to streamline our total prices, and like most management groups, we’ll proceed to guage what we’re seeing in our business and proceed adaptively.

We additionally appeared laborious at how we had been working collectively as a staff and requested our company staff to come back again to the workplace no less than three days per week, starting in May. During the pandemic, our staff rallied to get work performed from dwelling and did the whole lot doable to maintain up with the surprising circumstances that offered themselves. It was spectacular and I’m happy with the best way our collective staff got here collectively to beat unprecedented challenges for our clients, communities, and business. But, we do not assume it is the very best long-term method. We’ve turn into satisfied that collaborating and inventing is simpler and simpler after we’re working collectively and studying from each other in individual. The vitality and riffing on each other’s concepts occur extra freely, and lots of the greatest Amazon innovations have had their breakthrough moments from folks staying behind after a gathering and dealing by concepts on a whiteboard, or persevering with the dialog on the stroll again from a gathering, or simply popping by a teammate’s workplace later that day with one other thought. Invention is usually messy. It wanders and meanders and marinates. Serendipitous interactions assist it, and there are extra of these in-person than just about. It’s additionally considerably simpler to be taught, mannequin, observe, and strengthen our tradition after we’re within the workplace collectively more often than not and surrounded by our colleagues. Innovation and our distinctive tradition have been extremely essential in our first 29 years as an organization, and I count on it is going to be comparably so within the subsequent 29.

A crucial problem we have continued to sort out is the rising price to serve in our Stores success community (i.e. the fee to get a product from Amazon to a buyer)—and we have made a number of adjustments that we consider will meaningfully enhance our success prices and velocity of supply.

During the early a part of the pandemic, with many bodily shops shut down, our client business grew at a rare clip, with annual income rising from $245B in 2019 to $434B in 2022. This meant that we needed to double the success heart footprint that we might constructed over the prior 25 years and considerably speed up constructing a last-mile transportation community that is now the dimensions of UPS (together with a brand new sortation heart community to help with effectivity and velocity when objects wanted to traverse lengthy distances)—all within the span of about two years. This was no simple feat, and a whole bunch of hundreds of Amazonians labored very laborious to make this occur. However, not surprisingly, with that charge and scale of change, there was quite a lot of optimization wanted to yield the supposed productiveness. Over the final a number of months, we have scrutinized each course of path in our success facilities and transportation community and redesigned scores of processes and mechanisms, leading to regular productiveness positive aspects and price reductions over the previous few quarters. There’s extra work to do, however we’re happy with our trajectory and the significant upside in entrance of us.

We additionally took this event to make bigger structural adjustments that set us up higher to ship decrease prices and sooner velocity for a few years to come back. An excellent instance was reevaluating how our US success community was organized. Until lately, Amazon operated one nationwide US success community that distributed stock from success facilities unfold throughout your complete nation. If an area success heart did not have the product a buyer ordered, we might find yourself delivery it from different components of the nation, costing us extra and rising supply instances. This problem grew to become extra pronounced as our success community expanded to a whole bunch of further nodes over the previous few years, distributing stock throughout extra places and rising the complexity of connecting the success heart and supply station nodes effectively. Last yr, we began rearchitecting our stock placement technique and leveraging our bigger success heart footprint to maneuver from a nationwide success community to a regionalized community mannequin. We made vital inner adjustments (e.g. placement and logistics software program, processes, bodily operations) to create eight interconnected areas in smaller geographic areas. Each of those areas has broad, related choice to function in a largely self-sufficient means, whereas nonetheless with the ability to ship nationally when mandatory. Some of probably the most significant and laborious work got here from optimizing the connections between this massive quantity of infrastructure. We additionally proceed to enhance our superior machine studying algorithms to higher predict what clients in numerous components of the nation will want in order that we now have the precise stock in the precise areas on the proper time. We’ve lately accomplished this regional roll out and just like the early outcomes. Shorter journey distances imply decrease price to serve, much less influence on the surroundings, and clients getting their orders sooner. On the latter, we’re enthusiastic about seeing extra subsequent day and same-day deliveries, and we’re on observe to have our quickest Prime supply speeds ever in 2023. Overall, we stay assured about our plans to decrease prices, cut back supply instances, and construct a meaningfully bigger retail business with wholesome working margins.

AWS has an $85B annualized income run charge, remains to be early in its adoption curve, however at a juncture the place it’s important to remain targeted on what issues most to clients over the long-haul. Despite rising 29% year-over-year (“YoY”) in 2022 on a $62B income base, AWS faces short-term headwinds proper now as firms are being extra cautious in spending given the difficult, present macroeconomic situations. While some firms would possibly obsess over how they might extract as a lot cash from clients as doable in these tight instances, it is neither what clients need nor greatest for patrons in the long run, so we’re taking a unique tack. One of the various benefits of AWS and cloud computing is that when your business grows, you’ll be able to seamlessly scale up; and conversely, in case your business contracts, you’ll be able to select to offer us again that capability and stop paying for it. This elasticity is exclusive to the cloud, and does not exist while you’ve already made costly capital investments in your individual on-premises datacenters, servers, and networking gear. In AWS, like all our companies, we’re not making an attempt to optimize for anybody quarter or yr. We’re making an attempt to construct buyer relationships (and a business) that outlast all of us; and in consequence, our AWS gross sales and help groups are spending a lot of their time serving to clients optimize their AWS spend to allow them to higher climate this unsure economic system. Many of those AWS clients inform us that they don’t seem to be cost-cutting as a lot as cost-optimizing to allow them to take their assets and apply them to rising and ingenious new buyer experiences they’re planning. Customers have appreciated this customer-focused, long-term method, and we expect it’s going to bode effectively for each clients and AWS.

While these short-term headwinds soften our development charge, we like quite a lot of the basics that we’re seeing in AWS. Our new buyer pipeline is strong, as are our lively migrations. Many firms use discontinuous durations like this to step again and decide what they strategically wish to change, and we discover an rising variety of enterprises opting out of managing their very own infrastructure, and preferring to maneuver to AWS to benefit from the agility, innovation, cost-efficiency, and safety advantages. And most significantly for patrons, AWS continues to ship new capabilities quickly (over 3,300 new options and providers launched in 2022), and spend money on long-term innovations that change what’s doable.

Chip improvement is an efficient instance. In final yr’s letter, I discussed the funding we had been making in our general-purpose CPU processors named Graviton. Graviton2-based compute situations ship as much as 40% higher price-performance than the comparable newest era x86-based situations; and in 2022, we delivered our Graviton3 chips, offering 25% higher efficiency than the Graviton2 processors. Further, as machine studying adoption has continued to speed up, clients have yearned for lower-cost GPUs (the chips mostly used for machine studying). AWS began investing years in the past in these specialised chips for machine studying coaching and inference (inferences are the predictions or solutions {that a} machine studying mannequin gives). We delivered our first coaching chip in 2022 (“Trainium”); and for the commonest machine studying fashions, Trainium-based situations are as much as 140% sooner than GPU-based situations at as much as 70% decrease price. Most firms are nonetheless within the coaching stage, however as they develop fashions that graduate to large-scale manufacturing, they will discover that many of the price is in inference as a result of fashions are educated periodically whereas inferences are taking place on a regular basis as their related utility is being exercised. We launched our first inference chips (“Inferentia”) in 2019, they usually have saved firms like Amazon over 100 million {dollars} in capital expense already. Our Inferentia2 chip, which simply launched, presents as much as 4 instances increased throughput and ten instances decrease latency than our first Inferentia processor. With the large upcoming development in machine studying, clients will have the ability to get much more performed with AWS’s coaching and inference chips at a considerably decrease price. We’re not near being performed innovating right here, and this long-term funding ought to show fruitful for each clients and AWS. AWS remains to be within the early phases of its evolution, and has an opportunity for uncommon development within the subsequent decade.

Similarly excessive potential, Amazon’s Advertising business is uniquely efficient for manufacturers, which is a part of why it continues to develop at a brisk clip. Akin to bodily retailers’ promoting companies promoting shelf house, end-caps, and placement of their circulars, our sponsored merchandise and types choices have been an integral a part of the Amazon buying expertise for greater than a decade. However, in contrast to bodily retailers, Amazon can tailor these sponsored merchandise to be related to what clients are looking for given what we learn about buying behaviors and our very deep funding in machine studying algorithms. This results in promoting that is extra helpful for patrons; and in consequence, performs higher for manufacturers. This is a part of why our Advertising income has continued to develop quickly (23% YoY in This fall 2022, 25% YoY total for 2022 on a $31B income base), at the same time as most giant advertising-focused companies’ development have slowed over the past a number of quarters.

We attempt to be the very best place for advertisers to construct their manufacturers. We have close to and long-term alternatives that may assist us obtain that mission. We’re persevering with to make giant investments in machine studying to maintain honing our promoting choice algorithms. For the previous couple of years, we have invested in constructing complete, versatile, and sturdy planning and measurement options, giving entrepreneurs better perception into promoting effectiveness. An instance is Amazon Marketing Cloud (“AMC”). AMC is a “clean room” (i.e. safe digital surroundings) during which advertisers can run customized viewers and marketing campaign analytics throughout a spread of first and third-party inputs, in a privacy-safe method, to generate promoting and business insights to tell their broader advertising and marketing and gross sales methods. The Advertising and AWS groups have collaborated to allow firms to retailer their knowledge in AWS, function securely in AMC with Amazon and different third-party knowledge sources, carry out analytics in AWS, and have the choice to activate promoting on Amazon or third-party publishers by the Amazon Demand-Side Platform. Customers actually like this concerted functionality. We additionally see future alternative to thoughtfully combine promoting into our video, stay sports activities, audio, and grocery merchandise. We’ll proceed to work laborious to assist manufacturers uniquely interact with the precise viewers, and develop this a part of our business.

While it is tempting in turbulent instances solely to focus in your current giant companies, to construct a sustainable, long-lasting, rising firm that helps clients throughout a lot of dimensions, you’ll be able to’t cease inventing and dealing on long-term buyer experiences that may meaningfully influence clients and your organization.

When we take a look at new funding alternatives, we ask ourselves just a few questions:

• If we had been profitable, may it’s massive and have an affordable return on invested capital?
• Is the chance being well-served in the present day?
• Do we now have a differentiated method?
• And, do we now have competence in that space? And if not, can we purchase it shortly?

If we just like the solutions to these questions, then we’ll make investments. This course of has led to some expansions that appear simple, and others that some people may not have initially guessed.

The earliest instance is after we selected to broaden from simply promoting Books, to including classes like Music, Video, Electronics, and Toys. Back then (1998-1999), it wasn’t universally applauded, however on reflection, it appears pretty apparent.

The similar may very well be mentioned for our worldwide Stores enlargement. In 2022, our worldwide client section drove $118B of income. In our bigger, established worldwide client companies, we’re sufficiently big to be impacted by the slowing macroeconomic situations; nonetheless, the expansion in 2019-2021 on a big base was exceptional—30% compound annual development charge (“CAGR”) within the UK, 26% in Germany, and 21% in Japan (excluding the influence of FX). Over the previous a number of years, we have invested in new worldwide geographies, together with India, Brazil, Mexico, Australia, numerous European nations, the Middle East, and components of Africa. These new nations take a specific amount of fastened funding to get began and to scale, however we just like the trajectory they’re on, and their development patterns resemble what we have seen in North America and our established worldwide geographies. Emerging nations typically lack among the infrastructure and providers that our business depends on (e.g. fee strategies, transportation providers, and web/telecom infrastructure). To resolve these challenges, we proceed to work with numerous companions to ship options for patrons. Ultimately, we consider that this funding in serving a broader geographical footprint will permit us to assist extra clients the world over, in addition to construct a bigger free money flow-generating client business.

Beyond geographic enlargement, we have been working to broaden our buyer choices throughout some giant, distinctive product retail market segments. Grocery is an $800B market section within the US alone, with the typical family buying three to 4 instances per week. Amazon has constructed a considerably uncommon, however vital grocery business over practically 20 years. Similar to how different mass retailers entered the grocery house within the Nineteen Eighties, we started by including merchandise sometimes present in grocery store aisles that do not require temperature management equivalent to paper merchandise, canned and boxed meals, sweet and snacks, pet care, well being and private care, and wonder. However, we provide greater than three million objects in comparison with a typical grocery store’s 30K for a similar classes. To date, we have additionally targeted on bigger pack sizes, given the present price to serve on-line supply. While we’re happy with the dimensions and development of our grocery business, we aspire to serve extra of our clients’ grocery wants than we do in the present day. To accomplish that, we’d like a broader bodily retailer footprint provided that many of the grocery buying nonetheless occurs in bodily venues. Whole Foods Market pioneered the pure and natural specialty grocery retailer idea 40 years in the past. Today, it is a big and rising business that continues to boost the bar for wholesome and sustainable meals. Over the previous yr, we have continued to spend money on the business whereas additionally making adjustments to drive higher profitability. Whole Foods is on an encouraging path, however to have a bigger influence on bodily grocery, we should discover a mass grocery format that we consider is price increasing broadly. Amazon Fresh is the model we have been experimenting with for just a few years, and we’re working laborious to establish and construct the precise mass grocery format for Amazon scale. Grocery is a giant development alternative for Amazon.

Amazon Business is one other instance of an funding the place our ecommerce and logistics capabilities place us effectively to pursue this massive market section. Amazon Business permits companies, municipalities, and organizations to acquire merchandise like workplace provides and different bulk objects simply and at nice financial savings. While some areas of the economic system have struggled over the previous few years, Amazon Business has thrived. Why? Because the staff has translated what it means to ship choice, worth, and comfort right into a business procurement setting, consistently listening to and studying from clients, and innovating on their behalf. Some folks have by no means heard of Amazon Business, however, our business clients adore it. Amazon Business launched in 2015 and in the present day drives roughly $35B in annualized product sales. More than six million lively clients, together with 96 of the worldwide Fortune 100 firms, are having fun with Amazon Business’ one-stop buying, real-time analytics, and broad choice on a whole bunch of tens of millions of business provides. We consider that we have solely scratched the floor of what is doable thus far, and plan to maintain constructing the options our business clients inform us they want and need.

While many manufacturers and retailers efficiently promote their merchandise on Amazon’s market, there are additionally a lot of manufacturers and sellers who’ve launched their very own direct-to-consumer web sites. One of the challenges for these retailers is driving conversion from views to purchases. We invented Buy with Prime to assist with this problem. Buy with Prime permits third-party manufacturers and sellers to supply their merchandise on their very own web sites to our giant Amazon Prime membership, and supply these clients quick, free Prime delivery and seamless checkout with their Amazon account. Buy with Prime gives retailers a number of further advantages, together with Amazon dealing with the product storage, choosing, packing, supply, fee, and any returns, all by Amazon Pay and Fulfillment by Amazon. Buy with Prime has lately been made out there to all US retailers; and to date, Buy with Prime has elevated shopper conversion on third-party buying websites by 25% on common. Merchants are enthusiastic about changing extra gross sales and fulfilling these shipments extra simply, Prime members love that they’ll use their Prime advantages on extra locations, and Buy with Prime permits us to enhance the buying expertise throughout extra of the net.

Expanding internationally, pursuing giant retail market segments which are nonetheless nascent for Amazon, and utilizing our distinctive property to assist retailers promote extra successfully on their very own web sites are considerably pure extensions for us. There are additionally just a few investments we’re making which are farther from our core companies, however the place we see distinctive alternative. In 2003, AWS would have been a traditional instance. In 2023, Amazon Healthcare and Kuiper are potential analogues.

Our preliminary efforts in Healthcare started with pharmacy, which felt much less like a significant departure from ecommerce. For years, Amazon clients had requested us after we’d supply them a web based pharmacy as their frustrations mounted with present suppliers. Launched in 2020, Amazon Pharmacy is a full-service, on-line pharmacy that gives clear pricing, simple refills, and financial savings for Prime members. The business is rising shortly, and continues to innovate. An instance is Amazon Pharmacy’s current launch of RxPass, which for a $5 monthly flat charge, allows Prime members to get as lots of the eligible prescription drugs as they want for dozens of frequent situations, like hypertension, acid reflux disease, and nervousness. However, our clients have continued to specific a powerful need for Amazon to supply a greater various to the inefficient and unsatisfying broader healthcare expertise. We determined to begin with major care as it is a prevalent first cease within the affected person journey. We evaluated and studied the prevailing panorama extensively, together with some early Amazon experiments like Amazon Care. During this course of, we recognized One Medical’s patient-focused expertise as a superb basis upon which to construct our future business; and in July 2022, we introduced our acquisition of One Medical. There are a number of parts that clients love about One Medical. It has a incredible digital app that makes it simple for sufferers to debate points with a medical practitioner through chat or video convention. If a bodily go to is required, One Medical has places of work in cities throughout the US the place sufferers can e-book similar or subsequent day appointments. One Medical has relationships with specialty physicians in every of its cities and works intently with native hospital methods to make seeing specialists simple, so One Medical members can shortly entry these assets when wanted. Going ahead, we strongly consider that One Medical and Amazon will proceed to innovate collectively to alter what major care will appear like for patrons.

Kuiper is one other instance of Amazon innovating for patrons over the long run in an space the place there’s excessive buyer want. Our imaginative and prescient for Kuiper is to create a low-Earth orbit satellite tv for pc system to ship high-quality broadband web service to locations all over the world that do not at the moment have it. There are a whole bunch of tens of millions of households and companies who do not have dependable entry to the web. Imagine what they will have the ability to do with dependable connectivity, from folks taking on-line training programs, utilizing monetary providers, beginning their very own companies, doing their buying, having fun with leisure, to companies and governments enhancing their protection, effectivity, and operations. Kuiper will ship not solely accessibility, however affordability. Our groups have developed low-cost antennas (i.e. buyer terminals) that may decrease the obstacles to entry. We lately unveiled the brand new terminals that may talk with the satellites passing overhead, and we count on to have the ability to produce our customary residential model for lower than $400 every. They’re small: 11 inches sq., 1 inch thick, and weigh lower than 5 kilos with out their mounting bracket, however they ship speeds as much as 400 megabits per second. And they’re powered by Amazon-designed baseband chips. We’re getting ready to launch two prototype satellites to check your complete end-to-end communications community this yr, and plan to be in beta with business clients in 2024. The buyer response to what we have shared up to now about Kuiper has been very constructive, and we consider Kuiper represents a really giant potential alternative for Amazon. It additionally shares a number of similarities to AWS in that it is capital intensive at the beginning, however has a big potential client, enterprise, and authorities buyer base, vital income and working revenue potential, and comparatively few firms with the technical and ingenious aptitude, in addition to the funding speculation to go after it.

One ultimate funding space that I’ll point out, that is core to setting Amazon as much as invent in each space of our business for a lot of many years to come back, and the place we’re investing closely is Large Language Models (“LLMs”) and Generative AI. Machine studying has been a know-how with excessive promise for a number of many years, nevertheless it’s solely been the final 5 to 10 years that it is began for use extra pervasively by firms. This shift was pushed by a number of elements, together with entry to increased volumes of compute capability at decrease costs than was ever out there. Amazon has been utilizing machine studying extensively for 25 years, using it in the whole lot from personalised ecommerce suggestions, to success heart choose paths, to drones for Prime Air, to Alexa, to the various machine studying providers AWS presents (the place AWS has the broadest machine studying performance and buyer base of any cloud supplier). More lately, a more moderen type of machine studying, referred to as Generative AI, has burst onto the scene and guarantees to considerably speed up machine studying adoption. Generative AI relies on very Large Language Models (educated on as much as a whole bunch of billions of parameters, and rising), throughout expansive datasets, and has radically common and broad recall and studying capabilities. We have been engaged on our personal LLMs for some time now, consider it is going to rework and enhance just about each buyer expertise, and can proceed to speculate considerably in these fashions throughout all of our client, vendor, model, and creator experiences. Additionally, as we have performed for years in AWS, we’re democratizing this know-how so firms of all sizes can leverage Generative AI. AWS is providing probably the most price-performant machine studying chips in Trainium and Inferentia so small and enormous firms can afford to coach and run their LLMs in manufacturing. We allow firms to select from numerous LLMs and construct functions with the entire AWS safety, privateness and different options that clients are accustomed to utilizing. And, we’re delivering functions like AWS’s CodeWhisperer, which revolutionizes developer productiveness by producing code strategies in actual time. I may write a complete letter on LLMs and Generative AI as I believe they are going to be that transformative, however I’ll depart that for a future letter. Let’s simply say that LLMs and Generative AI are going to be a giant deal for patrons, our shareholders, and Amazon.

 
  
So, in closing, I’m optimistic that we’ll emerge from this difficult macroeconomic time in a stronger place than after we entered it. There are a number of causes for it and I’ve talked about a lot of them above. But, there are two comparatively easy statistics that underline our immense future alternative. While we now have a client business that is $434B in 2022, the overwhelming majority of complete market section share in world retail nonetheless resides in bodily shops (roughly 80%). And, it is a related story for Global IT spending, the place we now have AWS income of $80B in 2022, with about 90% of Global IT spending nonetheless on-premises and but emigrate to the cloud. As these equations steadily flip—as we’re already seeing occur—we consider our main buyer experiences, relentless invention, buyer focus, and laborious work will end in vital development within the coming years. And, after all, this does not embody the opposite companies and experiences we’re pursuing at Amazon, all of that are nonetheless of their early days.

I strongly consider that our greatest days are in entrance of us, and I look ahead to working with my teammates at Amazon to make it so.

Sincerely,

Andy Jassy
President and Chief Executive Officer
Amazon.com, Inc.

P.S. As we now have at all times performed, our authentic 1997 Shareholder Letter follows. What’s written there may be as true in the present day because it was in 1997.