0: It doesn't matter to me whether we're a

1: pure internet play. What matters to me is

2: do we provide the best customer service.

5: Internet Shminternet

31: Given the decades of wisdom that has built up

34: in the business world investors, it sounds

36: like you're saying you're making a big

38: speculative bet, if they're investing in

39: your company's stock. Well I think all

41: Internet companies you know the stocks are

43: incredibly volatile...

44: But even long term.

46: Long term I believe. That

50: it's very easy to predict that there are

52: going to be lots of successful companies

55: born of the Internet. They're going to have

57: very large market caps and so on. I also

60: believe that today where we sit it's very

62: hard to predict who those companies are

64: going to be. So you know you can make bets

67: on these things and I think that Amazon.com

69: if we don't if we're not one of those

71: important lasting companies born of the

74: Internet we will have nobody to blame but

76: ourselves and we will be extremely

78: disappointed in ourselves. But there are no

80: guarantees. It's very very hard to predict.

83: If you go back and look at the companies

85: created by the P.C. revolution in 1980 you

89: wouldn't have predicted the five winners the

92: five biggest winners. There've been lots of

94: winners actually. So this space is a little

96: different and brand name may need may mean

98: more and then there's some increasing

100: returns kinds of things maybe more. But I

103: believe that if you can focus obsessively

106: enough on customer experience, selection,

109: ease of use, low prices, more information to

112: make purchase decisions with. If you can

115: give customers all that plus great customer

118: service and with our toys and electronics we

121: have a 30 day return policy. If you can do

124: all of that then I think you have a good

126: chance. And that's what we're trying to do.

128: You're not really a pure Internet company

131: anymore either. I mean you've got millions

133: of square feet now of real estate. You've

135: got a growing huge and growing inventory of

139: items with you keep in stock. You've got

142: thousands and thousands of employees now.

144: We have over 3000 employees and over four

147: million square feet of distribution center

149: space. And those are things I'm very very

151: proud of because with that distribution

154: center space and half a dozen distribution

156: centers around the country it allows us to

158: get product close to customers so that we

160: can ship it to customers in a very timely

162: way which improves customer service levels.

165: That's what we're about. If there's one

166: thing Amazon.com is about its obsessive

169: attention to the customer

171: experience, End to end. And that's what

173: those distribution centers.

174: But you're not a pure Internet play.

175: It doesn't. It doesn't matter to me whether

177: we're a pure Internet play it matters to me

179: is we provide the best customer service.

181: Internet Shminternet. It's that's you know

183: that doesn't matter.

185: Well but it does matter to your investors to

187: know whether they're investing in a company

188: that is...

189: No, they should be investing in a company

191: that obsesses over customer experience in

193: the long term. There is never any

194: misalignment between customer interests and

197: shareholder interests.

197: Well that's the same argument that somebody

199: at WalMart would make as well.

201: I don't see why not. I think they should make

203: that argument. So it's a correct argument.

206: OK.

207: So you'll open as many square feet of space

210: physical space as you have to hire as many

212: employees as you have to...

214: To service customers.

215: Absolutely. And we'll do it as rapidly as we

218: can.

218: That's a very cost intense proposition.

222: Not compared to opening an equivalent network

225: of retail stores.

226: So if you open a bunch of chain stores. Look

228: when we open a distribution center we're

230: opening places that may have square where we

233: may pay 30 cents a square foot for for a

238: lease instead of paying seven dollars a

240: square foot which you might pay in a high

242: traffic retail area. So when you compare

245: those things they're not the same. You can't

247: compare a big chain of of of of retail

250: stores to half a dozen distribution centers.

253: It's just not you know it's bad math.

258: Either way whichever side of the argument you

261: believe you're making what it seems to me.

263: There's only one side which is obsess over

266: customers.

266: But it seems to me that. Both with the speed

269: of your growth in terms of the number of

270: stores online that you're opening the

273: different businesses you're getting into the

275: number of distribution centers and you're

276: opening a new employees you're hiring

279: That you are making an intense gamble here

282: which is twofold. One that you can run this

286: number of businesses different businesses

288: well. And two that you can make money by

293: selling vast volumes of products and

296: essentially razor thin profit margins.

299: I think that the the first one in particular

302: I agree with wholeheartedly which is that

304: where

305: There there's no guarantee that Amazon.com

308: can be a successful company. What we're

310: trying to do is very complicated. There's

313: huge execution risk involved. We have a

315: terribly complicated business. We're

317: growing, you know, historically very

319: rapidly. We're opening new product

323: categories we're expanding in new

324: geographies. We have whole new business

326: models with things like auctions. Now we

328: think this is the less risky of the two

330: approaches because scale is important in

333: this business. And you need scale also to

335: offer the lowest prices and the best

337: customer service to people. So scale is

341: important to us and we're going to go after

343: that kind of scale. But it does mean that

345: the executional challenges are huge. And so

348: you'll find a bunch of people back in

350: Seattle and around the world working very

352: hard to make sure we service customers at

354: the level that they're used to. And then

356: even improving that.

358: Isn't it to some extent a certain amount

361: of, with all do respect,

364: corporate arrogance to assume that you can

367: come into these businesses which you have no

369: experience in and virtually overnight enter

374: a huge variety of different businesses and

377: become the best in those businesses and the

380: market leader in those businesses. There are

382: other companies that have been running these

383: types of businesses for decades if not more.

386: I don't think so. So you know when we first

390: started selling books four years ago we were

393: everybody said look you're just computer

395: guys you don't know anything about selling

396: books. And that was true. But what we really

399: cared about customers and now we know a lot

401: about books and when we first started

403: selling music people said the same thing but

406: we hired the right people. So we don't do

408: this in a vacuum. We go out and hire the

410: best industry experts in each of these

413: categories. That's the same with toys

415: electronics. So you know we take this very

418: seriously we take the commitment to the

420: customer very seriously and we're not about

422: to release something or announce something

425: before it's ready.