E-commerce veteran Rick Watson reviews Amazon annual report and shareholder letter

Amazon this week released its 2019 Annual Report and Letter to Shareholders. Rick Watson, CEO and Founder, RMV Commerce Consulting, read them both so you don't have to.

Here are a few interesting points he called out. Somewhat unsurprisingly, it's all about the coronavirus and not 2019. “Amazon has moved a number of its staff to build its own testing facilities and labs. I haven't heard another company doing that which wasn't doing it before the crisis,” Watson says in a LinkedIn post.

As for the numbers, AWS represents 12% of net sales of the entire business, but 63% of the profit. “Wow If you a retailer on AWS and you compete with Amazon, please move to Google or Microsoft Cloud,” Watson quips.

Amazon has closed over 6,000 seller accounts globally due to price gouging. It now directly employs 840,000 people worldwide…”a massive number. Walmart? 2.2 million. Alibaba? Only 100k. That's amazing.”

The company has 272 million sq ft space devoted to datacentres and fulfilment centres globally. And it has 20 million sq ft physical stores, “a fact I bet they are happy about at the moment despite many saying they should scale their retail investments faster.” Finally, Amazon's international business is only growing at 13% y/y. As opposed to 21% y/y in North America. Both decelerated in 2019.

Addressing the critics

Also in the letter to shareholders, Amazon boss Jeff Bezos flagged up that his company is making significant investments to drive its carbon footprint to zero “despite the fact that shopping online is already inherently more carbon efficient than going to stores.”

The online retail space is often criticised for polluting the planet. Environmental campaigners, for instance, argue that the growing consumer appetite for convenience – getting anything you want delivered to your door asap in just one click – is taking its toll on the environment.

Bezos, however, observed that Amazon’s sustainability scientists have spent more than three years developing the models, tools, and metrics to measure the company’s carbon footprint.

“Their detailed analysis has found that shopping online consistently generates less carbon than driving to a store, since a single delivery van trip can take approximately 100 roundtrip car journeys off the road on average,” he claimed.

“Our scientists developed a model to compare the carbon intensity of ordering Whole Foods Market groceries online versus driving to your nearest Whole Foods Market store. The study found that, averaged across all basket sizes, online grocery deliveries generate 43% lower carbon emissions per item compared to shopping in stores. Smaller basket sizes generate even greater carbon savings.”

Covid-19

Bezos also waxed lyrical about his company’s behaviour during the coronavirus outbreak and insists that the welfare of his employees is of utmost importance. “We’ve learned from the Covid-19 crisis how important Amazon has become to our customers. We want you to know we take this responsibility seriously,” he commented.

The passionate defence came as Amazon temporarily halted its operations in France after a court ruled the US e-commerce giant had failed to adequately protect warehouse workers during the coronavirus outbreak.

In the US, meanwhile, Amazon has fired two employees who blasted the company over the same issue. UX designers Emily Cunningham and Maren Costa were let go last Friday. They were members of the Amazon Employees for Climate Justice group and had flagged up via Twitter a “lack of safe and sanitary working conditions” for warehouse workers.

“Amazon fired me and @marencosta,” Cunningham said on Twitter. “As Mary Oliver wrote, "oh! how rich it is to love the world." It's a gift to be able to fight for something you love so deeply. All I know is that we need eachother. And that we can do this. PS I love you.”

An Amazon spokesperson stated the pair had been shown the door for “repeatedly violating internal policies…We support every employee’s right to criticise their employer’s working conditions, but that does not come with blanket immunity against any and all internal policies.”

A third employee, Chris Hayes, also had his employment cut short after he criticised its treatment of warehouse workers. He had already handed in his resignation and was planning to leave this week, but a few hours after he invited co-workers to a virtual discussion with warehouse workers, a human resources representative told him he would no longer be allowed to work.