Amazon is my favorite company. They’ve inspired much of my investing philosophy. I recently dove into some historical information that inspired me. Here are 4 charts that show the past, present and possibly the future of Amazon.
Pure Magic and a Little Optionality
Twenty plus years of significant revenue growth, with an acceleration of growth at the end… it’s insane. This isn’t normal. But how did Amazon make this happen?
- Entered e-commerce at the perfect time and rode the tail winds of an amazing growth industry (that is still growing)
- Continuously created low cost experiments that yielded huge returns (AWS, FBA, Echo, etc…)
- Capitalized on every opportunity. From the dot com bubble through COVID, Amazon has not only survived the chaos, they’ve thrived on it. Amazon is antifragile.
Grow Your Margins
“Your margin is my opportunity”Jeff Bezos
Amazon has historically viewed other’s margin as their opportunity. Amazon will do what you do for less. How have they growth their margins like this? Two huge factors are AWS (significantly higher margin business) and the huge ad business Amazon is growing. They are still extremely competitive on pricing, if not the lowest. Monetization is coming from Amazon becoming the default search engine for shopping.
Let’s Build A Moat
The scariest thing about Amazon is they’re just getting started. They are massively profitable already, but not content. They are reinvesting in themselves and scaling in an unprecedented way. From AWS to fulfillment, Amazon is investing heavily through capital expenditures. Whether it be the first, middle or last mile, it probably will be dominated by Amazon. Layer in heavy investments in AWS infrastructure and watch out what comes next.
Past to Present
What an epic ride. I still see Amazon doing all the right things. Bezos stepping down isn’t good, but he’s still the chairman and will be waiting in the wings if Jassy ever falters. Amazon has so much going for it. Day 1.