Jeff Bezos uses shareholder letter to respond to calls for break-up: Amazon is good for competition!
If you don’t follow American politics, you might not know the name Elizabeth Warren. She’s a left-leaning senator who recently announced her run for the Democratic Party’s nomination in next year’s Presidential Elections. As is often the case when politicians make such announcements, senator Warren set out some policy issues. One that caught Jeff Bezos attention was the suggestion that Amazon should be broken up due to anti-trust concerns. In his eagerly awaited shareholder letter for the year (released last Thursday) Mr Bezos addressed senator Warren’s suggestion.
Amazon’s share price has risen by 25% year to date
Source: Yahoo Finance
Warren said that Amazon Marketplace should be separated from the main site because it “crushes” small businesses. Mr Bezos disagrees, and is quick to point out that, while Amazon obviously profits from the platform “third-party sellers are kicking our first-party butt.” In his letter to shareholders, he explained that third-party sellers now accounted for 58% of gross merchandise sales on the platform – and that this was intentional. Amazon has worked hard to build “the very best-selling tools we could imagine and build” in an effort to help these sellers compete with it. Amazon Prime and Fulfilment by Amazon, he wrote: “meaningfully improved the customer experience of buying from independent sellers.”
Bezos’s shareholder letter has become a “must-read” document for ecommerce investors over the years, much like Warren Buffett’s. In it, Mr Bezos tends to detail the kind of long-term business strategy plans that have rocketed him beyond his billionaire brothers into the position of world’s richest man. This year, he wanted to talk about minimum wages. Low pay has been a sticking point for many commentators in regards to Amazon, but last October, the company finally addressed complaints and instituted a $15 per hour minimum wage. Bezos wrote:
“Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage. Do it! Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone.”
Dominion holds Amazon in its Global Trends Ecommerce Fund.
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