The Customer-Obsessed Amazon.
Though Amazon is famous for being customer-focused and it has provided consumer surplus for its billions of customers over the years, the 1997 letter hints at why that’s so important: Market leadership. Similar to how Bezos works backward from the customer’s needs when considering future investments, Bezos views market leadership as the foundation of Amazon’s success.
"Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital."
He emphasizes customer growth, revenue growth, and the number of repeat customers as crucial factors in solidifying market leadership.
YoY Growth Metrics in 1997:
- Revenue growth of 838% from $15.7m to $147.8m.
- Customer account growth of 738% from 180k to 1.5m.
- Repeat customers grew to 58%+ in Q4 '97 from 46%+ in Q4 '96.
Amazon raised $54m to IPO at a market capitalization of $438m the same year. Noting they were only in "Day 1" for the Internet, Bezos ended the letter saying the company would focus on solidifying its market leadership in 1998.