Amazon Prime has 200 mn members globally: Jeff Bezos
In a letter to shareholders, Bezos said Amazon Web Services serves millions of customers and ended 2020 with a $50 billion annualized run rate
Published - Apr 19, 2021 8:20 AM Updated- Apr 19, 2021 8:20 AM
Amazon Prime has added 50 million new members in the last one year to take its total membership to 200 million worldwide, Amazon CEO Jeff Bezos said in his last letter to shareholders. He also said that customers have connected more than 100 million smart home devices to Alexa.
"Last year, we hired 500,000 employees and now directly employ 1.3 million people around the world. We have more than 200 million Prime members worldwide. More than 1.9 million small and medium-sized businesses sell in our store, and they make up close to 60% of our retail sales. Customers have connected more than 100 million smart home devices to Alexa. Amazon Web Services serves millions of customers and ended 2020 with a $50 billion annualized run rate," Bezos said.
Bezos noted that Amazon has created $1.6 trillion of wealth for shareowners. In 2020, Amazon employees earned a total of $91 billion which includes $11 billion of benefits and various payroll taxes. He also mentioned that third-party seller profits from selling on Amazon were between $25 billion and $39 billion.
He noted that customers complete 28% of purchases on Amazon in three minutes or less, and half of all purchases are finished in less than 15 minutes. "Compare that to the typical shopping trip to a physical store – driving, parking, searching store aisles, waiting in the checkout line, finding your car, and driving home. Research suggests the typical physical store trip takes about an hour."
Adding further, he stated that shopping on Amazon saves more than 75 hours a year for shoppers. Valuing the time saved on shopping at $10, Amazon has created $126 billion of value for its Prime users. "So that we can get a dollar figure, let’s value the time savings at $10 per hour, which is conservative. Seventy-five hours multiplied by $10 an hour and subtracting the cost of Prime gives you value creation for each Prime member of about $630. We have 200 million Prime members, for a total in 2020 of $126 billion of value creation."
While stating that AWS is challenging to estimate because each customer’s workload is so different, he added that AWS customer value creation was $38 billion in 2020. AWS and consumer together gives us total customer value creation in 2020 of $164 billion.
"Direct cost improvements from operating in the cloud versus on premises vary, but a reasonable estimate is 30%. Across AWS’s entire 2020 revenue of $45 billion, that 30% would imply customer value creation of $19 billion (what would have cost them $64 billion on their own cost $45 billion from AWS). The difficult part of this estimation exercise is that the direct cost reduction is the smallest portion of the customer benefit of moving to the cloud. The bigger benefit is the increased speed of software development – something that can significantly improve the customer’s competitiveness and top line," he said.
"We have no reasonable way of estimating that portion of customer value except to say that it’s almost certainly larger than the direct cost savings. To be conservative here (and remembering we’re really only trying to get ballpark estimates), I’ll say it’s the same and call AWS customer value creation $38 billion in 2020."
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