Jeff Bezos: Finally Relaxing?
Position: Chief Executive and Chairman, Amazon.com
Contribution: Built Amazon into the Internet's largest retailer
Challenge: Amazon has had one profitable quarter in its eight-year history. It needs to deliver a full year of profits -- and then keep doing so
With consumer confidence in question and the U.S. economic recovery somewhat muted, you might think Jeff Bezos, CEO of Amazon.com (AMZN ), wouldn't have much time to spend with employees at the company's Friday-afternoon summer barbecues. Not so. On Sept. 6, you would have found Bezos rounding the bases in an intense game of kickball on the front lawn of Amazon headquarters, which features a breathtaking view of Mt. Rainier to the southeast of Seattle.
If that says anything about Bezos, it may be that he's comfortable enough with his company's position these days to take it easy on Fridays -- maybe even call it a day early once in a while.
Amazon has worked relentlessly this year at cutting costs in order-fulfillment. The improved efficiency at its six automated distribution centers nationwide has yielded significant savings, which -- perhaps counterintuitively -- are being passed on to customers.
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Fulfillment costs as a percentage of sales in the second quarter dropped to 10.6%, compared with 12.8% a year ago, according to Amazon. And since July, 2001, it has initiated five across-the-board price cuts on books and shipping, resulting in the current policy of 30% off books over $15 and free shipping on orders above $25.
Amazon says it made these moves simply to attract more cost-conscious consumers. "There are two kinds of retailers: Those that work to raise prices, and those that work relentlessly to lower them," Bezos likes to say. Amazon, he adds, is firmly in the second camp. Declares company spokesman Bill Curry: "This is not an example of price cuts out of necessity."
The e-tailer has produced a net profit only once in its history -- one penny a share, or $5 million, in the fourth quarter of 2001. But delivering a full-year net profit is still a slim possibility in 2002, despite net losses in the first two quarters and an expected loss in the current period. It will all depend on the holiday selling season. With some luck, Bezos will still be playing kickball for fun next year -- not to work off nervous energy.
By David Shook in New York