Business Finance Homework Help

1. Is the author trying to persuade, inform, or do both?  Which specific words or phrases led to that conclusion? What is the central idea of this letter?

2. Does the author use ethos, pathos, and/or logos?  Which specific words or phrases led to that conclusion?

Source: 

The percentages represent the share of physical gross merchandise sales sold onAmazon by independent third-party sellers – mostly small- and medium-sized businesses– as opposed to Amazon retail’s own first party sales. Third-party sales have grown from3% of the total to 58%. To put it bluntly:Third-party sellers are kicking our first party butt. Badly.And it’s a high bar too because our first-party business has grown dramatically over thatperiod, from $1.6 billion in 1999 to $117 billion this past year. The compound annualgrowth rate for our first-party business in that time period is 25%. But in that same time,third-party sales have grown from $0.1 billion to $160 billion – a compound annual growthrate of 52%. To provide an external benchmark, eBay’s gross merchandise sales in thatperiod have grown at a compound rate of 20%, from $2.8 billion to $95 billion.Why did independent sellers do so much better selling on Amazon than they did on eBay?And why were independent sellers able to grow so much faster than Amazon’s own highly

9/21/21, 9:06 AM2018 Letter to Shareholdershttps://www.aboutamazon.com/news/company-news/2018-letter-to-shareholders2/6organized first-party sales organization? There isn’t one answer, but we do know oneextremely important part of the answer:We helped independent sellers compete against our first-party business by investing inand offering themthe very best selling tools we could imagine and build.There are manysuch tools, including tools that help sellers manage inventory, process payments, trackshipments, create reports, and sell across borders – and we’re inventing more every year.But of great importance are Fulfillment by Amazon and the Prime membership program. Incombination, these two programs meaningfully improved the customer experience ofbuying from independent sellers. With the success of these two programs now so wellestablished, it’s difficult for most people to fully appreciate today just how radical those twoofferings were at the time we launched them. We invested in both of these programs atsignificant financial risk and after much internal debate. We had to continue investingsignificantly over time as we experimented with different ideas and iterations. We could notforesee with certainty what those programs would eventually look like, let alone whetherthey would succeed, but they were pushed forward with intuition and heart, and nourishedwith optimism.Intuition, curiosity, and the power of wanderingFrom very early on in Amazon’s life, we knew we wanted to create a culture of builders –people who are curious, explorers. They like to invent. Even when they’re experts, they are“fresh” with a beginner’s mind. They see the way we do things as just the way we dothingsnow. A builder’s mentality helps us approach big, hard-to-solve opportunities with ahumble conviction that success can come through iteration: invent, launch, reinvent,relaunch, start over, rinse, repeat, again and again. They know the path to success isanything but straight.Sometimes (often actually) in business, youdoknow where you’re going, and when youdo, you can be efficient. Put in place a plan and execute. In contrast, wandering inbusiness is not efficient … but it’s also not random. It’sguided– by hunch, gut, intuition,curiosity, and powered by a deep conviction that the prize for customers is big enough thatit’s worth being a little messy and tangential to find our way there. Wandering is anessential counter-balance to efficiency. You need to employ both. The outsized discoveries– the “non-linear” ones – are highly likely to require wandering.AWS’s millions of customers range from startups to large enterprises, government entitiesto nonprofits, each looking to build better solutions for their end users. We spend a lot oftime thinking about what those organizations want and what the people inside them –developers, dev managers, ops managers, CIOs, chief digital officers, chief informationsecurity officers, etc. – want.Much of what we build at AWS is based onlisteningto customers. It’s critical to askcustomers what they want, listen carefully to their answers, and figure out a plan to provide

9/21/21, 9:06 AM2018 Letter to Shareholdershttps://www.aboutamazon.com/news/company-news/2018-letter-to-shareholders3/6it thoughtfully and quickly (speed matters in business!). No business could thrive withoutthat kind of customer obsession. But it’s also not enough. The biggest needle movers willbe things that customers don’t know to ask for. We must invent on their behalf. We have totap into our own inner imagination about what’s possible.AWS itself – as a whole – is an example. No one asked for AWS. No one. Turns out theworld was in fact ready and hungry for an offering like AWS but didn’t know it. We had ahunch, followed our curiosity, took the necessary financial risks, and began building –reworking, experimenting, and iterating countless times as we proceeded.Within AWS, that same pattern has recurred many times. For example, we inventedDynamoDB, a highly scalable, low latency key-value database now used by thousands ofAWS customers. And on the listening carefully-to-customers side, we heard loudly thatcompanies felt constrained by their commercial database options and had been unhappywith their database providers for decades – these offerings are expensive, proprietary,have high-lock-in and punitive licensing terms. We spent several years building our owndatabase engine, Amazon Aurora, a fully-managed MySQL and PostgreSQL-compatibleservice with the same or better durability and availability as the commercial engines, but atone-tenth of the cost. We werenotsurprised when this worked.But we’re also optimistic about specialized databases for specialized workloads. Over thepast 20 to 30 years, companies ran most of their workloads using relational databases.The broad familiarity with relational databases among developers made this technologythe go-to even when it wasn’t ideal. Though sub-optimal, the data set sizes were oftensmall enough and the acceptable query latencies long enough that you could make it work.But today, many applications are storing very large amounts of data – terabytes andpetabytes. And the requirements for apps have changed. Modern applications are drivingthe need for low latencies, real-time processing, and the ability to process millions ofrequests per second. It’s not just key-value stores like DynamoDB, but also in-memorydatabases like Amazon ElastiCache, time series databases like Amazon Timestream, andledger solutions like Amazon Quantum Ledger Database – the right tool for the right jobsaves money and gets your product to market faster.We’re also plunging into helping companies harness Machine Learning. We’ve beenworking on this for a long time, and, as with other important advances, our initial attemptsto externalize some of our early internal Machine Learning tools were failures. It took yearsof wandering – experimentation, iteration, and refinement, as well as valuable insights fromour customers – to enable us to find SageMaker, which launched just 18 months ago.SageMaker removes the heavy lifting, complexity, and guesswork from each step of themachine learning process – democratizing AI. Today, thousands of customers are buildingmachine learning models on top of AWS with SageMaker. We continue to enhance theservice, including by adding new reinforcement learning capabilities. Reinforcementlearning has a steep learning curve and many moving parts, which has largely put it out ofreach of all but the most well-funded and technical organizations, until now. None of this

9/21/21, 9:06 AM2018 Letter to Shareholdershttps://www.aboutamazon.com/news/company-news/2018-letter-to-shareholders4/6would be possible without a culture of curiosity and a willingness to try totally new thingson behalf of customers. And customers are responding to our customer-centric wanderingand listening – AWS is now a $30 billion annual run rate business and growing fast.Imagining the impossibleAmazon today remains a small player in global retail. We represent a low single-digitpercentage of the retail market, and there are much larger retailers in every country wherewe operate. And that’s largely because nearly 90% of retail remains offline, in brick andmortar stores. For many years, we considered how we might serve customers in physicalstores, but felt we needed first to invent something that would really delight customers inthat environment. With Amazon Go, we had a clear vision. Get rid of the worst thing aboutphysical retail: checkout lines. No one likes to wait in line. Instead, we imagined a storewhere you could walk in, pick up what you wanted, and leave.Getting there was hard. Technically hard. It required the efforts of hundreds of smart,dedicated computer scientists and engineers around the world. We had to design and buildour own proprietary cameras and shelves and invent new computer vision algorithms,including the ability to stitch together imagery from hundreds of cooperating cameras. Andwe had to do it in a way where the technology worked so well that it simply receded intothe background, invisible. The reward has been the response from customers, who’vedescribed the experience of shopping at Amazon Go as “magical.” We now have 10 storesin Chicago, San Francisco, and Seattle, and are excited about the future.Failure needs to scale tooAs a company grows,everythingneeds to scale, including the size of your failedexperiments. If the size of your failures isn’t growing, you’re not going to be inventing at asize that can actually move the needle. Amazon will be experimenting at the right scale fora company of our size if we occasionally have multibillion-dollar failures. Of course, wewon’t undertake such experiments cavalierly. We will work hard to make them good bets,but not all good bets will ultimately pay out. This kind of large-scale risk taking is part of theservice we as a large company can provide to our customers and to society. The goodnews for shareowners is that a single big winning bet can more than cover the cost ofmany losers.Development of the Fire phone and Echo was started around the same time. While theFire phone was a failure, we were able to take our learnings (as well as the developers)and accelerate our efforts building Echo and Alexa. The vision for Echo and Alexa wasinspired by the Star Trek computer. The idea also had origins in two other arenas wherewe’d been building and wandering for years: machine learning and the cloud. FromAmazon’s early days, machine learning was an essential part of our productrecommendations, and AWS gave us a front row seat to the capabilities of the cloud. After

9/21/21, 9:06 AM2018 Letter to Shareholdershttps://www.aboutamazon.com/news/company-news/2018-letter-to-shareholders5/6many years of development, Echo debuted in 2014, powered by Alexa, who lives in theAWS cloud.No customer was asking for Echo. This was definitely us wandering. Market researchdoesn’t help. If you had gone to a customer in 2013 and said “Would you like a black,always-on cylinder in your kitchen about the size of a Pringles can that you can talk to andask questions, that also turns on your lights and plays music?” I guarantee you they’d havelooked at you strangely and said “No, thank you.”Since that first-generation Echo, customers have purchased more than 100 million Alexa-enabled devices. Last year, we improved Alexa’s ability to understand requests andanswer questions by more than 20%, while adding billions of facts to make Alexa moreknowledgeable than ever. Developers doubled the number of Alexa skills to over 80,000,and customers spoke to Alexa tens of billions more times in 2018 compared to 2017. Thenumber of devices with Alexa built-in more than doubled in 2018. There are now more than150 different products available with Alexa built-in, from headphones and PCs to cars andsmart home devices. Much more to come!One last thing before closing. As I said in the first shareholder letter more than 20 yearsago, our focus is on hiring and retaining versatile and talented employees who can thinklike owners. Achieving that requires investing in our employees, and, as with so manyother things at Amazon, we use not just analysis but also intuition and heart to find our wayforward.Last year, we raised our minimum wage to $15-an-hour for all full-time, part-time,temporary, and seasonal employees across the U.S. This wage hike benefitted more than250,000 Amazon employees, as well as over 100,000 seasonal employees who worked atAmazon sites across the country last holiday. We strongly believe that this will benefit ourbusiness as we invest in our employees. But that is not what drove the decision. We hadalways offered competitive wages. But we decided it was time to lead – to offer wages thatwent beyond competitive. We did it because it seemed like the right thing to do.Today I challenge our top retail competitors (you know who you are!) to match ouremployee benefits and our $15 minimum wage. Do it! Better yet, go to $16 and throw thegauntlet back at us. It’s a kind of competition that will benefit everyone.Many of the other programs we have introduced for our employees came as much fromthe heart as the head. I’ve mentioned before the Career Choice program, which pays up to95% of tuition and fees towards a certificate or diploma in qualified fields of study, leadingto in-demand careers for our associates, even if those careers take them away fromAmazon. More than 16,000 employees have now taken advantage of the program, whichcontinues to grow. Similarly, our Career Skills program trains hourly associates in criticaljob skills like resume writing, how to communicate effectively, and computer basics. InOctober of last year, in continuation of these commitments, we signed the President’s

9/21/21, 9:06 AM2018 Letter to Shareholdershttps://www.aboutamazon.com/news/company-news/2018-letter-to-shareholders6/6Pledge to America’s Workers and announced we will be upskilling 50,000 U.S. employeesthrough our range of innovative training programs.Our investments are not limited to our current employees or even to the present. To traintomorrow’s workforce, we have pledged $50 million, including through our recentlyannounced Amazon Future Engineer program, to support STEM and CS education aroundthe country for elementary, high school, and university students, with a particular focus onattracting more girls and minorities to these professions. We also continue to takeadvantage of the incredible talents of our veterans. We are well on our way to meeting ourpledge to hire 25,000 veterans and military spouses by 2021. And through the AmazonTechnical Veterans Apprenticeship program, we are providing veterans on-the-job trainingin fields like cloud computing.A huge thank you to our customers for allowing us to serve you while always challengingus to do even better, to our shareowners for your continuing support, and to all ouremployees worldwide for your hard work and pioneering spirit. Teams all across Amazonarelisteningto customers andwanderingon their behalf!As always, I attach a copy of our original 1997 letter. It remains Day 1.Sincerely,Jeffrey P. BezosFounder and Chief Executive OfficerAmazon.com, Inc.