Amazon's major changes! What trends will it bring?

Yesterday, Amazon released its 2020 Q4 financial report as scheduled. As expected, the revenue in the fourth quarter of last year was amazing, with total revenue of more than 125.5 billion US dollars in Q4! This is also the first time that Amazon's quarterly revenue has exceeded 100 billion US dollars! At the same time, Amazon also disclosed a major news when announcing the financial report. The current Amazon CEO, our old friend Jeff Bezos, will resign in the third quarter of this year!

In a "letter to Amazon employees" written by his brother-in-law, he stated that he would resign as Amazon CEO in the third quarter of this year and move behind the scenes to serve as executive chairman of the board . At the same time, Andy Jassy, ​​the leader of AWS business, will succeed as Amazon's new CEO.

My brother-in-law has been at the helm of Amazon since he founded it at the age of 30, leading Amazon to reach the top again and again. He is also the only founder of the four major Internet giants in the United States who is still serving as the CEO. After experiencing the baptism of the epidemic last year, Amazon has reached its highest point in terms of market value and revenue. The financial report released yesterday showed that in the fourth quarter of last year, in addition to the sales volume setting a record for the first quarter of 100 billion in history, the net profit also exceeded 7.2 billion US dollars, an increase of 121% compared with the fourth quarter of 2019!

The net profit for the whole year of 2020 also increased by nearly 100% year-on-year. As the leader of the e-commerce industry, it is really terrifying that the profit growth can almost double when the scale is already so large! It can be said that it has set an unprecedented growth peak! (Sellers who want to see the complete Q4 financial report can scan the code (zyqmda) at the end of the article to find me). So it is quite unexpected that my brother-in-law chose to retreat bravely in the midst of such a brilliant achievement.

Under the leadership of my brother-in-law, Amazon has grown from a deserted online book sales website to a full-category e-commerce giant with a market value of one trillion US dollars. It can be said that among the major Internet giants, Amazon is most influenced by its founder. My brother-in-law's business philosophy and temperament deeply guide Amazon. We sellers can feel my brother-in-law's pure business spirit from Amazon's various handling methods. For example, the response to the advertising budget overflow bug incident in early 2019 and the design logic of the new backend functions all reveal the official "Bezos-style" style.

Amazon is now about to face its most significant personnel change. The founder is leaving and retreating behind the scenes. What changes and trends will a new CEO who is not from the e-commerce business bring to the entire Amazon?

The new CEO Andy Jassy (hereinafter referred to as Andy) joined Amazon in 1997. He once served as his brother-in-law’s first "shadow consultant" and the only Amazon veteran who attended the CEO meeting as a semi-formal employee.

For a long time, foreign media have been regarding Andy as Amazon's "second in command" and listing him and Jeff Wilke, the vice president in charge of North American e-commerce business, as strong candidates to succeed his brother-in-law. His brother-in-law finally decided on Andy as his successor, which also revealed the general trend of Amazon's future development.

Andy took over the Amazon cloud service AWS business in 2003 and has been operating for Amazon ever since. AWS has become a huge business unit with an annual revenue of more than 40 billion US dollars. It is the leader in the US cloud computing industry and has more than one-third of the cloud computing market share in the United States. AWS is also the most profitable department within Amazon. According to the full-year data for 2020 released in this financial report, although AWS's sales accounted for only 13% of Amazon's total sales, the net profit contributed by AWS accounted for as much as 60% of the total profit.

The fact that his brother-in-law passed the reins to Andy was not only a recognition of his work at AWS, but also a signal that the weight of AWS business within Amazon may change more significantly due to Andy's appointment. Higher profitability and better cash flow structure make the mall business pale in comparison. In addition, Andy himself is the "real father" of the AWS business, so it is certain that AWS will move up a notch in Amazon's overall business, surpassing the Amazon Mall to become the real core of Amazon.

There is another very important reason why my brother-in-law wants to reduce his reliance on the mall business - the antitrust investigation. In the antitrust investigation that ended in October last year, my brother-in-law's personal attendance at the hearing did not help Amazon win a single point. The antitrust organization still determined that Amazon has a monopoly position in logistics, mall platforms and other businesses.

Almost all of these businesses that have been identified as monopolistic are shopping malls and related businesses. So the question is, if there are two businesses in front of you, one with more money and less work (AWS), and the other with less money and more work (shopping mall) and the risk of being sanctioned and split, which one would you choose? The answer in everyone's mind must be obvious. This is why my brother-in-law did not choose Jeff Wilke, the president of the North American shopping mall business, but Andy from AWS to inherit his position.

However, this consideration is more out of Amazon's own profitability and future. Amazon Mall is still the world's largest e-commerce platform with unlimited possibilities and huge market share , but this business is a bit hot for Amazon itself. We sellers don't have to worry that Andy, who came from AWS, will be "lukewarm" about the mall business. The first thing Andy did after taking office was to deal with the antitrust investigation , and there won't be too many big moves that will stimulate sellers or buyers.