There was plenty to brag about in Amazon’s latest earnings report: a 14% year over year jump in net sales, a 12% jump in sales for the entire year, and a “record-breaking Black Friday and Cyber Monday holiday shopping event.” But the e-commerce giant’s CEO said he was more excited about recent investments in improving customer experience than financials.
“While we’ve made meaningful progress in our financial measures, what we’re most pleased about is the continued customer experience improvements across our businesses,” Andy Jassy told investors in the Q4 earnings call.
The company highlighted new tech offerings such as AI-powered size recommendations for apparel. It also launched a beta version of Rufus, an AI shopping assistant or chatbot, designed to answer questions about Amazon’s product catalog and offer recommendations based on conversational context.
Amazon is rolling out Rufus to a small subset of customers, and plans to expand access in waves and ask for feedback from early testers.
“It’s still early days for generative AI, and the technology won’t always get it exactly right,” VPs Rajiv Mehta and Trishul Chilimbiwrote in a press release. “We will keep improving our AI models and fine-tune responses to continuously make Rufus more helpful over time.”
Staying sharp: Putting aside the flashy new tech for a moment, Amazon also emphasized that it continues to focus on a more tried-and-true business model: keeping prices low.
Jassy noted that customers continue to respond to Amazon’s “continued focus on selection, price, and convenience.” He added: “Being sharp on price is always important, but particularly in an uncertain economy where customers are careful about how much they’re spending.”
“Throughout the quarter, customers saved nearly $10 billion across millions of deals and coupons, almost 70% more than last year,” Jassy said.
Delivery times were another highlight of the report. Amazon said the number of items delivered on the same day or overnight in Q4 was up more than 65% year over year.
Jassy told investors that the increase in the US is due to both the “regionalization” of its supply chain, which has brought items closer to customers, and the “expansion of same day facilities.”
It turns out these investments are related to Amazon’s ability to lower costs. Bringing down transportation distance helped reduce its “cost-to-serve” more than $0.45 per unit from the prior year, which has allowed the company to make more products available and lower their average selling price and increase their profit margins.
“We have a saying that it’s not hard to lower prices; it’s hard to be able to afford lowering prices,” Jassy said.