Brian Olsavsky: Hey, Ron, I’m going to start with this one on international profitability. So yes, in the quarter, our operating income was $902 million. And if you’ve watched that, we’ve seen a steady progression in operating income in our international segment, it’s up $2.2 billion year-over-year. So we like the trend there. It breaks down into a few areas. I would say the established countries of Europe, Japan, as well as the UK are following a lot of the same trajectory as in the United States. They are profitable in their own right. They are adding selection, they’re adding new features like grocery there, adding to their Prime benefits, and a lot of the work that we do in the United States carries over there. The second group is the emerging countries.
And, of course, we’ve launched 10 new countries in the last seven years. Each of those has its own particular trajectory on profitability. The first thing we see there is having a good customer experience, having people sign up for Prime. A lot of times, our Prime Video benefits help with that. Then work on our cost structure as we get scale, ad advertising and other things. And eventually, what we see is a breakeven countries breakeven and then they make positive income and free cash flow and are more of a contribution to the – positive contribution to the international segment. So we’re seeing both the emerging and the established improving, and we like the trajectory. And I think you’ll see more of as we move forward.
Andy Jassy: Yeah. I would add a few things. I mean, I’m again quite bullish on our international stores business. It’s already a very large business. We’ve added a number of countries that are on the right trajectory, as Brian just indicated, and it’s going to be a big, profitable business for us. And I really like the direction it’s headed. I’ll take also just the second part of your question just really around continuing to take — to work on cost structure. I’d say first of all, on the regionalization side, which we’ve talked a lot about the last year, it may sound a little boring to talk about because we talked about it a lot of times. But I’d just tell you that we’re not done there. A lot of the work that we’ve done, we still have opportunities to refine to get more value out of that.
And a lot of what we learned on the regionalization side in the US was in part inspired from what we saw in Europe, which, in many ways, is set up as a regional network because of the nature of how close those countries are to one another. And I would say, we have also learned lessons from what we’ve done in the US that we’re going to be able to apply to our international operations as well. I think we see additional opportunities in all sorts of places. A good example, of which is just how and where we inbound items to. The architecture we’ve had set up has largely had people inbounding to a couple of places. And then we took — we spent a lot of effort and time and expense in breaking those down and shipping them to lots of other places. And we believe we’re going to be much more efficient in how we use the inbound network and how we partner with our sellers.
Part of what we did with our change in seller fees, we lowered the outbound fees in a meaningful way, but then we added an incentive for our sellers to inbound into locations that allow us to be more cost following and allow both our sellers and us to enjoy in those cost savings when we’re able to do so. And we’re seeing very optimistic signs there, too. I think we’re still early with respect to how we can continue to optimize the number of units per box, which has all sorts of good benefits. And then I’d just also say that it’s been really interesting to watch the same-day facilities evolution in our fulfillment network. And I think a lot of people have made the assumption over the last few years that faster speeds are going to mean higher cost, and that is not the case if you build the infrastructure with the right building blocks the way we have over the last couple of years.
And our same-day facilities are our least expensive facilities in the network. We still have a fraction of the number of those that we will have in the U.S. that we’ll have in other parts of the world, which will, again, both change our cost structure while increasing speed. So, I don’t think we’re at the limits of what we can do. It’s not going to all happen in one year. We’re going to be working hard at this and inventing at this for several years, but I think we have a lot of upside in front of us.
Dave Fildes: Thank you for joining us on the call today and for your questions. A replay will be available on our Investor Relations website for at least three months. We appreciate your interest in Amazon and look forward to speaking with you again next quarter.
Operator: And ladies and gentlemen, that does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
