Amazon.com, Inc. (NASDAQ:AMZN) Q4 2022 Earnings Call Transcript

And as Brian touched on, it’s important to remember that over the last few years, we’ve — we took a fulfillment center footprint that we’ve built over 25 years and doubled it in just a couple of years. And then we, at the same time, built out a transportation network for last mile roughly the size of UPS in a couple of years. And so when you do both of those things to meet the huge surge in demand, you’re going to — just to get those functional, it took everything we had. And so there’s a lot to figure out how to optimize and how to make more efficient and more productive. And then I think at the same time, if you think about doubling the number of fulfillment centers you have and then adding a very large transportation network and you realize that all of those facilities have to link together to get products to customers, that’s a pretty big expansion in the number of nodes in the network.

It becomes a little bit different network. And so to figure out how to be really efficient across all those links and have them be highly utilized and to get the flows in those facilities working the right way, it takes time. So we’re working very hard on it. I’m pleased with the progress we made in Q4, and you can see that in some of the results. But that work will extend into ’23. So that’s first. I think the second thing, priority-wise, I would talk about is just speed. We believe that continuing to get products to customers faster, makes customers happier, and they also converted a higher rate when they can see promises of deliveries that are faster. I think selection will always be a very high area of focus for us. We work with hundreds of thousands in the U.S. and millions overall in the world of selling partners.

In this past quarter, 59% of the units sold were from our third-party selling partners, and we work very hard to provide unmatched selection. And that matters a lot to customers. I think pricing being sharp is always important. But particularly in this type of uncertain economy, where customers are very conscious about how much they’re spending, having the millions of deals that we put together with our selling partners in the fourth quarter was an important part of the demand that you saw, and we’ll continue to work really hard on being sharp on pricing. And then just the customer experience improvements that we’re working all the time, whether it’s adding Buy with Prime that allows Prime users to use their Prime benefits on other websites than just Amazon; or adding RxPass in the health care space, where our Prime customers for $5 a month can get all the medicines they’re using in unlimited fashion; or whether it’s just even in our apparel business, where when you’re looking clothing you might buy, being able to see virtually your shoes with that outfit to see how it looks and it changes your customer experience, your buying experience, we will continue to work very hard on those customer experiences, and we have a lot more planned.

Operator: And the next question comes from the line of Doug Anmuth with JPMorgan.

Douglas Anmuth: Also for Andy, I have two. Just first, how would you evaluate your efforts in grocery thus far? I know you’re — it’s a big, huge market. You’re attacking it different ways. What are the key steps here that you’re focused on to drive greater market share? And then secondly, how should we think about the strategic importance of some of these emerging bets type of areas like health care and Kuiper and autonomous vehicles, among others?