Amazon CEO Bezos to Shareholders: No, We Are Not a Charity

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​Amazon (AMZN) CEO Jeff Bezos insisted in his annual letter to shareholders that the company's low prices and razor-thin profits don't mean that the retail giant is a charity.

"Our heavy investments in Prime, [Amazon Web Services], Kindle, digital media, and customer experience in general strike some as too generous, shareholder indifferent, or even at odds with being a for-profit company," he acknowledged in a letter posted today to the site's investor relations page. He went on to quote journalist Matthew Yglesias, who described the company as "a charitable organization being run by elements of the investment community for the benefit of consumers."

Bezos strongly disagreed with that description.

"Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas," he writes. "Take a long-term view, and the interests of customers and shareholders align."
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The notion that Amazon is more concerned with consumers than shareholders isn't entirely unfounded. Despite its billions in revenue, Amazon regularly posts tiny profits -- if it posts a profit at all. In its latest earnings statement, it projected a net loss for the first quarter of 2013.

But Bezos makes a compelling case that the company's reputation for customer service serves it well in the long run. He notes, for instance, that Amazon proactively monitors the price of preordered items and automatically lowers the price for the customer. While that means the company is giving its customers money they didn't ask for -- see where that "charity" accusation comes from? -- he insists that the boost to the company's reputation is worth it in the long-run.

"Our policy could be to require the customer to contact us and ask for the refund," he says. "Doing it proactively is more expensive for us, but it also surprises, delights, and earns trust."

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.
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