Amazon.com, Inc. AMZN’s founder and CEO Jeff Bezos is famous not only for having created a groundbreaking company, but also for the way that he’s run it.
Over the years, Bezos has been relentlessly committed to long-term growth, ignoring shareholders’ concerns and analysts’ criticisms. Looking back at the company’s history, it is pretty safe to say that his “willingness to sacrifice short-term profits for long-term success appears to be bearing fruit,” in the words of data journalist Felix Richter.
Maintaining The Lead
Amazon has managed to establish and maintain itself as the leading online retailer in numerous markets around the world. In addition, over the past few years, it has built “an industry-leading cloud computing business and established itself as a serious contender in the growing media streaming landscape,” Richter added in a recent Statista article.
But, how has Amazon become so good in so many different arenas?
The key is re-investment. Over the years, the tech giant has put most of its profits back in the company.
For instance, in the last twelve months, Amazon’s net profit reached $596 million. In 2004, net profits stood at $588 million. While the figure is almost the same, the panorama in the revenues front is totally different.
In 2015, the company posted revenue of $107 billion, 15 times higher than in 2004. However, net profit has remained almost flat.
The chart below illustrates Amazon’s strategy by comparing the company’s revenue and profit growth between 1997 and 2015.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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