Amazon.com, the online retail global giant has already crossed sales over USD 1 billion in India and this growth is pleasantly surprising for the company, says Jeff Bezos, founder and chief executive officer, Amazon.com.
In an exclusive interview to CNBC-TV18's Menaka Doshi, Bezos says India is the company's fast growing geography and its a fact that's hard to digest.
"Our success comes from getting the small and medium enterprises (SMEs) onto the online platform," says Bezos.
Also read: Why e-commerce is taking India by a storm
The company that hasn't yet "reported" a profit in 20 years, continues to focus on the decades old adage- customer is king.
"I don't understand why I should think or worry about my competition at a time when I should only focus on my customers. We have continued to ignore our competition and we will continue to do the same," he adds.
Also read: India can see $100bn worth e-comm co in 10-20 yrs: Snapdeal
Below is the edited transcript of Jeff Bezos' interview with CNBC-TV18's Menaka Doshi.
Q: Has India surprised you in ways that you never expected in terms of the kind of responses that you have got at Amazon, are the customers different, is the business strategy different?
A: Well it is a little different but the biggest surprise has just been how rapidly our business here in India has grown. So we launched Amazon India just a year ago and already it is the fastest geography ever to reach over a billion dollars in sales and it is happening so quickly and growing so fast and part of that is because the strategy is a little different here.
One of the things that is very unique about India is that there are so many small and medium enterprises (SMEs). So what our local team here has done is invent some new ways to get those SMEs up and online and participating in this digital ecosystem. So it is a pretty interesting invention and it is working so well here in India we may take it to the other parts of the world as well.
Q: Amazon is now almost 20 years older.
A: Yes.
Q: From what I have read and understood you have never reported a profit. I use the word 'reported a profit' carefully because you have made one but you just chosen to reinvest a lot of those funds in expanding your business. You have a different philosophy regarding profitability. Can you talk us through why it is not so important for you to report a profit?
A: We have a bunch of different business segments and some of those are generating very significant profits and then we take those profits and we invest them in new businesses, new geographies. For example we are investing in India right now and when things are working that is when we raise our investment levels. We like to double down on things that are working. So India is deserving a big investment because it is working so well.
Sometimes I get the question how do you avoid the short term pressures of Wall Street and how Amazon is able to take this long term approach and keep reinvesting its earnings and I will tell you that the key to that is from the very beginning back in 1997 when we became a publicly traded company we laid out as clearly as we could what kind of company we were and how we wanted to operate. Warren Buffett the great investor has a terrific quote. He says 'You can hold a rock concern and that is okay and you can hold a ballet and that is okay. Just don't hold a rock concert and advertise it as a ballet.'
So investors come in all shapes and sizes. They have different investment horizons, different investor approaches and so some of them like our approach and they self select because we have been clear about it and we have been consistent about our approach. We don't even claim that our approach is the right one. We just claim that it is ours.
Q: But is it an approach where you don't see in the near term, reporting a profit. Start ups not reporting a profit is well understood, especially in a nascent a new business as the internet or the digital business but 20 years and not reporting once. I am just curious to know at what point in time do you think it will be alright to report a profit?
A: We are investing in things like Amazon India. We are committed to invest USD 2 billion here. We are investing in Amazon Web Services. We are investing in new product categories like fashion which by the way is going to be especially good. Fashion is going to be unusually successful in India in part because there are so many different regional fashions in India and one of the things that we can do is online commerce is let people in any region by the fashion from any other region. So I am very excited about that. But there are so many opportunities to invest.
Q: What does that mean for your investors. The reason I keep pushing this is because it is a different paradigm and I know you have said that investors who understand you have stayed with you but then we have also seen some investors be disappointed, let's say, by a recent quarterly announcement. So I am just curious you are changing the paradigm for investors in the way you do business?
A: I don't know if we are changing paradigm. Different investors could select different companies that have different approaches and those might work better for them. If you look back in 1997 when we went public we went public at USD 1.50/share out of split adjusted basis and today the stock is USD 300/share. So from USD 1.50 to USD 300 in 17 years we have created a lot of shareholder value. We have done it by being consistent, by thinking about the future, trying to put the customer first, trying to invent and being patient. Benjamin Graham, another great investor says 'In the short term stock market is a voting machine and in the long term it is a weighing machine' and at Amazon we have always tried to build the kind of company that wants to be weighed.
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