Amazon has cracked the code on keeping customers.
A coworker used to work at Amazon for four years. He told me that Jeff Bezos believed there was nothing more expensive than losing a customer. Hence, the reason why returns are so easy with Amazon, even though Amazon may eat those costs in the short term. Last night was no exception.
AWS Hack
In 2014, my Amazon Web Services account was hacked. Ten days into the month, I noticed that my bill was already a thousand times larger than my typical bill. Amazon recognized the hack and gave me amnesty for the entire bill.
Spreading the Profits
Amazon had their first profitable quarter in the fourth quarter of 2001 when they earned $5 million in profit on revenues of over $1 billion.¹ Bezos wanted to share this profit with customers.
Tech companies typically don't pay dividends to investors. Even today, Amazon doesn't pay a dividend. But sharing profits with customers is very unusual. In this case, the profit shared with each customer amounted to less than $1/customer. As insignificant as that sounds, Bezos found a way to make it meaningful.
The price of a USPS First Class postage stamp was increasing in January 2002 from 34¢ to 37¢. Back then, "snail mail" was much more popular than today; not everyone had an e-mail account. Each price increase in postage was a challenge before April 2007 when the post office introduced the Forever Stamp. Before the Forever Stamp, a person had to buy 1¢ stamps to add to postage. This was a hassle and many people, including myself, would, for example, simply put two 34¢ stamps on a letter instead of a 34¢ stamp plus three 1¢ stamps. It seems like a waste of money but our personal time, to purchase additional 1¢ stamps, is worth something to each of us.
Bezos's solution was elegant. He recognized this inconvenience of needing to buy 1¢ stamps, so he had Amazon send a bunch of 1¢ stamps to their customers. I remember thinking how brilliant this was when I received them.
Last Night
Two days ago, I received my shingles #2 and pneumonia vaccines. The shingles second vaccine is the same as the first one, which I received on its own, without much discomfort. But, yesterday, I felt sick and I feared Covid because, on New Year's Day, I had breakfast with someone who tested positive for Covid, the next day – the same day I received my vaccines.
I took my temperature yesterday morning and it was fine – no fever. In the evening, when I took it, my thermometer was displaying a fever of 100.7°F. But the display was blinking which meant the battery was too low for a reliable reading. I looked on Amazon for a replacement battery. But there was no practical option that would arrive in time plus I couldn't buy a single battery which would be a waste.
Instead, I ordered a new thermometer around 6 PM and I paid an extra $3 so it would be delivered the next morning between 4AM and 8 AM. However, to my surprise, Amazon delivered it about an hour later. I took my temperature with the new thermometer and all was well – no fever.
It's unusual for Amazon to move up a delivery by one day. I'm speculating that they know, if someone is paying extra for a faster delivery, for a medical item, that it's urgently needed. So, it seems they were able to expedite my delivery to give me peace of mind. I greatly appreciate that and it pays to live very close to downtown San Diego.
