How Many Customers Does Amazon Have?

CEO Jeff Bezos shared that number and a few other secrets at the company's annual shareholder meeting.

May 24, 2014 at 7:41AM

Amazon (NASDAQ:AMZN) CEO Jeff Bezos may be one of the quieter chief executives leading a technology company. In general the giant online retailer plays things pretty close to the vest and the company rarely releases information about its customer base. But when Bezos speaks -- as he did Wednesday at the company's annual shareholder meeting -- he usually wastes few words and offers tremendous insight into his company's business.

Bezos told the crowd at the shareholders' meeting held in Seattle that the one-time bookstore, which now sells pretty much everything, had added 30 million new customers last year to bring its total active user base to 244 million, GeekWire reported.

"It's still day one," the CEO said, implying that he sees a lot more growth in the future. 

Amazon defines active customers as accounts that have made a purchase in the past 12 months. Active customers generally have valid credit cards on file. With roughly 244 million in that category, Amazon more than doubles eBay's (NASDAQ:EBAY) PayPal payment service, which has 110 million active customers, but it sits behind Apple (NASDAQ:AAPL), which has 800 million customers with iTunes accounts, according to GeekWire.

What's impressive about this number is that Amazon is growing so quickly in its 19th year of existence. As important as adding news customers is, it's also very telling that Amazon has been able to hold onto its existing user base. This will become even more important as the company continues to develop new ways for people to buy things through the Amazon ecosystem. Satisfied customers will buy Kindle Fire Tablets, the Fire TV set-top box, and maybe eventually the rumored Amazon phone.

Once they buy those things Amazon will be in an even better position to sell more.

Amazon likes to stay quiet

Though the shareholder meeting was open to reporters, those covering it were restricted to pen and paper. One shareholder asked Bezos about the company's policy on talking to media, eCommerceBytes reported.

"Our primary approach is, we talk when we have something to say. I never think of us as secretive, I think of us as mostly quiet." The CEO went on to say Amazon takes great care to try and keep its product roadmaps quiet. "You really need to be cognizant of how your competitors are going to glean useful tidbits from seemingly harmless disclosures."

Amazon might be a little paranoid in its secrecy but there is competitive advantage in that lack of sharing. While a competitor like Apple can still surprise with a new product, the general timetable for refreshed models of existing lines is well-known, which robs the announcement of some pizzazz. Amazon has generally been unpredictable, which makes its new releases more special. The company's recent introduction of the Fire TV set-top digital streaming player seemingly came out of nowhere, which makes it harder for competitors to react. Roku, for example, had it known about the impending release, could have countered with a price cut or a new feature for its set-top boxes.

It's all about delivery

Though reports from the meeting contain little in the way of actual news, Bezos acknowledged that the company plans to aggressively expand the use of robots in its warehouses in 2014, Seattle Times reported. The company began using robots two years ago when it acquired Kiva Systems for $775 million largely so it could further automate its warehouse operations. As of last October the company had over 1,000 robots deployed.

The robots are another step in Amazon's efforts to lower delivery times to improve service to customers. 

At the time of the purchase Amazon ViP of Global Customer Fulfillment, said  "Kiva's technology is another way to improve productivity by bringing the products directly to employees to pick, pack, and stock."

Though the robots may help Amazon avoid having to hire more workers, the company told GeekWire that the addition of more robots would not impact human staffing levels. Amazon has 96 warehouses around the world, seven more than it did last year at this time.

Delivery remains the single most important problem for Amazon to solve -- the only real advantage brick-and-mortar retailers have over the online giant is that they can offer customers immediate satisfaction. If robots can speed the process, then Amazon clearly made a wise buy acquiring Kiva.

Amazon is on the right path

Bezos has not only kept his cards close to the vest he has aggressively stuck to his "day one" philosophy that this is just the beginning for Amazon. That policy likely has cost the company significant profits in the short term. Instead of making the most money possible Bezos has invested in everything from delivery drones to software that predicts what customers will order before they order it. Not all of those bets will pay off, but barring the robots someday revolting like Battlestar Galactica's Cylons, some clearly have.

Amazon is growing steadily while fortifying its future position. At some point the market will solidify and all the secret keeping (along with the tremendous financial) outlay will pay off. Bezos is playing a long game when so many other players have burned brightly for a time then sputtered out. It may not be as sexy but the retail universe is littered with once prosperous companies that stopped evolving and died. 

By going against the grain Bezos is assuring Amazon's future rather than maximizing it short-term profits. 

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Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends, Apple, and eBay. The Motley Fool owns shares of, Apple, and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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