Bezos Stays Upbeat Despite 'Brutal' Year

Amazon.com attributed the slowing growth rate of its books/ music/video group in 2000 to a maturing market, a focus on balancing revenue growth with operating efficiency, increased efforts to expand its offerings and a general slowdown in consumer spending. In 2000, sales in the B/M/V group rose 30%, to $1.7 billion, compared to a growth rate of 122% between 1998 and 1999. The comment was made in Amazon's 10-k filing with the Securities & Exchange Commission, which also noted that the company is committed to opening new online stores in 2001 and beyond.

The company also plans to add new products and services to its international Web sites in the year. Total revenues from Amazon's international operations jumped 127% in 2000, to $381 million, a figure that includes export sales to the U.S. Despite its growth plans for the overseas market, Amazon will close its distribution center in the Netherlands in June and centralize its European customer service facilities in the U.K. and Germany. Its Seattle distribution center is scheduled to close next month as part of the company's previously announced restructuring.

In his letter to shareholders, Amazon CEO Jeff Bezos acknowledged that it was a "brutal" year for Amazon shareholders with the company's stock down by about 80%. Despite investor nervousness, Bezos maintained that Amazon "is in a stronger position now than at any time in its past."

Bezos also used the shareholder letter to defend Amazon's decision to become a broad-based e-retailer, rather than remain devoted to the book field, by noting the difficulty single-category e-commerce companies have had in reaching the scale necessary to succeed. Bezos pointed to living.com and Pets. com—two companies that Amazon had invested in, losing a "significant" amount of money—as examples of the inability of medium-sized e-retailers to become profitable. The death of numerous e-retailers notwithstanding, Bezos still believes online retail will account for 15% of retail sales.