Business News

CCTV Script 20/04/18


— This is the script of CNBC's news report for China's CCTV on April 20, Friday.

Bezos not only always keep silent about the specific number of paying user that is one of the most important assets for Amazon, but also be caution to media interview and seldom delivery message via exclusive interview. In the letter to shareholders disclosed on the 18th, however, Bezos mentioned the number of Amazon user has been over 0.1 billion. But the questions are: 1st, why dose Bezos disclose the data at this stage? 2nd, what does the data indicate?

Some analysts believe that this letter to shareholders is quite important, because President Trump criticized Amazon for "3 crimes" that includes not paying a reasonable consumption tax, causes loss to U.S. delivery system and led to the bankruptcy of tens of thousands of traditional retailers which caused Amazon in the forefront of public opinion and many investors question the profitability of Amazon. Prime has more than 0.1 billion users which is a powerful answer from Bezos.

As for the 2nd question, what does the number of Prime user indicate? That indicates Amazon earns more than 9.9 billion USD revenue from member fees, accounting for 5.5% of total annual revenue in 2017. Meanwhile, the growth of the number of paying user represents the increase of user's spending on Amazon. According to a survey from Consumer Association, the spending of Prime users doubles that of unpaying users. So the Prime's member service plays an important role to Amazon's performance.

During the overnight trade, Amazon's stock price advanced 1.9% after the published data allied investor's sentiment. And in the past year, Amazon's stock rose by 76%, which is about 5 times that of the S&P 500.

Bezos also said the number of delivery package is over 5 billion in 2017. Amazon does change the operation model of many industries, so many people is curious about its future development.

Bezos said that the investment on original content is the highlight of Amazon's development plan, as well as the growth in China market. Amazon has business in various industries which makes its future unpredictable. For example, in the last year, Amazon has been involved in different industries that include transportation, supermarket, packaged food, Trucks, auto parts, pharmaceuticals, real estate agents, cosmetics, concert bookings, swimming pool supplies and banking, etc. Bezos added that Amazon's long-term plan will also focus on the combination of technological explorations such as machine learning, automation, and space exploration with Amazon.

Amazon is called as U.S. "Business Nightmare" amid the stock price of related business will drop immediately when Amazon announce it will enter into these business or even when there is just a rumor. Regulatory measures that the Trump administration may take afterwards overshadowed Amazon's prospect which make the nightmare not invulnerable. "Everything Store" described Amazon's growth, But now, "Everything Store", this name may underestimated Bezos's ambition.