In case anyone missed the memo about the deep impact generative artificial intelligence will have on retail, Amazon is here to remind everyone, especially investors.
In a letter to shareholders released Thursday, chief executive officer Andy Jassy enumerated the company’s priorities, noting that Amazon Web Services (AWS) in particular faces ”headwinds.“ He foresees major growth in areas like advertising and AI, however — and in fact, he suggested that the company’s large investments in generative AI and large language models (LLM) will surely pay off, as technologies destined to change the game for retail in fundamental and sweeping ways.
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With one letter, Jassy appeared to be trying to shore up confidence in a cloud division that has been struggling amid macroeconomic forces, tout AWS services to prospective clients and cement his own thought leadership about the machine-driven future of retail.
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The notion of the bots coming for retail isn’t new, and it’s tempting to chalk that up to yet another hype bubble akin to the fading metaverse trend. Meanwhile AI has been capturing the public and the business world’s imagination, so the timing makes it easy to swap one in for the other on the trend meter. But it’s not that simple.
From the outset, even the metaverse’s biggest fans knew that it would take years, even decades more, to mature. With artificial intelligence, which dates back more than 50 years, recent advancements already look like major leaps forward, thanks to breakthroughs and new versions, like generative AI. The newer wave of bots feature uncanny abilities to understand and communicate more like humans, as well as generate creative works, because they learn rapidly from the massive volumes of data piped through via LLMs.
Amazon, which has been using machine learning for 25 years for personalized product recommendations, fulfillment center routes, Prime Air drones, Alexa and AWS services, has been working with LLMs specifically for some time, added Jassy. But it’s not hogging the tech for itself. Instead, as a marquee facet of AWS’ offerings, retailers and brands can benefit from Amazon’s tools.
“We enable companies to choose from various LLMs and build applications with all of the AWS security, privacy and other features that customers are accustomed to using.…I could write an entire letter on LLMs and generative AI, as I think they will be that transformative, but I’ll leave that for a future letter,” he explained. “Let’s just say that LLMs and Generative AI are going to be a big deal for customers, our shareholders and Amazon.”
The last part matters, because it means that the fast-moving, rapidly expanding skillsets of generative AI will drive Amazon’s own business. The tech will “transform and improve virtually every customer experience, and [Amazon] will continue to invest substantially in these models across all of our consumer, seller, brand and creator experiences,” Jassy said.
In other words, Amazon may be grappling with the same downturns dogging other tech and e-commerce operations, but Jassy sees a grand vision for Amazon’s future.
That may be what he is telling himself as well, as the CEO sees his own compensation crater.
When the heir apparent to founder and then-CEO Jeff Bezos ascended to the top leadership role in 2021, he nabbed $212.7 million in compensation, mainly in special stock grants. According to the company’s latest proxy statement with the Securities and Exchange Commission, the figure plunged in 2022 to $1.3 million in salary, stock awards and other perks.
Bezos, who sits as executive chair, remained flat, pulling in slightly more last year at $1.68 million. But he retains roughly 10 percent ownership in the business, which is valued at nearly $5 trillion.
The CEO appears to be literally putting his money where his mouth is, and the vision he’s laid out looks less like excuses and bluster, and more like a serious path forward. If that’s true, the implications go well beyond Amazon, putting the tech giant and its cloud division at the center of wherever AI take retail and e-commerce next.
Good thing for Amazon that it seems braced for change, because it might come regardless. On Thursday, the company announced that it’s facing a record 18 shareholder proposals to boost environmental, social and governance measures. The proposals will be subject to a vote at the the annual meeting in May.