Amazon's Virtuous Cycle

How growing a company leads to a lower cost structure.

Source: Rob Phee
Published: August 2012

Amazon’s Virtuous Cycle

If you’re growing the company, the side benefit is that you build a lower cost structure. As we get bigger, we leverage our buys, our fulfillment infrastructure, and our website, which lowers the cost per unit of everything that we do.

We then have two choices: pay the cash out as a dividend or lower prices for customers. We choose to lower prices, which completes another cycle of great customer experiences.

We look for virtuous cycles that are complete, close looped, and that as you inject energy into each piece of them, the flywheel spins faster and faster.

-Jeff Wilke, CEO of Amazon’s worldwide consumer business

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