Recently, Wall Street investors ignored Amazon’s (AMZ) latest lower earnings report and bid for $49B in new bonds. AMZ nibbled only $16B (at lower than projected interest rates) and bought Whole Foods for $13.7B. What will they do with the extra $2.3B? It is likely they’ll add to their already huge innovation budget. In 2016, AMZ spent $6.74B on fixed assets, with overall estimates for “innovative activities” exceeding $17B.
How does AMZ’s investment in innovation increase value for B2B buyers?
Following the news feed for AMZ’s daily innovation announcements is a full-time job. Most of these innovations indirectly increase value for Prime customers, while also bringing in new Prime customers and increasing retention. Then, there is a domino effect as these Primers take their AMZ shopping expectations to work, causing an accelerating increase in B2B sales.