Amazon’s 2019 was about as eventful as it gets.
The tech giant plowed billions into an ambitious one-day shipping promise, put out a slew of new Alexa devices, lost out on a huge military cloud contract to Microsoft, tussled with politicians from the city level all the way up to presidential candidates, and so, so much more.
As the dust settles on the busy year, Amazon just released its annual 10-K filing with U.S. Securities and Exchange Commission. The document is primarily a financial summary and recap of the year’s events. But shifts in language also shed light on how Amazon is changing, and what it sees as top priorities and risks going forward. For a company that its keeps plans very close to the vest, these kinds of disclosures are one of few available tools to analyze its thought process — in effect, to attempt to read Amazon’s mind.
We compared the company’s 10-K forms from 2018 and 2019 to see what has changed, using the trusty “Compare Documents” feature in Microsoft Word. There weren’t any tectonic shifts in the company’s mission, but some subtle tweaks led to some interesting insights.
One notable difference, given heightened antitrust scrutiny of Amazon and other tech giants, is a greater emphasis on the potential for competitors to come out of nowhere to challenge the company. Amazon elevated this line in the 10-K and added a new clause that we’ve emphasized here in bold: “The Internet facilitates competitive entry and comparison shopping, which enhances the ability of new, smaller, or lesser-known businesses to compete against us.”
Amazon CEO Jeff Bezos preaches the value of failure as a natural part of innovation, and another change in the 10-K seems to incorporate that mindset.
Previously, a section on expanding into new markets and product areas warned that failure “could damage our reputation, limit our growth, and negatively affect our operating results.” That language has now been axed in that section, and replaced in the new 10-K with this less-alarming warning: “Failure to realize the benefits of amounts we invest in new technologies, products, or services could result in the value of those investments being written down or written off.”
The latest 10-K contains no mention of HQ2 beyond a small footnote, after Amazon’s public search for a second headquarters dominated headlines throughout 2017 and 2018. New York City popped up in the 2018 filing as the home of a future headquarters but disappeared from the most recent 10-K following the acrimonious split between the city and Amazon.
Nor do we see a mention of one-day shipping, perhaps Amazon’s most impactful and challenging initiative of 2019. The company spent almost $1.5 billion on the one-day push in the holiday quarter and another $1 billion in the first quarter of this year.
Here are a few other changes from the document that intrigued us, plus some under-the-radar numbers from 2019:
- Advertising is becoming an important pillar of the company. Last year’s document contained a one-off mention of advertising as part of the overall business. This year, Amazon added more detail, writing that it provides advertising services “to sellers, vendors, publishers, and authors, through programs such as sponsored ads, display, and video advertising.” Amazon doesn’t break out advertising individually in its financial results, instead coupling it under a larger umbrella of “other.” That “other” group brought in more than $14 billion in revenue in 2019, up 39 percent over the prior year.
- Amazon is a grocer, if it wasn’t already evident. In this year’s document, Amazon officially added “companies that sell grocery products online and in physical stores,” to its official list of competitors. Amazon ramped up grocery delivery from Whole Foods stores throughout the year and confirmed that it is getting ready to start up a new store concept.
- The company spent $315 million on acquisitions in 2019, its lowest in three years. The years 2017 and 2018 featured the blockbuster deals for Whole Foods Market and Ring. Amazon didn’t make any acquisitions big enough in 2019 to be listed in the filing individually.
- Amazon’s global real estate footprint — which includes all the offices, stores, data centers and warehouses it owns and leases around the globe — was 333.8 million square feet at the end of the year. In 2019, Amazon added 45 million square feet to its real estate portfolio, an increase of 16 percent over the prior year. Amazon’s network of warehouses and data centers in North America and its international office footprint were the biggest drivers, growing more than 20 percent each in 2019.
- Amazon finished the year with 44 additional stores compared to 2018. Its total brick-and-mortar footprint sits at 571 stores, only seven of which are outside North America.
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