“Consumers are spending money, but they’re just being very careful about what they spend and how much they spend,” said Amazon CEO Andy Jassy.
Jassy recently spoke with CNBC’s Andrew Ross Sorkin on “Squawk Box,” from how to attract cash-strapped consumers with the help of AI to what’s driving Amazon’s growth as both an advertiser and a streamer. Everything has been revealed up to and including.
“Consumers are trading down the average selling price wherever they can,” he told CNBC. “As you know, consumers will take deals wherever they can find a deal. It will take a long time for me to stop buying such things.
“You can see that in the growth of our consumer products business, which grew more than 20% year-over-year (YoY) in the fourth quarter of 2023. Part of the reason for that is because people are always looking to buy. But part of that is simply because we have speed and can get to people faster, so they’re looking at us at a higher price point.”
Transform the consumer experience with AI
According to Jassy, AI is a tool that can help brands reach increasingly savvy consumers. Discretionary goods such as televisions and electronics are most affected by consumer ‘markdowns’, so brands need to be equally savvy in their approach to marketing in a depressed economy.
Jassy said: “I think AI will transform every customer experience as we know it. I think a lot of the discussion has been around applications, starting with ChatGPT, which got a lot of attention, but there are three big things in the generative AI stack. We think there are macro areas, and each one is huge, and we’re investing deeply in each one.
“At the bottom, you have people building their own large-scale language models, and what’s really important there is the computers that train the models and do the predictions and inference. That’s where the chips are.
“We have developed a training chip called Trainium and an inference chip called Inferentia that are significantly more cost-effective than anything available elsewhere. It will be done on a chip.”
Regarding consumer impressions of AI, Jassy said the most consistent thing he’s seen throughout the early stages of consumer launches is that “customers want choice.”
He further added: “They want different model types for different types of applications and use cases. They want different model sizes because that changes the latency and cost structure.”
Amazon’s belief in AI is symbolized by its recent $4 billion investment in AI startup Anthropic. While the AI safety and research company does not work exclusively with Amazon, the partnership will make Amazon a primary cloud partner for Anthropic, which will help build future projects on Amazon chips like Trainium. The AI model will be trained.
“I don’t think it’s advertising to them.”
Amazon is involved in many areas and has recently become a major player in advertising and data collection. Last year, the company’s advertising business grew 24% year over year, increasing from $38 billion in 2022 to $47 billion in 2023.
Regarding the company’s growth in this regard, Jassy told CNBC:
“In fact, most of our advertising is machine learning practitioners coming up with the right products to put in front of people, so we don’t feel like we’re advertising to them. I feel like I’ve found an item.
For brands, with the launch of Amazon’s Sponsored Products and more recently Sponsored TV, companies can put their brands at the forefront of relevant advertising and reach the right consumers at the right time in the purchase funnel. , you can now take advantage of this machine learning.
Jassy said: “Sponsored TV services give people self-service access to entities like Freevee and Twitch, but we recently added the ability to advertise on Prime Video shows and movies. But, you know, we expect to continue to find very thoughtful ways to advertise within the various entities that we have.”
Amazon’s streaming service, Prime Video, has become a profitable business unit in its own right, competing well in an increasingly competitive streaming landscape. When launching Prime, Jassy said, “It was very important to us that people find value in the entire Prime service.”
He further added: “In fact, we found that many people signed up for Prime for our exclusive content, and that becoming a Prime member led them to shop with our e-commerce service. It pushed the business downstream, and that’s still very much the case.
“But we now believe it will also be a good economic business in its own right, apart from the value it brings to other parts of the business.”
Amazon’s stock is up 22% this year, and the e-commerce giant continues to grow rapidly, positioning itself ahead of the AI era and positioning itself as a data collection and advertising service and as an e-commerce marketplace and service. It is established. streamer. Exactly what the future holds for the business and technology worlds as a whole is uncertain, but there’s no doubt that Amazon will play a key role in shaping that future.
