, CFO

Goldman Sachs Internet Conference

May 27, 2004 .com

This presentation may contain forward-looking statements, including statements regarding expectations of sales, gross margin, productivity, leverage, operating results, consolidated segment operating results, capital investment, return on capital, free cash flow and other financial statement or balance sheet items or ratios, all of which are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, among others, the potential changes in general economic conditions, Amazon.com’s risks related to potential future losses, significant amount of indebtedness, competition, commercial agreements and strategic alliances, foreign exchange rates, seasonality, potential fluctuations in operating results and rate of growth, management of potential growth, system interruption, international expansion, consumer trends, inventory, fulfillment center optimization, limited operating history, government regulation and taxation, fraud, and new business areas. More information about factors that potentially could affect Amazon.com’s financial results is included in Amazon.com’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2003, and all subsequent filings. Additional information relating to certain of our financial measures contained herein is available in our most recent press release and at our website at www.amazon.com/ir under ‘Financial Documents and Annual Reports’.

2 Amazon.com Agenda

Our Strategy

Our Model

Our Results

3 Our Strategy Vision

Earth’s Biggest Selection Build a place where people can find and discover anything they want to buy online

Earth’s Most Customer-Centric Company Start with the customer and work backwards

4 Our Strategy Our Virtuous Cycle

Source: , September 2001

Over 41MM Active Customer Accounts 5 Our Strategy Customer Experience Pillars Price Selection Convenience

I N N O V A T I O N 6 Selection Leveraging the Platform

Amazon.com Our Inventory as Seller Our Product Detail Pages

Marketplace / 3rd Party Inventory Merchants@ Our Product Detail Pages

Over 700,000 Active Seller Accounts* 7 *Those with an order from one of our customers in the last 12 months Selection Home and Garden in

8 Selection Third Party -- Marketplace

9 Selection Third Party -- Marketplace

10 Selection Third Party -- Merchants @ Amazon.com

11 Selection Beauty -- Merchants @ Amazon.com

12 Selection Jewelry & Watches

13 Selection Jewelry & Watches

14 Selection Jewelry & Watches

15 Selection Gourmet Food

16 Selection Health & Personal Care

17 Our Strategy Leveraging our Platform

Amazon.com Our Inventory as Seller Our Product Detail Pages } 77% of Units* Syndicated Our Technology & Inventory Stores Co-branded Partner Websites

23% of Units* Marketplace / 3rd Party Inventory Merchants@ Our Product Detail Pages

Merchant.com Our Technology Powers Partner Websites 18 *Q1 2004 Our Strategy Syndicated Stores

Others: CDNow, HMV, Virgin, WaldenBooks, 19 Our Strategy Merchant.com

20 Global Selection

Books ‘95 ‘98 ‘98 ‘00 ‘00 ‘02 Music/DVD/Video ‘98 ‘99 ‘99 ‘01 ‘00 ‘02 Video Games & Software ‘99 ‘00 ‘00 ‘01 ‘01 ‘03 Electronics ‘99 ‘01 ‘01 ‘03 Toys & Baby ‘99 ‘01 Tools & Hardware ‘99 ‘04 ‘04 Kitchen & Housewares ‘00 ‘04 ‘04 ‘03 Office Products ‘02 Apparel & Accessories ‘02 Sports & Outdoors ‘03 Gourmet Food ‘03 Jewelry & Watches ‘03 Health & Personal Care ‘03 Beauty ‘04 Third Party Sellers Marketplace ‘00 ‘02 ‘02 ‘02 ‘03 ‘03 Merchants@ ‘02 21 Expect More Category and Country Expansion Over Time Global Brand Interbrand Top 100

1. Coca-Cola

20.

36. Gap

43. Ikea

65. Yahoo

70. Tiffany

74. Amazon.com -- “Amazon’s relentless focus on making online buying easier...improved its standing among consumers.”

93. Starbucks

98. Wall Street Journal

22 Source: Business Week - August, 2003 -- Interbrand’s Annual Survey of the World’s Most Valuable Brands Convenience Search Inside the

23 Convenience Search Inside the Book

Searchable Pages From Hundreds of Publishers 24 Convenience Customer Self Service

25 Convenience Customer Self Service

If You Have to Contact Us -- It’s Not Convenient 26 Convenience A9.com

Improving E-Commerce Search 27 Convenience Guaranteed Accelerated Delivery

28 Price Jewelry

29 Price

30 Price Free Shipping

U.S.

U.K.

JP

FR La livraison gratuite à partir de 20 euros d'achats !

DE

CA 31 Customer Satisfaction

“Amazon.com continues its lead, with a remarkable score of 88... Although customers consider service quality to be exceedingly high, an increasing part of their satisfaction appears to result from lower pricing.”

Highest Ever Service Industry Score -- Online or Offline 32 Source: American Customer Satisfaction Index – February, 2004. University of Michigan, American Society for Quality, CFI Group. Our Model Capital Efficiency -- Centralized Distribution

Physical Store Amazon.com

Headquarters

Warehouses

Stores

Lower Invested Capital = Higher Return 33 Our Model Balance Sheet -- March 31, 2004 Assets ($MM) Cash & Marketable Securities $ 998 TTM Free Cash Flow $344 Inventories 282 19 Turns / 4% of Sales Accounts Receivable, net & Other 126 $499 in “operating assets” Total Current Assets 1,406 Fixed Assets, net 217 Fixed Assets Down 5% Y/Y Other Long Term Assets 116 ROIC 38% up From 15% Total Assets $1,739 Liabilities and Stockholders’ Deficit Principal Due 2009 / 2010 Current Liabilities $866 Long-Term Debt 1,778 $150 Partial Call Feb-04 Total Stockholders’ Deficit (905) Up to an Additional $500 Total Liabilities & $1,739 Over Time Stockholders’ Deficit

Long Term Expectation -- Triple Digit Returns on Invested Capital 34 Our Model Capital Efficiency -- Negative Operating Cycle*

21 Days Day 0 20 23 44

Product Product Customer Supplier Received Shipped Payment Paid

Working Capital is a Source of Cash 35

* As of 3/31/04 -- TTM Average Inventory Turns, Approximate AR Days and Ending AP Days Our Model Inventory Velocity

Hypothetical Example -- Digital Camera

Physical Store Amazon.com

Average Selling Price $300 $300 Turns -- TTM 7.5 18.7 Obsolescence Hypothetical Value -- One Year Later $210 $210

Obsolescence Loss Per Week (30% per Year) $1.7 $1.7 Average Weeks in Inventory 7.0 2.8 Obsolescence Cost Per Unit $11.9 $4.8 As a % of Sales 4.0% 1.6%

Inventory Velocity Translates to Cash and Margin Benefit 36 Our Model Inventory Velocity -- Trailing Twelve Months (TTM)

Inventory Turns

Gross Inventory 20 Margin Turns Amazon.com Amazon.com 24% 19

Costco Barnes & Noble 28% 3 11

Costco 12% 11 Wal-Mart Home Best Buy Depot Home Depot 32% 5

Barnes & Noble Best Buy 25% 7 2 10% 22.5% 35% Wal-Mart 23% 7 Gross Margin

Best of Both Worlds -- High Turns, High Margins 37

Source: MultexIR Stock Screener (Most Recent Available Data as of May 20, 2004) -- Inventory Turns = TTM COGS / TTM Average Inventory Our Model Technology

Performance / $ Internet Penetration / Users Optical Fiber -- Doubles 9 months (bits per second) Web Services

Data Storage -- Doubles 12 months Bandwidth (bits per square inch) Wireless Silicon (Moore’s Law) -- Doubles 18 Months (number of transistors) Instant On

0 Years 5 Third Parties Source: Vinod Khosla, Kleiner Perkins Caufield & Byers, 2000

Technology is our Ally -- It Will Only Get Better 38 Our Results Free Cash Flow* -- TTM ($MM) $44 $24

$138 ($94) $73 ($49) ($37) $344 $313

Q1 04 Change in Change in Depreciation CapEx Net Change in Other Q1 04 Pro Forma Accounts Inventories & FCF Net Income Payable Amortization

Leverage in Earnings, Working Capital and Fixed Assets 39 * Operating Cash Flow Less Capital Expenditures -- see appendix Our Results Free Cash Flow* -- TTM ($MM)

$350 $344 Up 180%

$175 $123

$0 Q1 03 Q1 04

Long Term Goal -- Optimize Free Cash Flow per Share 40

* Operating Cash Flow Less Capital Expenditures (including capitalized software & development) -- see appendix Our Results Share Count 440 (MM) 432 432

220 392 405

0 Q1 03Shares Outstanding Stock Awards Q1 Outstanding 04 Efficiently Managing Dilution -- Flat Y/Y 41 Our Results Net Sales -- TTM

($MM)

$6,000 $5,710 Up 37%

$4,169

$3,000 $4,061 $5,441

$0 Q1 03 Q1 04

F/X Neutral Net Sales F/X Impact 31% Growth Excluding F/X Impact 42 Our Results Net Sales Mix -- TTM ($MM) North America Sales Mix Worldwide Sales Mix $115 3% $116 $935 2% $1,244 27% 22% $2,351 70%

International Sales Mix $309 $1 $4,351 13% N/A 76%

Media Electronics and Other General Merchandise $2,000 43 Other (Merchant.com & Misc. Marketing) 87% Our Results $1,400Gross Margin -- TTM 26%

$1,347 Up 30% 24.9%

$1,200 24%

23.6%

$1,000 $1,040 22%

Q1 03Gross Profit Gross Margin Q1 04

Maximize Margin Dollars, Not Percentages 44 Our Results International Revenue -- TTM ($MM)

55% Growth Excluding F/X Impact

$2,400 Up 74% $2,310 40% of WW Revenue From International (UK, Germany, & France)

$1,324 $1,200 46% of Revenue From Shipments to Customers Outside of U.S. (Including Exports)

$0 Q1 035% Segment Operating Q1 04 Margin

Long Term Expectation -- 50%+ of Sales to Customers Outside the US 45 Our Results Consolidated Segment Operating Expenses -- TTM

40% 37%

Sales Growth % Y/Y 28%

19.6% Opex as a % of Sales 20% 16.4%

14.6% Opex Growth % Y/Y

1% 0% Q1 03 Q2 03 Q3 03 Q4 03 Q1 04

Leveraging Cost Structure 46 Our Results

Consolidated Segment Operating Income* -- TTM Operating Income Operating Margin ($MM) 7% Up 184bps Up $188MM $411

5% $450 8% $223

$225 4%

$0 0% Q1 03Q1 03 Q1 04 Q1 04

Long Term Expectation -- Low Double Digit Operating Margins 47

* See Appendix Our Results First Quarter Highlights*

($MM) Q1 03 Q1 04 Change

Free Cash Flow -- TTM $123 $344 180% Net Sales $1,084 $1,530 41%

Gross Profit $271 $361 33%

Gross Margin 25.0% 23.6% (139bps) Consolidated Segment Operating Expenses $ 203 $ 244 20%

As a % of Sales 18.7% 15.9% (282bps) Consolidated Segment Operating Income $ 67 $ 117 73%

Consolidated Segment Operating Margin 6.2% 7.6% 142bps

Fueled by Lower Prices and Free Shipping 48

*See Appendix Amazon.com Summary

The Online Model is Advantaged We Face Many Challenges and Many Opportunities -- We Are: • Relentlessly Improving Customer Experience -- Expanding Selection and Convenience While Lowering Prices • Demonstrating Sustained Operational Progress • Well Positioned for Growth • Innovation is the Foundation of Everything We Do • Focused on Optimizing Free Cash Flow per Share

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Appendix Free Cash Flow Reconciliation -- TTM ($MM)

Q1 03 Q2 03 Q3 03 Q4 03 Q1 04

Operating Cash Flow $164 $285 $284 $392 $393

Less: Purchases of Fixed 41 40 44 46 49 Assets

Free Cash Flow $123 $245 $239 $346 $344

52 Consolidated Segment Operating Income Reconciliation ($MM)

Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Consolidated Segment Operating Income $67 $67 $74 $153 $117

Less:

Stock-Based Compensation 27 24 21 15 7

Other Operating Expense (Income) 1 1 1--(1)

GAAP Income From Operations $39 $42 $52 $138 $110

53 Pro Forma Net Income Reconciliation -- TTM ($MM) Q1 03 Q2 03 Q3 03 Q4 03 Q1 04

Pro Forma Net Income $112 $158 $206 $256 $313 Less:

Stock-Based Compensation 85 87 108 88 68

Other Operating Expense (Income) 36 36 (2) 3 1

Remeasurements and Other126 122 135 130 88

GAAP Net Income (Loss) ($136) ($86)($35) $35 $157

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