Amazon's Internal Accounting Metric: Downstream Impact (DSI)

Amazon employs an internal accounting metric named Downstream Impact (DSI) to attribute revenue generated from devices like Echo to other parts of its business. This metric allows loss-making divisions, such as those producing Alexa-equipped devices, to claim revenue from associated purchases, effectively masking their financial losses. For example, if a customer orders laundry detergent via an Echo speaker, the devices team can attribute a portion of that revenue to themselves. DSI reflects the interconnected nature of Amazon's vast business ecosystem, where purchases made can influence customer behaviors across product lines, such as increased shopping or digital media subscriptions. However, the usage of this metric has led to significant challenges, including internal disputes over revenue attribution and the potential for double or triple counting of revenue. For instance, both the Echo and Fire TV teams could claim credit for a customer's decision to buy an Amazon Prime subscription, resulting in inflated revenue figures. Critics have likened DSI to 'monopoly money' due to its imprecision and questionable utility. Despite these issues, Amazon plans to persist with DSI as a measure of business success, aligning it with overall growth across its divisions.