Amazon CEO Andy Jassy explains how Amazon keeps prices low

Amazon CEO Andy Jassy recently told CNBC's Jim Cramer that the company's retail prices are down compared to last year—and explained what it takes to keep them there.

"We have an expression that we've used for almost a couple decades at Amazon, that it's pretty easy to lower prices, but it's much harder to be able to afford lower prices, and it's really true," Jassy said. "We spend a disproportionate amount of time, A, inventing, and then B, trying to figure out how we can lower our cost-to-serve inside our fulfillment network so that we can continue to keep prices low for customers."

Jassy pointed to a series of behind-the-scenes infrastructure investments designed to reduce the cost of getting products to customers.

"We've completely rearchitected our regional network in the U.S., so we're able to store items closer to end users so they travel shorter distances, they get there quicker, and it's less expensive to serve customers that way," he said.

Amazon has also introduced features such as "Add to Order," which lets customers add items to an existing shipment, which reduces packaging waste and delivery costs.

"Think about the logistics of an order that you're already processing and then being able to get that item in the same order," he said. "The work we do to get more units in each box, it's better for customers because they don't have to open as many packages and have environmental waste, and it's just a much better, faster experience. And it happens to be more cost effective for us too."

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