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Amazon.com
Type Public (NASDAQ: AMZN)
Founded 1994
Headquarters Seattle, Washington, USA
Key people Jeff Bezos, Founder, President, CEO, and Chairman
Rick Dalzell, Senior VP/CIO
Industry Retail
Products Amazon.com
A9.com
Alexa Internet
IMDb
Web Store
Revenue US$10.71 billion (2006)
Net income US$190 million (2006)
Employees 13,900 (2006)
Website www.amazon.com
Amazon.com, Inc. (NASDAQ: AMZN) is an American e-commerce company based in
Seattle, Washington. It was one of the first major companies to sell goods
over the Internet and was one of the iconic stocks of the late 1990s dot-com
bubble. After the bubble burst Amazon faced skepticism about its business
model, but it made its first annual profit in 2003.
Founded by Jeff Bezos in 1994, and launched in 1995, Amazon.com began as an
online bookstore, though it soon diversified its product lines, adding DVDs,
music CDs, computer software, video games, electronics, apparel, furniture,
food, toys and more.
Amazon has established separate websites in Canada, the United Kingdom,
Germany, Austria, France, China, and Japan. It ships globally on selected
products.
History and business model
Amazon was founded in 1994, spurred by what Bezos refers to as his "regret
minimization framework," i.e. his effort to fend off late-in-life regret for
not staking a claim in the Internet gold rush.[1] It is common lore that
Bezos wrote its business plan while he and his wife drove a 1988 Chevrolet
Blazer from Fort Worth, Texas to Bellevue, Washington.[2]
The company began operating as an online bookstore under the name
Cadabra.com (as in abracadabra), a name that Bezos quickly abandoned due to
its sounding like "cadaver".[2] While the largest brick-and-mortar
bookstores and mail-order catalogs for books might offer 200,000 titles, an
online bookstore could offer many times more. Bezos renamed his company
"Amazon" after the world's most voluminous river. The company was
incorporated in 1994 in the state of Washington, began service in July 1995,
and was reincorporated in 1996 in Delaware. Amazon.com had its initial
public offering on May 15, 1997, trading on the NASDAQ stock exchange under
the symbol AMZN at an IPO price of US$18.00 per share (equivalent to US$1.50
after three stock splits during the late 1990s).
Amazon's initial business plan was unusual: the company did not expect to
turn a profit for four to five years. In retrospect, the strategy was
effective. Amazon grew at a steady pace in the late 1990s while many other
Internet companies grew at a blindingly fast pace. Amazon's "slow" growth
caused a number of its stockholders to complain, saying that the company was
not reaching profitability fast enough. When the Dot-com bubble burst and
many e-companies went out of business, Amazon persevered and finally turned
its first profit in the fourth quarter of 2002: a meager US$5 million, just
1¢ per share, on revenues of over US$1 billion, but it was important
symbolically. The firm has since remained profitable: net income was US$35.3
million in 2003, US$588.5 million in 2004, US$359 million in 2005, and
US$190 million in 2006 (including a US$662 million charge on R&D in 2006).
Nevertheless, the firm's cumulative profits remain negative, since the
positive performance of recent years is not yet sufficient to wipe out the
losses of the past, as of 2005 the accumulated deficit stood at US$2.03
billion.
Revenue continued to grow thanks to product diversification and
international presence: US$3.9 billion in 2002, US$5.3 billion in 2003,
US$6.9 billion in 2004, US$8.5 billion in 2005, and US$10.7 billion in 2006.
On November 21, 2005, Amazon entered the S&P 500 index, replacing the
venerable AT&T after it merged with SBC Communications.
Time Magazine named Bezos its 1999 Person of the Year in recognition of the
company's success in popularizing online shopping.
Merchant partnerships
The Web sites of Borders (borders.com, borders.co.uk), Waldenbooks (waldenbooks.com),
Virgin Megastores (virginmega.com), CDNOW (cdnow.com), and HMV (hmv.com) are
powered and hosted by Amazon. Until June 30, 2006, typing ToysRUs.com into
one's browser would similarly bring up Amazon.com's Toys & Games tab;
however, this relationship was terminated as the result of a
lawsuit.
Amazon.com powers and operates retail web sites for Target, the NBA, Sears
Canada, Sears UK, Benefit Cosmetics, Bebe Stores, Timex Corporation, Marks &
Spencer, and Bombay Company.
It also powers, although does not host, AOL's Shop@AOL service. It achieves
this via Web Services technology.
Locations
Headquarters
The company's global headquarters is located on Seattle, Washington's Beacon
Hill. It has offices throughout other parts of greater Seattle. Amazon has a
Canadian site in both English and French, but is prevented from operating
any headquarters, servers, fulfillment centers or call centers in Canada due
to that country's legal restrictions on foreign-owned booksellers. Instead,
Amazon's Canadian site originates in the United States, and Amazon has an
agreement with Canada Post to handle distribution within Canada and for the
use of the Crown corporation's Mississauga, Ontario shipping facility.[3] In
2002, the Canadian Booksellers Association and Indigo Books and Music sought
a court ruling that Amazon's partnership with Canada Post represented an
attempt to circumvent Canadian law,[4] but the litigation was dropped in
2004.[5]
Software development centers
The company employs software developers in modest- to large-sized centers
across the globe. Locations include Slough, England; Edinburgh, Scotland;
Bangalore, Chennai, and Hyderabad, India; Kennewick, Washington; Cape Town,
South Africa; Iaşi, Romania; Shibuya, Tokyo, Japan (closed in 2005); and
Beijing, China.
Fulfillment and warehousing
Fulfillment centers are located in the following cities, often near
airports:
* North America:
* Arizona, USA: Phoenix
* Delaware, USA: New Castle
* Kansas, USA: Coffeyville
* Kentucky, USA: Campbellsville, Hebron (near CVG), and Lexington
* Massachusetts, USA: Springfield (new as of early 2007)
* Nevada, USA: Fernley and Red Rock (near 4SD)
* Washington, USA: Seattle
* Pennsylvania, USA: Chambersburg, Carlisle, and Lewisberry
* Texas, USA: Dallas/Fort Worth
* Ontario, Canada: Mississauga
* Europe:
Amazon.co.uk warehouse, Glenrothes
Amazon.co.uk warehouse, Glenrothes
* Munster, Republic of Ireland: Cork
* Bedfordshire, England, UK: Marston Gate
* Inverclyde, Scotland, UK: Gourock
* Fife, Scotland, UK: Glenrothes
* Loiret, France: Orléans-Boigny (2000),
* Loiret, France: Orléans-Saran (2007),
* Hessen, Germany: Bad Hersfeld
* Saxony, Germany: Leipzig
* Asia:
* Chiba, Japan
* Guangzhou, China
* Shanghai, China
* Beijing, China
Product lines
Amazon has steadily branched into retail sales of music CDs, videotapes and
DVDs, software, consumer electronics, kitchen items, tools, lawn and garden
items, toys & games, baby products, apparel, sporting goods, gourmet food,
jewelry, watches, health and personal-care items, beauty products, musical
instruments, industrial & scientific supplies, groceries and more.
The company launched Amazon.com Auctions, its own Web auctions service, in
March 1999. However it failed to chip away at industry pioneer eBay's
juggernaut growth. Amazon Auctions was followed by the launch of a
fixed-price marketplace business called zShops in September 1999, and a
failed Sotheby's/Amazon partnership called sothebys.amazon.com in November.
Although zShops failed to live up to its expectations, it laid the
groundwork for the hugely successful Amazon Marketplace service launched in
2001 that let customers sell used books, CDs, DVDs, and other products
alongside new items. Amazon Marketplace's main rival today is eBay's
Half.com service.
On May 16, 2007 Amazon announced it intends to launch its own online music
store. Downloads will be sold without copy-protection. The store is to
launch "later this year."[6]
Website
A popular feature of Amazon is the ability for users to submit reviews to
the web page of each product. As part of their review, users must rate the
product on a rating scale from one to five stars. Such rating scales provide
a basic idea of the popularity and dependability of a product.
Search Inside the Book is a feature which makes it possible for customers to
search for keywords in the full text of many books in the catalog.[7] [8]
The feature started out with 120,000 titles (or 33 million pages of text) on
October 23, 2003. There are currently about 250,000 books in the program.
Amazon has cooperated with around 130 publishers to allow users to perform
these searches. To avoid copyright violations, Amazon.com does not return
the computer-readable text of the book but rather a picture of the page
containing the found excerpt, disables printing of the pages, and puts
limits on the number of pages in a book a single user can access. Amazon is
planning to launch Search Inside the Book internationally. Additionally,
customers can purchase access to read the entire book online via the Amazon
Upgrade program, although the selection of books eligible for this service
is currently limited.
According to information in Amazon.com discussion forums, Amazon derives
about 40% of its sales from affiliates, whom they call "Associates." An
Associate is essentially an independent seller or business that receives a
commission for referring customers to the Amazon.com site. Associates do
this by placing links on their websites to the Amazon homepage or to
specific products. If a referral results in a sale, the Associate receives a
commission from Amazon. By the end of 2003, Amazon had signed up almost one
million Associates. Associates can access the Amazon catalog directly on
their websites by using the Amazon Web Services (AWS) XML service. Amazon
was the first online business to set up an Associates program. The idea has
since been copied by many other online businesses. AStore is a new
Associates product that gives the power to create a professional online
store, in minutes and without the need for programming skills, that can be
embedded within or linked to from another website. In late 2006, Amazon
essentially removed a large number of high selling associates from their
program without warning.
Acquisitions and spinoffs
Amazon bought the Internet Movie Database (IMDb) in April 1998, a move that
upset a number of its longtime users; the transformation of IMDb from a
public-domain, nonprofit site to a commercial venture was seen as a slap in
the face to many Web users. However, the IMDb has continued to grow and
prosper.
Amazon bought Cambridge, Massachusetts-based PlanetAll in August 1998 for
800,000 shares of Amazon stock. PlanetAll operated a Web-based address book,
calendar, and reminder service. In the same deal, Amazon acquired
Sunnyvale-based Junglee.com, an XML-based data mining startup for 1.6
million shares of Amazon stock. The two deals together were valued at about
US$280 million at the time. Most staff of both firms were absorbed by Amazon
in early 1999. These employees went on to build community-focused features
for the Amazon Web site, including Amazon.com Auctions, Amazon.com
Marketplace, Friends & Favorites, and Purchase Circles.
In June 1999, Amazon bought Alexa Internet, Accept.com, and Exchange.com in
a set of stock deals worth approximately US$645 million.
In 2004, Amazon purchased Joyo.com, a Chinese e-commerce Web site. It also
debuted A9.com, a company focused on researching, and building innovative
technology. One of the technologies A9.com was working on was a search
engine with a "Search Inside the Book" feature allowing users to search
within the text of books as well as searching for text on the Web. Another
A9 technology was its "Find It on the Block" feature allowing users to find
not just the phone number, address, map, and directions for a business; but
to see a picture of it, and all the businesses and shops on that same
street.
In March 2005, Amazon acquired BookSurge, a print on demand company and
Mobipocket.com, an eBook software company.
In February 2006, Amazon acquired Shopbop, a Madison, Wisconsin-based
retailer of designer clothing and accessories for women.[9]
Amazon spinoffs include search technology company A9.com and shoe and
handbag store Endless.com.
In May 2007, Amazon acquired dpreview.com, a London-based digital
photography review website created by Phil Askey as his personal hobby
website and Brilliance Audio, the largest independent publisher of
audiobooks in the United States. [10]
Noteworthy events
In 2002, Amazon became the exclusive retailer for the much-hyped Segway
Human Transporter. Bezos was an early supporter of the Segway before its
details were made public.
On June 21, 2003, Amazon coordinated what was at the time one of the largest
sales and distribution events in e-commerce history with the sale of over
1.3 million copies of Harry Potter and the Order of the Phoenix.
On July 16, 2005, Amazon celebrated its 10th anniversary by telecasting a
worldwide live concert hosted by Bill Maher and artists such as Bob Dylan
and Norah Jones.
Innovations
Amazon Web Services
Amazon launched Amazon Web Services (AWS) in 2002. The service provides
programmatic access to many features leveraged behind the scenes on its own
website. AWS was rapidly adopted by what now amount to tens of thousands of
software developers.
Amazon Connect
Amazon announced Amazon Connect in 2005. It enables authors to post remarks
that appear at the bottom of the detail pages for each of their books and on
the Amazon home page of those who have bought their books.
Amazon Shorts
Amazon Shorts is a program launched in 2005. The program offers exclusive
short form content including short stories and non-fiction pieces from best
selling authors, all available for immediate download at $0.49. As of June
2007, the program has over 1,700 pieces and is adding about 50 new pieces
per week.
Amazon S3
In March 2006, Amazon launched an online storage service called Amazon S3.
An unlimited number of data objects, from 1 byte to 5 gigabytes in size, can
be stored in S3 and distributed via HTTP or BitTorrent. The service charges
monthly fees for data stored and for data transferred.
Discussion boards
In August 2006, Amazon launched product wikis (later folded into Amapedia)
and discussion forums for certain products. There are set guidelines that
follow standard message board conventions. Discussion boards were later
expanded to include deals in the Gold Box[11] and to cover collections of
items with the same user-provided tags.[12]
EC2
In August 2006, Amazon also introduced EC2 ("Elastic Compute Cloud"), a
virtual site farm, allowing users to use the Amazon infrastructure with its
high reliability to run diverse applications ranging from running
simulations to web hosting. (Currently in beta. EC2 official site).
Amapedia
In January 2007 Amazon launched Amapedia, a collaborative wiki for
user-generated content related to "the products you like the most." Amapedia
replaced Amazon's ProductWiki product, and all ProductWiki content was
copied into Amapedia at launch.
Amazon Mechanical Turk
In November 2005, Amazon.com began testing Amazon Mechanical Turk, an
application programming interface (API) allowing programs to dispatch tasks
to human processors.
Amazon honor system
In 2001, Amazon was one of the first online stores to begin accepting
donations to the Red Cross on behalf of 9/11 victims. For several days the
company dedicated its entire home page for this cause.
Donations
In 2004, Amazon launched its Presidential Candidates feature, whereby
customers could donate from US$5 to US$200 to the campaigns of U.S.
presidential hopefuls, resurrecting the Amazon Honor System for the purpose.
The Honor System was originally launched in 2001 as a way for Amazon
customers to "tip" their "favorite Web sites and to buy digital content on
the Web," Amazon collecting 2.9% of the payment plus a flat fee of 30 cents.
It has never been shut down, but had fallen into relative disuse.
At the end of 2004, with the catastrophic earthquake and tsunami in the
Indian Ocean, Amazon set up an online donation channel to the American Red
Cross using the Honor System, waiving its processing fee. As of January 3,
2005, over 162,000 individuals had donated over US$13.1 million in this way.
The same week, Amazon created similar channels for the British, Canadian,
French, German, and Japanese Red Cross organizations via its international
sites. Over 7,000 Britons donated more than $350,000; 900 Canadians over
$56,000; 660 French over $23,000; 2,900 Germans over $145,000; and 1,900
Japanese over $66,000.
Amazon reactivated its Red Cross donation channel when Hurricane Katrina
struck at the end of August 2005. As of September 8, over 98,000 payments
had been made totaling over US$10.7 million.
Controversies
Trademark infringement
In 1999 the Amazon Bookstore Cooperative of Minneapolis, Minnesota sued
Amazon.com for trademark infringement. The cooperative had been using the
name "Amazon" since 1970, but reached an out-of-court agreement to share the
name with the on-line retailer.[13]
Patent use
The company has been controversial for its alleged use of patents as a
competitive hindrance. The "1-click patent"[14] is perhaps the best-known
example of this. Amazon's use of the one-click patent against competitor
Barnes and Noble's website led the Free Software Foundation to announce a
boycott on Amazon in December 1999.[15] The boycott was discontinued in
September 2002.[16]
On May 12, 2006, the USPTO ordered a reexamination of the "One-Click"
patent, based on a request filed by Peter Calveley. Calveley cited as prior
art an earlier e-commerce patent and the Digicash electronic cash system.
On February 25, 2003, the company was granted a patent titled "Method and
system for conducting a discussion relating to an item on Internet
discussion boards".[17]
Patent infringement
The company has been sued for alleged patent infringement a number of times,
among them:
* Pinpoint v. Amazon.com
* Charles E. Hill & Associates v. Amazon.com
* Soverain Software LLC v. Amazon.com
* IBM v. Amazon.com
* British Technology Group v. Amazon.com
* Cendant Publishing v. Amazon.com
Shipping destinations
In 2006 Amazon.co.uk severely limited products that it (or its Marketplace
sellers) will ship to the Republic of Ireland, though it will still ship to
Northern Ireland. Irish shoppers are now limited to books, CDs, and DVDs
only. Amazon.co.uk also limits the expedition of electronics to European
Union countries for unknown reasons.
Customer service
Amazon.com does not publish its toll-free customer service number
(+1-800-201-7575) on its own web site. Customers are instead asked to submit
written service requests (which are answered by e-mail) or to use a
click-to-call service to be connected by phone to an available service
representative.[18] There are numerous Web pages that exist solely to
publish the Amazon.com customer service phone numbers, one of which received
in excess of 23,000 visits in December 2004 alone.[19] Despite the perceived
difficulty in reaching customer service by phone, "[n]o retailer or service
provider in ACSI has higher customer satisfaction than Amazon."[20][21]
Labor relations
Frustrated by low wages, lack of advancement opportunities, and alleged poor
treatment, Amazon.com fulfillment workers at eight distribution centers
sought to join the United Food and Commercial Workers (UFCW) in December,
2000. Meanwhile, the Communications Workers of America undertook a campaign
to unionize some 400 customer-service representatives in Seattle. Amazon.com
management embarked on a counter-campaign that included shutting down its
Seattle service center.[22] Amazon.com succeeded in stalling the unions'
efforts in part by appealing to workers' fear of finding jobs at the end of
the dot com boom. Duane Stillwell, president of the Prewitt Organizing Fund,
said: "It's unfortunate that this vaunted high-tech company is just saying
the same crude things that factory owners have been saying for 100 years
about unions. They're just scaring people out of wanting to do the right
thing."[23]
Chris Benoit DVD
In late June 2007, shortly after the death of professional wrestler Chris
Benoit, Amazon displayed a special note on search results pages for the term
"WWE": “Tragic news from the WWE. Wrestler Chris Benoit and his wife and son
have been found dead in their Georgia home, and police are investigating the
situation as a possible murder-suicide.” The caption was then followed by a
photo and a link to purchase the WWE Chris Benoit: Hard Knocks DVD.
Amazon.com later removed the offending message after widespread complaints
in the professional wrestling community.[24]
Trivia
* Douglas Hofstadter's Fluid Concepts & Creative Analogies: Computer Models
of the Fundamental Mechanisms of Thought was the first book sold by
Amazon.com on July 15, 1995.[25]
* Some of the words in Amazon.com URLs, usually referring to various
components of the company's web site software, are nods to the Amazon River
and Brazil:
o obidos (the name of the old page-rendering engine) comes from Óbidos, the
meeting place of the Amazon's tributaries;
o várzea is Portuguese (Brazil's main language) for a forest flooded after
heavy rains, as parts of the Amazon forest are;
o gp is short for Gurupa (the page-rendering system that had completely
replaced Obidos by late 2006), a region in Brazil near the mouth of the
Amazon.
* Similarly Brazil- or Amazon-themed names are used for many other
Amazon.com software systems less exposed to the end users, e.g.:
o one of the mass mail sending systems is Correios (after the Brazilian
postal service);
o the source code version control system is Brazil;
o a remote procedure call protocol is Iquitos;
o Urubamba is a software system interacting with Google's AdSense.
* A 2002 glitch in Amazon.com's review system revealed that many
well-established authors were anonymously giving themselves glowing reviews,
with some revealed to be anonymously giving "rival" authors terrible
reviews. The glitch in the system was fixed and those reviews have since
been removed or made anonymous.
* An easter egg can be found on Amazon.com's website. An invisible link at
the very bottom of the "Directory of All Stores" page leads to a February
2002 tribute to David Risher, "Amazon.com's favorite site surfer".
References
1. ^ Time Magazine 1999 Person of the Year - Jeffrey P.Bezos
2. ^ a b NYTimes, July 10 2005: "A Retail Revolution Turns 10"
3. ^ "Amazon.ca debuts in Canada", CTV.ca, 2002-06-25. Retrieved on
2006-12-19.
4. ^ "Book Biz Takes on Amazon.ca", Wired (magazine), 2002-08-08. Retrieved
on 2006-12-19.
5. ^ "Gowlings IP Report Online: Canadian Booksellers Association Abandons
Amazon.ca Case", Gowlings, 2004-09-24. Retrieved on 2006-12-19.
6. ^ "Amazon.com to Launch DRM-Free MP3 Music Download Store",
Marketatch.com, 2007-05-16. Retrieved on 2007-05-20.
7. ^ Amazon.com's online reader Search Inside reference
8. ^ Amazon.com Search Inside reference
9. ^ Wisconsin Technology Network: "Amazon acquires Madison-based Shopbop"
10. ^ "Amazon.com Acquires Brilliance Audio", Taume News, 2007-05-27.
Retrieved on 2007-05-28.
11. ^ Gold Box deal discussion forum
12. ^ A post in the "wii" tag forum
13. ^ "Amazon.com, Bookstore Settle Suit", InternetNews, 1994-11-04.
Retrieved on 2006-09-24.
14. ^ US5,960,411 (PDF version) (1997-09-12) Hartman; Peri (Seattle, WA),
Bezos; Jeffrey P. (Seattle, WA), Kaphan; Shel (Seattle, WA), Spiegel; Joel
(Seattle, WA) Method and system for placing a purchase order via a
communications network
15. ^ "Richard Stallman -- Boycott Amazon!", Linux Today, 1999-12-22.
Retrieved on 2006-09-22.
16. ^ From the FSF site: amazon philosophy.
17. ^ US6,525,747 (PDF version) (1999-08-02) Bezos; Jeffrey P. Method and
system for conducting a discussion relating to an item
18. ^ Amazon.com Click-to-Call feature: https://www.amazon.com/gp/help/contact-us/call-me.html/?skip=true
19. ^ "The Amazon.com Customer Service Phone Number"
20. ^ [1]
21. ^ [2]
22. ^ CNet News.com: "Unions a casualty of dot-com shakeout"
23. ^ CorpWatch.com: "US: Amazon.com Fights Union Activity" 11/29/2000
24. ^ "JBL COMMENTS ON BENOIT TRAGEDY & MORE BENOIT NOTES," on Pro Wrestling
Insider published on June 28, 2007.
25. ^ Amazon.com's company timeline
Further reading
* Robert Spector (2001). amazon.com--Get Big Fast: Inside the Revolutionary
Business Model That Changed the World. Harper Collins Publishers. ISBN
0-06-662041-4.
* Mike Daisey (2002). 21 Dog Years. Free Press. ISBN 0-7432-2580-5.
* Mara Friedman (2004). Amazon.com for Dummies. Wiley Publishing. ISBN
0-7645-5840-4.
* James Marcus (2004). Amazonia: Five Years at the Epicenter of the Dot.Com
Juggernaut. W.W. Norton. ISBN 1-56584-870-5.
* Amazon No Longer the Role Model for E-Commerce Design (2005).
* A conversation with Werner Vogels, the CTO of Amazon, ACM Queue vol.4,
no.4 - May 2006.
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