When Starts Amazon.com

Amazon.com, the iconic example of electronic commerce, is an online retailer, manufacturer of electronic book readers, and provider of Web services. Seattle, Washington, serves as its corporate headquarters.

Amazon.com is a massive Internet-based business that sells books, music, movies, housewares, electronics, toys, and a wide range of other products, either directly or as a middleman between other retailers and Amazon.com's millions of customers. Renting out computer power and data storage, or "cloud computing," is a part of its Web services business. Because of its widespread online presence, 1% of all Internet traffic in North America passed via Amazon.com data centres in 2012.

Additionally, the business manufactures the popular Kindle e-book readers. Amazon.com has become a significant disruptive force in the book publishing market as a result of its promotion of these devices, which has caused a dramatic increase in e-book publishing.

“Get Big Fast”

Jeff Bezos, a former Wall Street hedge fund executive, founded Amazon.com in 1994, choosing the name primarily because it began with the first letter of the alphabet and because of its association with the vast South American river. Based on his research, Bezos concluded that books would be the most logical product to sell online at first. Amazon.com was not the first to do so; in 1991, Computer Literacy, a Silicon Valley bookstore, began selling books from its inventory to its technically savvy customers. However, Amazon.com's promise was to deliver any book to any reader, anywhere.

While Amazon.com began as a bookseller, Bezos insisted from the start that the site was more than just a retailer of consumer goods. He contended that Amazon.com was a technology company whose business was to make online transactions easier for consumers.

Amazon.com's business strategy was frequently criticised. Financial journalists and analysts derisively referred to the company as Amazon.bomb. Doubters predicted that Amazon.com would eventually lose market share to established bookselling chains such as Borders and Barnes & Noble once they launched competing e-commerce sites. The company's lack of profits until the fourth quarter of 2001 seemed to vindicate its detractors.

Bezos, on the other hand, dismissed critics as underestimating the Internet's massive growth potential. He contended that in order to succeed as an online retailer, a company must "Get Big Fast," a slogan he had printed on employee T-shirts. In fact, Amazon.com grew quickly, reaching 180,000 customer accounts by December 1996, after its first full year of operation, and 1,000,000 customer accounts less than a year later, in October 1997. Its revenues increased from $15.7 million in 1996 to $148 million in 1997, then to $610 million in 1998. The success of Amazon.com propelled its founder to become Time magazine's 1999 Person of the Year.

In other areas, the company grew quickly. Its Associates programme grew from one such site in 1996 to more than 350,000 by 1999, where other Web sites could offer merchandise for sale and Amazon.com would fill the order and pay a commission. Following Bezos' initial strategy, the company quickly expanded beyond books. Sales of music and videos began in 1998. That same year, it expanded internationally by acquiring online booksellers in the United Kingdom and Germany. By 1999, the company was also selling consumer electronics, video games, software, home improvement items, toys and games, and a variety of other products.

Although expanding its product offerings broadened its appeal, it was Amazon.com's service that earned it customer loyalty and ultimately profit. Its personalization tools recommended other products to buy based on a customer's purchasing history as well as data from buyers of similar items. Its publication of product reviews by customers fostered a "community of consumers" that assisted one another in finding everything from the right book to the best blender.

Beyond retailing

As previously stated, Bezos claimed that Amazon.com was not a retailer but rather a technology company. To emphasise the point, Amazon Web Services (AWS) was launched in 2002, initially offering data on Internet traffic patterns, Web site popularity, and other statistics to developers and marketers. In 2006, the company added Elastic Compute Cloud (EC2) to its AWS portfolio, which rents out computer processing power in small or large increments. The Simple Storage Service (S3), which rents data storage over the Internet, became available the same year.

S3 and EC2 were quickly successful, and they helped popularise the idea that businesses and individuals do not need to own computing resources; instead, they can rent them as needed over the Internet, or "in the cloud." For example, shortly after its launch in 2007, the S3 service held more than 10 billion objects, or files; five years later, it held more than 905 billion. Amazon.com's competitors, such as Netflix, use both S3 and EC2 for their competing video streaming service.

When Bezos founded Amazon.com, the strategy was to not carry any inventory. However, in order to gain greater control over deliveries, the company began stockpiling inventory in its warehouses in 1997. In 2000, the company launched a service that allows small businesses and individuals to sell their products on Amazon.com, and by 2006, it had launched its Fulfillment by Amazon service, which managed such businesses' inventory. Its expanding inventory-management business prompted the $775 million acquisition of Kiva Systems in 2012, a robotics company whose devices automate inventory-fulfillment duties.

Nonetheless, despite having expanded far beyond online retailing, the majority of the company's revenues continue to come from selling products online (though AWS remains its most profitable division), and that is where much of its investment has been directed. It has acquired or invested in many online retailers over the years, including the shoe retailer Zappos, which it purchased for $847 million in 2009.

The Kindle

Amazon.com began selling its own Kindle e-readers in 2007, reviving the e-book market. The Kindle Fire, a related low-cost tablet computer, was introduced in 2011, and by 2012, the Kindle Fire was estimated to account for half of all tablets sold that used Google's Android mobile operating system.

After its first full year of selling books in 1996, book publishers praised the new service as a great way to help them clear their backlists of slow-selling books. With the introduction of the Kindle, however, tensions between publishers and Amazon.com began to rise. The company wanted to sell new e-books for a fixed price that was significantly lower than the price of new printed books, which prompted numerous complaints from the publishing industry.

By 2010, the schism between book publishers and Amazon.com over e-book pricing had grown. Macmillan Books threatened to withdraw its e-books from Amazon.com, which responded by removing all Macmillan books, both printed and electronic, from the site. However, Amazon.com quickly caved and allowed Macmillan and other publishers to set e-book prices.

AmazonEncore, a publishing line dedicated to popular self-published and out-of-print books, was launched in 2009. It also allowed users to publish their own e-books. Its e-book ambitions led to the establishment of Amazon Publishing in 2011 with the intention of developing and publishing its own titles. That year, Amazon.com announced that Kindle e-books were outselling all printed books. While many book publishers continue to derive significant revenue from Amazon.com sales, the company is no longer regarded by publishers as merely another bookseller. It is now a major competitor in their industry.