Jeff Bezos incorporated the company (as Cadabra) in July 1994 and the site went online as Amazon.com in 1995. The company was renamed after the Amazon River, one of the largest rivers in the world, which in turn was named after the Amazons, the legendary nation of female warriors in Greek mythology.
Amazon has separate retail websites for United States, United Kingdom, France, Canada, Germany, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico, with international shipping to certain other countries for some of its products. In 2011, it had professed an intention to launch its websites in Poland,Netherlands, and Sweden, as well. An Austrian website operates as part of the German website.
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After reading a report about the future of the Internet which projected annual Web commerce growth at 2,300%, Bezos created a list of 20 products which could be marketed online. He narrowed the list to what he felt were the five most promising products which included: compact discs, computer hardware, computer software, videos, and books. Bezos finally decided that his new business would sell books online, due to the large world-wide demand for literature, the low price points for books, along with the huge number of titles available in print. Amazon was originally founded in Bezos' garage in Bellevue, Washington.
The company began as an online bookstore, an idea spurred off with discussion with John Ingram of Ingram Book (now called Ingram Content Group), along with Keyur Patel who still holds a stake in Amazon. In the first two months of business, Amazon sold to all 50 states and over 45 countries. Within two months, Amazon's sales were up to $20,000/week. While the largest brick and mortar bookstores and mail order catalogs might offer 200,000 titles, an online bookstore could "carry" several times more, since they had an almost unlimited virtual (not actual) warehouse: those of the actual product makers/suppliers.
Bezos wanted a name for his company that began with "A" so that it would appear early in alphabetic order. He began looking through the dictionary and settled on "Amazon" because it was a place that was "exotic and different" just as he planned for his store to be, and he believed it was the biggest river in the world, and he planned to make his store the biggest in the world. Bezos placed a premium on his head start in building a brand, telling a reporter, "There's nothing about our model that can't be copied over time. But you know, McDonald's got copied. And it still built a huge, multibillion-dollar company. A lot of it comes down to the brand name. Brand names are more important online than they are in the physical world."
Since 2000, Amazon's logotype has featured a curved arrow leading from A to Z, representing that they carry every product from A to Z, with the arrow shaped like a smile.
Amazon was incorporated in 1994, in the state of Washington. In July 1995, the company began service and sold its first book on Amazon.com: Douglas Hofstadter's Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought. In October 1995, the company announced itself to the public. In 1996, it was reincorporated in Delaware. Amazon issued its initial public offering of stock on May 15, 1997, trading under the NASDAQ stock exchange symbol AMZN, at a price of US$18.00 per share ($1.50 after three stock splits in the late 1990s).
Amazon's initial business plan was unusual; it did not expect to make a profit for four to five years. This "slow" growth caused stockholders to complain about the company not reaching profitability fast enough to justify investing in, or to even survive in the long-term. When the dot-com bubble burst at the start of the 21st Century, destroying many e-companies in the process, Amazon survived, and grew on past the bubble burst to become a huge player in online sales. It finally turned its first profit in the fourth quarter of 2001: $5 million (i.e., 1¢ per share), on revenues of more than $1 billion. This profit margin, though extremely modest, proved to skeptics that Bezos' unconventional business model could succeed. In 1999, Time magazine named Bezos the Person of the Year, recognizing the company's success in popularizing online shopping.
Barnes & Noble sued Amazon on May 12, 1997, alleging that Amazon's claim to be "the world's largest bookstore" was false. Barnes and Noble asserted, "[It] isn't a bookstore at all. It's a book broker." The suit was later settled out of court, and Amazon continued to make the same claim." Walmart sued Amazon on October 16, 1998, alleging that Amazon had stolen their trade secrets by hiring former Walmart executives. Although this suit was also settled out of court, it caused Amazon to implement internal restrictions and the re-assignment of the former Walmart executives.
Merchant partnershipsUntil June 30, 2006, typing ToysRUs.com into a browser would bring up Amazon.com's "Toys & Games" tab; however, this relationship was terminated due to a lawsuit. Amazon also hosted and managed the website for Borders bookstores but this ceased in 2008. From 2001 until August 2011, Amazon hosted the retail website for Target. Benefit Cosmetics, another merchant partner of Amazon, has also launched a major E-Commerce platform of their own based on Hybris and arvato systems NA, in the US, EU and China.
Amazon.com operates retail websites for Sears Canada, bebe Stores, Marks & Spencer, Mothercare, and Lacoste. For a growing number of enterprise clients, currently including the UK merchants Marks & Spencer, Benefit Cosmetics' UK entity, edeals.com, and Mothercare, Amazon provides a unified multichannel platform where a customer can interact with some people they call the retail website, standalone in-store terminals, or phone-based customer service agents. Amazon Web Services also powers AOL's Shop@AOL.
On October 18, 2011, Amazon.com announced a partnership with DC Comics for the exclusive digital rights to many popular comics, including Superman, Batman, Green Lantern, The Sandman, and Watchmen. The partnership has caused well-known bookstores like Barnes & Noble to remove these titles from their shelves.
In November 2013, Amazon.com announced a partnership with the United States Postal Service to begin delivering orders on Sundays. The service, included with Amazon’s standard shipping rates, initiated in metropolitan areas of Los Angeles and New York, with plans to expand into Dallas, Houston, New Orleans, and Phoenix by 2014.
Products and services
Retail goodsAmazon product lines include media - books, DVDs, music CDs, software, videotapes, and software - apparel, baby products, consumer electronics, beauty products, gourmet food, groceries, health and personal-care items, industrial & scientific supplies, kitchen items, jewelry and watches, lawn and garden items, musical instruments, sporting goods, tools, and toys & games.
The company launched amazon.com Auctions, a web auctions service, in March 1999. However, it failed to chip away at the large market share of the industry pioneer, eBay. Later, the company launched a fixed-price marketplace business, zShops, in September 1999, and the now defunct partnership with Sotheby's, called Sothebys.amazon.com, in November. Auctions and zShops evolved into Amazon Marketplace, a service launched in November 2000 that let customers sell used books, CDs, DVDs, and other products alongside new items. Today, Amazon Marketplace's main rival is eBay's Half.com service.
In August 2007, Amazon announced AmazonFresh, a grocery service offering perishable and nonperishable foods. Customers can have orders delivered to their homes at dawn or during a specified daytime window. Delivery was initially restricted to residents of Mercer Island, Washington, and was later expanded to several ZIP codes in Seattle proper. AmazonFresh also operated pick-up locations in the suburbs of Bellevue and Kirkland from summer 2007 through early 2008.
In 2012, Amazon announced the launch of Vine.com for buying green products, including groceries, household items, and apparel. It is part of Quidsi, the company that Amazon bought in 2010 that also runs the sites Diapers.com (baby), Wag.com (pets), and YoYo.com (toys). Amazon also owns other e-commerce sites like Shopbop.com, Woot.com, and Zappos.com.
Amazon's Subscribe & Save program offers a discounted price on an item (usually sold in bulk), free shipping on every Subscribe & Save shipment, and automatic shipment of the item every one, two, three, or six months.
In 2013, Amazon launched its site in India, amazon.in. It has started with electronic goods and plans to expand into fashion apparel, beauty, home essentials, and healthcare categories by the end of 2013
Consumer electronicsIn November 2007, Amazon launched Amazon Kindle, an e-book reader which downloads content over "Whispernet", via Sprint's EV-DO wireless network. The screen uses E Ink technology to reduce battery consumption and to provide a more legible display. As of March 2011, the stated library numbers over 850,000 titles.
In September 2011, Amazon announced its entry into the tablet computer market by introducing the Kindle Fire, which runs a customized version of the operating system Android. The exceedingly low pricing of Fire ($199 USD) was widely perceived as a strategy backed by Amazon's revenue from its content sales, to be stimulated by sales of the Fire.
In September 2012, Amazon unveiled the second generation tablet, called the Kindle Fire HD. On September 25, 2013, Amazon.com unveiled its third generation tablet, called Kindle Fire HDX. In October 2013, the sixth generation Kindle was released.
In January 2008, Amazon began distributing its MP3 service to subsidiary websites worldwide and, in December 2008, Amazon MP3 was made available in the UK. At the launch of Amazon MP3 in the UK, over 3 million Digital Rights Management (DRM)-free songs were made available to consumers, with prices that started at 59p, compared to Apple's 79p starting price.
In July 2010, Amazon announced that e-book sales for its Kindle reader outnumbered sales of hardcover books for the first time ever during the second quarter of 2010. Amazon claims that, during that period, 143 e-books were sold for every 100 hardcover books, including hardcovers for which there is no digital edition; and during late June and early July, sales rose to 180 digital books for every 100 hardcovers.
On March 22, 2011, Amazon launched the Amazon Appstore for Android devices and the service was made available in over 200 countries. Also in 2011, Amazon announced that it was releasing a Mac download store to offer dozens of games and hundreds of pieces of software for Apple computers.
In January 2013, Amazon launched AutoRip, a digital music service. The service allows customers to receive a free MP3 copy of select CDs purchased through Amazon. Amazon announced in September 2013 that they would launch Kindle MatchBook in October 2013, a similar service for books allowing customers who buy books from Amazon to acquire an e-book copy for free, or at a discounted price of US$3 or less. MatchBook was launched on the company's site on October 29, 2013.
Amazon GamesIn August 2012, Amazon announced it would be adding a gaming department to its company titled Amazon Game Studios. Amazon stated that they will introduce "innovative, fun and well-crafted games" to consumers. According to the Amazon Game Studios website, the last game that was launched by the department was Amazon's first ever mobile game Air Patriots, released on November 1, 2012.
On February 6, 2014, Amazon confirmed the acquisition of the gaming company Double Helix Games without any indication of the financial terms. The 75 Double Helix employees will become Amazon employees and their Orange County, California headquarters remain their operating base. Amazon informed the TechCrunch media company that it "acquired Double Helix as part of our [Amazon's] ongoing commitment to build innovative games for customers" and confirmed that Double Helix's current game roster and other future developments will receive support following the acquisition.
Private labels and exclusive marketing arrangementsIn August 2005, Amazon began selling products under its own private label, "Pinzon"; the trademark applications indicated that the label would be used for textiles, kitchen utensils, and other household goods. In March 2007, the company applied to expand the trademark to cover a more diverse list of goods and to register a new design consisting of the "word PINZON in stylized letters with a notched letter "O" which appears at the "one o'clock" position". Coverage by the trademark grew to include items such as paints, carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and jewelry. In September 2008, Amazon filed to have the name registered. USPTO has finished its review of the application, but Amazon has yet to receive an official registration for the name.
AmazonBasics is a private-label consumer electronics product line. It sells AV cables, blank DVD media and other electronics products under the AmazonBasics product label. The line was launched in 2009.
An Amazon.com exclusive is a product, usually a DVD, that is available exclusively on Amazon.com. Some DVDs are produced by the owner of the film/product, while others are produced by Amazon.com itself. The DVDs produced by Amazon are made using their "CreateSpace" program, in which DVDs are created, upon ordering, using DVD-R technology. The DVDs are then shipped about two days later. Some DVDs (such as the Jersey Shore Season 1 or The Unusuals Season 1) first release their DVD on Amazon as an Amazon.com Exclusive for a limited time before being released elsewhere. On May 23, 2011, Amazon.com allowed customers to download Lady Gaga's Born This Way album for $0.99, resulting in some downloads being delayed, due to an extremely high volume of downloads.
Amazon self publishing services through one of its companies, CreateSpace, a member of the Amazon group of companies.
In November 2005, amazon.com began testing Amazon Mechanical Turk, an application programming interface (API) allowing programs to dispatch tasks to human processors.
In March 2006, Amazon launched an online storage service called Amazon Simple Storage Service (Amazon S3). An unlimited number of data objects, from 1 byte to 5 terabytes in size, can be stored in S3 and distributed via HTTP or BitTorrent. The service charges monthly fees for data stored and transferred. In 2006, Amazon introduced Amazon Simple Queue Service (Amazon SQS), a distributed queue messaging service, and product wikis (later folded into Amapedia) and discussion forums for certain products using guidelines that follow standard message board conventions. Also in 2006, Amazon introduced Amazon Elastic Compute Cloud (Amazon EC2), a virtual site farm, allowing users to use the Amazon infrastructure to run applications ranging from running simulations to web hosting. In 2008, Amazon improved the service by adding Elastic Block Store (EBS), offering persistent storage for Amazon EC2 instances and Elastic IP addresses, and offering static IP addresses designed for dynamic cloud computing. Amazon introduced SimpleDB, a database system, allowing users of its other infrastructure to utilize a high-reliability, high-performance database system.
Amazon continues to refine and add services to AWS, adding such services as Scalable DNS service (Amazon Route 53), payment handling, and AWS specific APIs for their Mechanical Turk service.
In August 2012, Amazon announced Amazon Glacier, a low-cost online file storage web service that provides reliable data archiving, storage, and backup.
In November 2012 at AWS' web developer conference in Las Vegas it announced it was targeting large companies as cloud storage clients. It will further cut its S3 prices to customers with long-term contracts in its "Redshift" storage service launching in 2013.
In March 2013 Amazon announced its Mobile Ads API for developers. The new Ads API can be used on apps distributed on any Android platform as long as the app is also available on Amazon’s Appstore.
ReviewsAmazon allows users to submit reviews to the web page of each product. Reviewers must rate the product on a rating scale from one to five stars. Amazon provides a badging option for reviewers which indicate the real name of the reviewer (based on confirmation of a credit card account) or which indicate that the reviewer is one of the top reviewers by popularity. Customers may comment or vote on the reviews, indicating whether or not they found it helpful to them. If a review is given enough "helpful" hits, it appears on the front page of the product. In 2010, Amazon was reported as being the largest single source of Internet consumer reviews.
When publishers asked Bezos why Amazon would publish negative reviews, he defended the practice by claiming that amazon.com was "taking a different approach...we want to make every book available – the good, the bad, and the ugly...to let truth loose".
Although reviews are attributed to the credit-card name of the reviewer, there have been cases of positive reviews being written and posted by a public relations company on behalf of its clients, and writers employing pseudonyms to leave negative reviews of their rivals' work.
Following listing for sale of Untouchable: The Strange Life and Tragic Death of Michael Jackson a disparaging biography of Michael Jackson by Randall Sullivan his fans, organized via social media as "Michael Jackson’s Rapid Response Team to Media Attacks" bombarded Amazon with negative reviews and negative ratings of positive reviews.
Content search"Search Inside the Book" is a feature which allows customers to search for keywords in the full text of many books in the catalog. The feature started with 120,000 titles (or 33 million pages of text) on October 23, 2003. There are currently about 300,000 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. Instead, it returns a picture of the matching page, instructs the web browser to disable printing, and puts limits on the number of pages in a book a single user can access. Additionally, customers can purchase online access to some of the same books via the "Amazon Upgrade" program.
Third-party sellersAmazon derives about 40% of its sales from affiliate marketing called "Amazon Associates" and third-party sellers who sell products on Amazon. Associates receive a commission for referring customers to Amazon by placing links on their websites to Amazon, if the referral results in a sale. Worldwide, Amazon has "over 900,000 members" in its affiliate programs. Amazon reported over 1.3 million sellers sold products through Amazon's websites in 2007. Unlike eBay, Amazon sellers do not have to maintain separate payment accounts; all payments are handled by Amazon.
Associates can access the Amazon catalog directly on their websites by using the Amazon Web Services (AWS) XML service. A new affiliate product, aStore, allows Associates to embed a subset of Amazon products within another website, or linked to another website. In June 2010, Amazon Seller Product Suggestions was launched (rumored to be internally called "Project Genesis") to provide more transparency to sellers by recommending specific products to third-party sellers to sell on Amazon. Products suggested are based on customers' browsing history.
A January 2010 survey of third-party sellers by Auctionbytes.com found that Amazon was 4th overall. Amazon.com placed second in "Profitability". Its lowest rating, but still above average, was in "Ease of Use". Sellers felt it had clearly defined rules, provided a steady stream of traffic to their listings, and put less emphasis on a community component. Amazon came in second in the Recommended Selling Venue category.
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Amazon sales rankThe Amazon sales rank (ASR) provides an indication of the popularity of a product sold on any Amazon locale. It is a relative indicator of popularity that is updated hourly. Effectively, it is a "best sellers list" for the millions of products stocked by Amazon. While the ASR has no direct effect on the sales of a product, it is used by Amazon to determine which products to include in their best sellers lists. Products that appear in these lists enjoy additional exposure on the Amazon website, and this may lead to an increase in sales. In particular, products that experience large jumps (up or down) in their sales ranks may be included within Amazon's lists of "movers and shakers," and this also provides additional exposure that may lead to an increase in sales. For competitive reasons, Amazon does not release actual sales figures to the public. However, Amazon has now begun to release point of sale data via the Nielsen BookScan service to verified authors. While the ASR has been the source of much speculation by publishers, manufacturers and marketers, Amazon itself does not release the details of its sales rank calculation algorithm. In addition, it states:
Please keep in mind that our sales rank figures are simply meant to be a guide of general interest for the customer and not definitive sales information for publishers - we assume you have this information regularly from your distribution sources
Amazon technologyCustomer Relationship Management (CRM) and Information Management (IM) support Amazon’s business strategy. The core technology that keeps Amazon running is Linux-based. As of 2005, Amazon had the world’s three largest Linux databases, with capacities of 7.8 TB, 18.5 TB, and 24.7 TB. The central data warehouse of Amazon is made of 28 Hewlett Packard servers with four CPUs per node running Oracle database software. Amazon’s technology architecture handles millions of back-end operations every day, as well as queries from more than half a million third-party sellers. With hundreds of thousands of people sending their credit card numbers to Amazon’s servers everyday, security becomes a major concern. Amazon employs Netscape Secure Commerce Server using the Secure Socket Layer protocol which stores all credit card details in a separate database. The company also records data on customer buyer behavior which enables them to offer or recommend to an individual specific item, or bundles of items based upon preferences demonstrated through purchases or items visited.
On January 31, 2013 Amazon experienced an outage that lasted approximately 49 minutes, leaving its site inaccessible to some customers.
Multi-level sales strategyAmazon employs a multi-level e-commerce strategy. Amazon started off by focusing on Business-to-Consumer relationships between itself and its customers, and Business-to-Business relationships between itself and its suppliers but it then moved to incorporate Customer-to-Business transactions as it realized the value of customer reviews as part of the product descriptions. It now also facilitates customer to customer with the provision of the Amazon marketplace which act as an intermediary to facilitate consumer to consumer transactions. The company lets almost anyone sell almost anything using its platform. In addition to affiliate program that lets anybody post Amazon links and earn a commission on click through sales, there is now a program which let those affiliates build entire websites based on Amazon’s platform.
Some other large e-commerce sellers use Amazon to sell their products in addition to selling them through their own websites. The sales are processed through Amazon.com and end up at individual sellers for processing and order fulfillment and Amazon leases space for these retailers. Small sellers of used and new goods go to Amazon Marketplace to offer goods at a fixed price. Amazon also employs the use of drop shippers or meta sellers. These are members or entities that advertise goods on Amazon who order these goods direct from other competing websites but usually from other Amazon members. These meta sellers may have millions of products listed, have large transaction numbers and are grouped alongside other less prolific members giving them credibility as just someone who has been in business for a long time. Markup is anywhere from 50% to 100% and sometimes more, these sellers maintain that items are in stock when the opposite is true. As Amazon increases their dominance in the marketplace these drop shippers have become more and more commonplace in recent years. The resulting damage to a supply and demand marketplace remains to be seen but advertising contracts with large search engines eliminating smaller websites from overall exposure these practices should have a negative effect on the industry on the whole.