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Amazon.com, Inc. () 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.
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.
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.
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 centres or call centres 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]
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 centers are located in the following cities, often near airports:
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]
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. 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 your website.
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.[7]
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. [8]
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.
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. AWS is believed to be the first free publicly-accessible Web Service of any real utility, especially for making money, which is made possible through its Amazon.com Associates affiliate network.
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.
In March 2006, Amazon launched an online storage service called Amazon S3. An unlimited number of data objects, weighing from 1 byte to 5 gigabytes each, can be stored in S3 and distributed via HTTP or BitTorrent. The service charges storage fees of 15¢ per gigabyte per month and data transfer fees of 20¢ per gigabyte.
In August 2006, Amazon launched product wikis and discussion forums for certain lines wherein logged in customers can add or update product wikis, such as for books. There are set guidelines that follow standard message board conventions.
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).
In January 2007 Amazon launched Amapedia, a collaborative wiki for user-generated content related to "the products you like the most."
In November 2005, Amazon.com began testing Amazon Mechanical Turk, an application programming interface (API) allowing programs to dispatch tasks to human processors.
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.
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 over US$350,000; over 900 Canadians, over US$56,000; over 660 French, over US$23,000; over 2,900 Germans, over US$145,000; and over 1,900 Japanese, over US$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.
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.[9]
The company has been controversial for its alleged use of patents as an competitive hindrance. The "1-click patent"[10] 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.[11] The boycott was discontinued in September 2002.[12]
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".[13]
The company has been sued for alleged patent infringement a number of times, among them:
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.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.[14] 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.[15] Despite the perceived difficulty in reaching customer service by phone, "[n]o retailer or service provider in ACSI has higher customer satisfaction than Amazon."[16]
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.[17] 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."[18] Critics allege that Amazon.com's business practices are similar to those of the retail chain Wal-Mart, in that Amazon.com offers low prices for goods by underpaying its workers and cutting profits to publishers and other suppliers.
Amazon.com permits third-party sellers to sell items for more than their MSRP. For instance, as of April 27 2007, several third-party sellers offer the Wii video game console -- which is out of stock at Amazon proper -- for prices starting at US$369.00 versus an MSRP of US$249.00.[19]
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