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Amazon (company)

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Amazon.com, Inc.
Company typePublic (Nasdaq: AMZN)
S&P 500 Component
IndustryRetail
Founded1994
FounderJeffrey P. Bezos
HeadquartersSeattle, Washington, U.S.
Area served
Worldwide
Key people
Jeffrey P. Bezos
(Chairman, CEO, & President), Tom Szkutak
(CFO)
ProductsAmazon.com
A9.com
Alexa Internet
IMDb
Kindle
Audible.com
Amazon Web Services
Endless.com
A2Z Development
Alexa.com
RevenueIncrease US$ 24.509 billion (2009)
Increase US$ 1.129 billion (2009)
Increase US$ 902 million (2009)
Total assetsIncreaseUS$13.8 billion (FY 2009)[1]
Total equityIncreaseUS$5.26 billion (FY 2009)[1]
Number of employees
31,200 (2010)[2]

Amazon.com, Inc. (Nasdaq: AMZN) is a US-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is America's largest online retailer, with nearly three times the Internet sales revenue of the runner up, Staples, Inc., as of January 2010.[4]

Jeff Bezos founded Amazon.com, Inc. in 1994 and launched it online in 1995. The company was originally named Cadabra, Inc., but the name was changed when it was discovered that people sometimes heard the name as "Cadaver." The name Amazon.com was chosen because the Amazon River is the largest river in the world, and so the name suggests large size, and also in part because it starts with 'A' and therefore would show up near the beginning of alphabetical lists. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3 downloads, computer software, video games, electronics, apparel, furniture, food, and toys. Amazon has established separate websites in Canada, the United Kingdom, Germany, France, Italy, Japan, and China. It also provides international shipping to certain countries for some of its products.

In 2010, Amazon's decision to remove Wikileaks from their servers resulted in numerous calls to boycott the company[5], with many people particularly incensed that Amazon then went on to sell copies of the Wikileaks material, despite using this material as its reason for removing Wikileaks.[6]

History

Jeff Bezos, the founder of Amazon.com

Amazon was founded in 1995,[7] spurred by what Bezos called "regret minimization framework", his effort to fend off regret for not staking a claim in the Internet gold rush.[8] Company lore says Bezos wrote the business plan while he and his wife drove from New York to Seattle,[9] although that account appears to be apocryphal.[10] Bezos flew from New York to Texas, where he picked up a car from a family member, and then drove from Texas to Seattle.

The company began as an online bookstore;[10] while the largest brick-and-mortar bookstores and mail-order catalogs for books might offer 200,000 titles, an online bookstore could offer more. Bezos named the company "Amazon" after the world's largest river. Since 2000, Amazon's logotype is an arrow leading from A to Z, representing customer satisfaction (as it forms a smile); a goal was to have every product in the alphabet.[11]

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.[12] 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 an IPO price of US$18.00 per share ($1.50 after three stock splits in the late 1990s).

Amazon's initial business plan was unusual: the company did not expect a profit for four to five years. Its "slow" growth provoked stockholder complaints 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 2001: $5 million or 1¢ per share, on revenues of more than $1 billion, but the modest profit was important in demonstrating the business model could be profitable. In 1999, Time magazine named Bezos Person of the Year, recognizing the company's success in popularizing online shopping.

Acquisitions

Spinoffs

Merchant partnerships

The Web site CDNOW is powered and hosted by Amazon. Until June 30, 2006, typing ToysRUs.com into a browser would similarly bring up amazon.com's Toys & Games tab; however, this relationship was terminated as the result of a lawsuit.[35] Amazon also hosted and ran the website for Borders bookstores, but this ceased in 2008.[36]

amazon.com powers and operates retail web sites for Target, Sears Canada, Benefit Cosmetics, bebe Stores, Timex, 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 seamlessly interact with some people that they call the retail website, standalone in-store terminals, or phone-based customer service agents. Amazon Web Services also powers AOL's Shop@AOL.

Influence

The Amazon business model has been used by a number of competing companies. The Middle East and Arab World are served regionally by neelwafurat.com, a competing business launched in 1998 in Beirut.[37][38] Neelwafurat.com is known for offering books otherwise banned in many Middle Eastern nations, such as Cities of Salt by Abdul-Rahman Munif and The Insane Asylum by Ghazi al-Gosaibi.[39]

Business results

The company remains profitable: net income was $35 million in 2003, $588 million in 2004, $359 million in 2005, and $190 million (including a $662 million charge for R&D) in 2006. Retained earnings were negative $1.8 billion in 2006, negative $1.4 billion in 2007, negative $730 million in 2008, and $172 million in 2009.[40] Annual revenues, aided by product line expansion and rapid growth in international sales, grew from $3.9 billion in 2002 to $10.7 billion by 2006.

On November 21, 2005, Amazon entered the S&P 500 index, and, on December 31, 2008, the S&P 100 index. On March 26, 2010, Amazon had a higher market cap than Target Corporation, Home Depot, Costco, Barnes and Noble, and Best Buy, only lagging that of Walmart among American brick and mortar retailers.[41]

Locations

Amazon.com has offices, fulfillment centers, customer service centers and software development centers across North America, Latin America, Europe and Asia.[42]

Headquarters

amazon.com's headquarters in the PacMed building in Beacon Hill, Seattle.

The company's global headquarters are located on Seattle's Beacon Hill. It has offices throughout other parts of greater Seattle, including Union Station and The Columbia Center.

Amazon has announced plans to move its headquarters to the South Lake Union neighborhood of Seattle beginning in mid-2010, with full occupancy by 2011. This move will consolidate all Seattle employees onto the new 11-building campus.[43]

Software development centers

The company employs software developers in centers across the globe. While much of Amazon's software development is in Seattle, other locations include Slough and Edinburgh (United Kingdom), Dublin (Ireland), Bangalore, Chennai, and Hyderabad (India), Cape Town (South Africa), Iaşi (Romania), Shibuya, Tokyo (Japan), Beijing (China), and San Francisco (United States).

Fulfillment and warehousing

Fulfillment centers are located in the following cities, often near airports. None are within 500 miles (800 km) of Amazon's headquarters in Seattle. These centers also provide warehousing and order-fulfillment for third-party sellers:[44]

  • North America:
These U.S. distribution centers have been closed: Red Rock, Nevada; Chambersburg, Pennsylvania; Munster, Indiana; McDonough, Georgia.[45] [46]
  • Europe:
Amazon.co.uk warehouse, Glenrothes.
  • Asia:

Products and services

Third-generation Amazon Kindle

Amazon product lines include books, 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, clothing, industrial & scientific supplies, and groceries.

The company launched amazon.com Auctions, a Web auctions service, in March 1999. However, it failed to chip away at industry pioneer eBay's large market share. amazon.com Auctions was followed by the launch of a fixed-price marketplace business, zShops, in September 1999, and the now defunct Sotheby's/Amazon partnership called amazon.com in November. Auctions and zShops evolved into Amazon Marketplace, a service launched in 2001 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 2005,[50] 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.[50] 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 whose space appears at the "one o'clock" position.".[51] Coverage by the trademark grew to include items such as paints, carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and jewelry.[51] On 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.

Amazon MP3, its own online music store, launched in the US in September 25, 2007, selling downloads exclusively in MP3 format without digital rights management.[52] This was the first online offering of DRM-free music from all four major record companies.[53][54][55][56]

In August 2007, Amazon announced AmazonFresh,[57] 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.[58] AmazonFresh also operated pick-up locations in the suburbs of Bellevue and Kirkland from summer 2007 through early 2008. In 2008 Amazon expanded into film production, producing the film The Stolen Child with 20th Century Fox.[59]

Amazon's Honor System was launched in 2001 to allow customers to make donations or buy digital content, with Amazon collecting a percentage of the payment plus a fee. The service was discontinued in 2008.[60] and replaced by Amazon Payments. Amazon launched Amazon Web Services (AWS) in 2002, which provides programmatic access to latent features on its website. Amazon also created "channels" to benefit certain causes. In 2004, Amazon's "Presidential Candidates" allowed customers to donate $5–200 to the campaigns of 2004 U.S. presidential hopefuls. Amazon has periodically reactivated a Red Cross donation channel after crises such as the 9/11, Hurricane Katrina, and the 2004 earthquake and tsunami in the Indian Ocean. By January 2005, nearly 200,000 people had donated over $15.7 million in the US.[61]

Amazon Prime offers two day shipping with no minimum purchase amount for a flat annual fee, as well as discounted priority shipping rates. Amazon launched the program in the continental United States in 2005, in Japan, the United Kingdom and Germany in 2007, and in France (as "Amazon Premium") in 2008. Launched in 2005, Amazon Shorts offers exclusive short stories and non-fiction pieces from best-selling authors for immediate download. By June 2007, the program had over 1,700 pieces and was adding about 50 new pieces per week. 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 gigabytes 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 adding Elastic Block Store (EBS), offering persistent storage for Amazon EC2 instances and Elastic IP addresses, static IP addresses designed for dynamic cloud computing.

In 2007 Amazon launched Amapedia, a wiki for user-generated content to replace ProductWiki, the video on demand service Amazon Unbox, and Amazon MP3, which sells downloadable MP3's.[62] Amazon's terms of use agreements restrict use of the MP3's, but Amazon does not use DRM to enforce those terms.[63] Amazon MP3 sells music from the Big 4 record labels EMI, Universal, Warner Bros. Records, and Sony BMG, as well as independents. Previous to the launch of this service, Amazon made an investment in Amie Street, a music store with a variable pricing model based on demand.[64] Also in 2007 Amazon launched Amazon Vine, which allows reviewers free access to pre-release products from vendors in return for posting a review, as well as payment service specifically targeted at developers, Amazon FPS.[citation needed]

In November 2007, Amazon launched Amazon Kindle, an e-book reader which downloads content over "Whispernet", via the Sprint Nextel EV-DO wireless network. The screen uses E Ink technology to reduce battery consumption. In 2008 Amazon stated that its Kindle-based library included 200,000 titles. In December 2007, Amazon introduced SimpleDB, a database system, allowing users of its other infrastructure to utilize a high reliability high performance database system. In August 2007, Amazon launched an invitation-only beta-test for online grocery delivery. It has since rolled out in several Seattle, Washington suburbs.

In January 2008 Amazon began rolling out their MP3 service to subsidiary websites worldwide.[65] In December, 2008, Amazon MP3 was made available in the UK. In September, IMDB and amazon.com launched a Music metadata browsing site with wiki-like user contribution.[66] In November, Amazon partnered with Fisher-Price, Mattel, Microsoft and Transcend to offer products with minimal packaging to reduce environmental impact and frustration with opening "clamshell" type packaging.[57] Amazon Web Services launched a public beta of Amazon Elastic Compute Cloud running Microsoft Windows Server and Microsoft SQL Server.[67] Amazon Connect enables authors to post remarks on their book pages to customers. WebStore allows businesses to create custom e-commerce websites using Amazon technology. Sellers pay a commission of 7 percent, including credit-card processing fees and fraud protection, and a subscription fee of $59.95/month for an unlimited number of webstores and listings.

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 sold 143 e-books 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.[68]

In 2010 Amazon launched two publishing imprints, AmazonEncore[69] and AmazonCrossing.[70] AmazonEncore publishes books that were previously self-published.[71] AmazonCrossing translates foreign works into English, the first book published was the French-language novel The King of Kahel in November 2010.[72]

Website

The domain amazon.com attracted at least 615 million visitors annually by 2008, twice the numbers of walmart.com.[73] Amazon attracts approximately 65 million customers to its U.S. website per month.[74]

Reviews

Amazon 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 an optional 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.

Amazon.com's customer reviews are monitored for indecency, but do permit negative comments. Robert Spector, author of the book amazon.com, describes how "when publishers and authors asked Bezos why amazon.com 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'" (Spector 132). Allegations have been made that Amazon has selectively deleted negative reviews of Scientology related items despite compliance with comments guidelines.[75][76]

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.[77][78] The feature started with 120,000 titles (or 33 million pages of text) on October 23, 2003.[79] 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. Instead, it returns a picture of the matching page, disables 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 sellers

Amazon derives about 40 percent of its sales from affiliate marketing called "Amazon Associates" and third-party sellers who sell products on Amazon[citation needed]. 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.[80] Amazon reported over 1.3 million sellers sold products through Amazon's World Wide Web sites 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, 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.[81]

A January 2010 survey of third-party sellers by Auctionbytes.com [82] found that Amazon was 4th overall.[83] amazon.com placed second in "Profitability". Its lowest rating, but still above average, was in "Ease of Use". Sellers felt Amazon had clearly-defined rules, provided a steady stream of traffic to their listings, and put less emphasis on a community component. amazon.com came in second in the Recommended Selling Venue category.

Controversies

See Amazon.com controversies.

Since its founding, in summary, the website Amazon.com has attracted criticism and controversy from multiple sources over its actions, such as its "1-Click patent" claims, anti-competitive actions, price discrimination, anti-unionization efforts, Amazon Kindle remote content removal, and low corporate tax payments. Various decisions over whether to censor or publish content such as the WikiLeaks web site, LGBT book sales rank, works containing libel, facilitating dogfight, cockfight, or pedophile activities have been controversial. Recently Amazon removed Wikileaks's content from its EC2 cloud service, but later insists it did so because the content could cause harm to people and did not belong to Wikileaks – and that it was not due to political pressure or the hacker attacks against the site.

Amazon is now also attracting backlash from the film and writing community for launching its Amazon Studios, referred to by writers as Scamazon Studios, for insisting writers give a free 18 month option on their scripts, and by claiming exclusive rights forever, without a legitimate contract - thus acting outside of International Copyright Laws.

Entrepreneurship by former employees

A number of companies have been started and founded by former Amazon.com employees.[84]

  • BankBazaar.com was founded by Arjun Shetty, a former senior product manager at amazon.com
  • Barcode Hero/Kima Labs was founded by Blake Scholl and Jason Crawford.
  • Evri was led by Neil Roseman, a former VP at amazon.com
  • Findory was founded by Greg Linden
  • Foodista was founded by Barnaby Dorfman
  • Hulu is led by Jason Kilar, a former SVP at amazon.com
  • Jambool/SocialGold was co-founded by former amazon.com engineers Vikas Gupta and Reza Hussein
  • Off&Away was co-founded by Doug Aley and Michael Walton
  • Quora was co-founded by ex-amazon.com (and Facebook) engineer Charlie Cheever
  • TeachStreet was founded by Dave Schappell, an early amazon.com product manager
  • Trusera was founded by Keith Schorsch, an early Amazonian
  • Pelago was co-founded by Jeff Holden, a former SVP at amazon.com and Darren Vengroff, a former Principal Engineer
  • Wikinvest was founded by Michael Sha
  • Benguela was founded by Chris Pinkham and Willem Von Biljon (they previously built amazon.com EC2)

See also

References

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Further reading

Wikimedia Commons has media related to Amazon.com.

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