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Amazon.com, Inc.

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(NASDAQ:AMZN)
Contact Information
Amazon.com, Inc.
410 Terry Ave. North
Seattle, WA 98109-5210
WA Tel. 206-266-1000

Type: Public
On the web: http://www.amazon.com
 Employees: 56,200
Employee growth: 66.8%

What began as Earth's biggest bookstore has become Earth's biggest everything store. Expansion has propelled Amazon.com in innumerable directions. While the website still offers millions of books, movies, games, and music, electronics and other general merchandise categories, including apparel and accessories, auto parts, home furnishings, health and beauty aids, toys, and groceries ring up about 60% of sales. Shoppers can also download e-books, games, MP3s, and films to their computers or handheld devices, including Amazon's own portable e-reader, the Kindle. Amazon also offers products and services, such as self-publishing, online advertising, e-commerce platform, hosting, and a co-branded credit card.

Key numbers for fiscal year ending December, 2011:
Sales: $48,077.0M
One year growth: 40.6%
Net income: $631.0M
Income growth: (45.2%)

Officers:
Chairman, President and CEO: Jeffrey P. (Jeff) Bezos
SVP and CFO: Thomas J. (Tom) Szkutak
VP and CTO: Werner Vogels

Competitors:
Apple Inc.
Barnes & Noble
Walmart.com

Amazon.com

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Gale Directory of Company Histories:

Amazon.com, Inc.

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Incorporated:1997
NAIC:45411 Electronic Shopping and Mail-Order Houses

Considered a pioneer in online retailing, Amazon.com, Inc. expanded during the late 1990s to offer the "Earth's Biggest Selection" of books, CDs, videos, DVDs, electronics, toys, tools, home furnishings and housewares, apparel, and kitchen gadgets. Through third-party agreements, Amazon.com also sells products from well-known retailers including Toysrus.com Inc., Target Corporation, Circuit City Stores Inc., the Borders Group, Waterstones, Expedia Inc., Hotwire, National Leisure Group Inc., and Virgin Wines. Sometimes criticized for its focus on market share over profits, Amazon.com put investor fears to rest when it secured its first net profit during the fourth quarter of 2001.

Throughout the 1990s, the popularity of the Internet and World Wide Web swept across the world, and personal computers in most businesses and households got hooked up in some form or another to Internet providers and Web browser software. As use of the Internet became more prevalent in society, companies began looking to the Web as a new avenue for commerce. Selling products over the Internet offered a variety of choices and opportunities. One of the pioneers of e-commerce was Jeff Bezos, founder of Amazon.com.

In 1994, Bezos left his job as vice-president of the Wall Street firm D.E. Shaw, moved to Seattle, and began to work out a business plan for what would become Amazon.com. After reading a report that projected annual Web growth at 2,300 percent, Bezos drew up a list of 20 products that could be sold on the Internet. He narrowed the list to what he felt were the five most promising: compact discs, computer hardware, computer software, videos, and books. Bezos eventually decided that his venture would sell books over the Web, due to the large worldwide market for literature, the low price that could be offered for books, and the tremendous selection of titles that were available in print. He chose Seattle as the company headquarters due to its large high-tech work force and its proximity to a large book distribution center in Oregon. Bezos then worked to raise funds for the company while also working with software developers to build the company's web site. The web site debuted in July 1995 and quickly became the number one book-related site on the Web.

In just four months of operation, Amazon.com became a very popular site on the Web, making high marks on several Internet rankings. It generated recognition as the sixth best site on Point Communications' "top ten" list, and was almost immediately placed on Yahoo's "what's cool list" and Netscape's "what's new list." The site opened with a searchable database of over one million titles. Customers could enter search information, prompting the system to sift through the company database and find the desired titles. The program then displayed information about the selection on a customer's computer screen, and gave the customer the option to order the books with a credit card and have the books shipped in a just a few days.

Unlike its large competitors, such as Barnes & Noble and Borders, Amazon.com carried only about 2,000 titles in stock in its Seattle warehouse. Most orders through Amazon.com were placed directly through wholesalers and publishers, so no warehouse was needed. Amazon.com would simply receive the books from the other sources, then ship them to the customer. At first, the company operated out of Bezos' garage, until it was clear that it was going to be a success, necessitating a move to a Seattle office, which served as the customer support, shipping, and receiving area. It was interesting that, because of the Internet, such a small venture could realize such a broad scope so quickly; within a month of launching the web site, Bezos and Amazon.com had filled orders from all 50 states and 45 other countries.

As a pioneer in the world of Internet commerce, Amazon.com strived to set the standard for web businesses. With that goal in mind, Bezos went to work on making the web site as customer friendly as possible and relating the site to all types of customers. For those people who knew what book they were looking for and just wanted quick performance and low cost, Amazon.com offered powerful search capabilities of its expanded 1.5 million-title database. The company also began offering 10 to 30 percent discounts on most titles, making the prices extremely affordable. For other customers who were just looking for something to read in a general area of interest, Amazon.com offered topic areas to browse, as well as lists of bestsellers, award winners, and titles that were recently featured in the media. Finally, for people who could not decide, Amazon.com offered a recommendation center. There a customer could find books based on his or her mood, reading habits, or preferences. The recommendation center also offered titles based on records of books the customer had purchased in the past, if they were return customers to the site.

Other hits with customers were the little touches, such as optional gift wrapping of packages, and the "eye" notification service, which sent customers e-mails alerting them when a new book in their favorite subject or by their favorite author came into stock. The site also offered the ability for customers not only to write their comments about different books and have them published on the site, but to read other customers' comments about books they were interested in buying.

After less than two years of operation, Amazon.com became a public company in May 1997 with an initial public offering (IPO) of three million shares of common stock. With the proceeds from the IPO, Bezos went to work on improving the already productive web site and on bettering the company's distribution capabilities.

To help broaden the company's distribution capabilities, and to ease the strain on the existing distribution center that came from such a high volume of orders, in September 1997 Bezos announced that Amazon.com would be opening an East Coast distribution center in New Castle, Delaware. There was also a 70 percent expansion of the company's Seattle center. The improvements increased the company's stocking and shipping capabilities and reduced the time it took to fill customers' orders. The Delaware site not only got Amazon.com closer to East Coast customers, but also to East Coast publishers, which decreased Amazon.com's receiving time. With the new centers in place, Bezos set a goal for the company of 95 percent same-day shipping of in-stock orders, getting orders to the customers much faster than before.

Another growth area for Amazon.com was the success of its "Associate' program. Established in July 1996, the program allowed individuals with their own web sites to choose books of interest and place ads for them on their own sites, allowing visitors to purchase those books. The customer was linked to Amazon.com, which took care of all the orders. Associates were sent reports on their sales and made a 3 to 8 percent commission from books sold on their sites. The Associates program really began to take off in mid-1997, when Amazon.com formed partnerships with Yahoo, Inc. and America Online, Inc. Both companies agreed to give Amazon.com broad promotional capabilities on their sites, two of the most visited sites on the Web. As the success continued, Amazon also struck deals with many other popular sites, including Netscape, GeoCities, Excite, and AltaVista.

As the company continued to grow in 1997, Bezos announced in October that Amazon.com would be the first Internet retailer to reach the milestone of one million customers. With customers in all 50 states and now 160 countries worldwide, what had started in a Seattle garage was now a company with $147.8 million in yearly sales.

As Amazon.com ventured into 1998, the company continued to grow. By February, the Associates program had reached 30,000 members, who now earned up to 15 percent for recommending and selling books from their web sites. Four months later, the number of Associates had doubled to 60,000.

The company's customer database continued to grow as well, with cumulative customer accounts reaching 2.26 million in March, an increase of 50 percent in just three months, and of 564 percent over the previous year. In other words, it took Amazon.com 27 months to serve its first million customers and only six months to serve the second million. This feat made Amazon.com the third largest bookseller in the United States.

Financed by a $75 million credit facility secured in late 1997, Amazon.com continued to reshape its services in 1998. To its catalog of over 2.5 million titles, the company added Amazon.com Advantage, a program to help the sales of independent authors and publishers, and Amazon.com Kids, a service providing over 100,000 titles for younger children and teenagers.

Amazon.com also expanded its business through a trio of acquisitions in early 1998. Two of the companies were acquired to further expand Amazon.com's business into Europe. Bookpages, one of the largest online booksellers in the United Kingdom, gave Amazon.com access to the U.K. market. Telebook, the largest online bookseller in Germany, added its German titles to the mix. Both companies not only gave Amazon .com access to new customers in Europe, but it also gave existing Amazon.com customers access to more books from around the world. The Internet Movie Database (IMD), the third acquisition, was used to support plans for its move into online video sales. The tremendous resources and information of the IMD served as a valuable asset in the construction of a customer-friendly and informative web site for video sales.

Another big change in 1998 was the announcement of the company's decision to enter into the online music business. Bezos again wanted to make the site as useful as possible for his customers, so he appealed to them for help. Several months before officially opening its music site, Amazon.com asked its bookstore customers and members of the music profession to help design the new web site.

The music store opened in June 1998, with over 125,000 music titles available. The new site, which began operations at the same time that Amazon.com debuted a redesigned book site, offered many of the same helpful services available at the company's book site. The database was searchable by artist, song title, or label, and customers were able to listen to more than 225,000 sound clips before making their selection.

Amazon.com ended the second quarter of 1998 as strong as ever. Cumulative customer accounts broke the three million mark, and as sales figures for Amazon.com continued to rise, and more products and titles were added, the future looked bright for this pioneer in the Internet commerce marketplace. With music as a part of the company mix, and video sales on the horizon, Bezos seemed to have accomplished his goal of gathering a strong market share in the online sales arena. As Bezos told Fortune magazine in December 1996: "By the year 2000, there could be two or three big online bookstores. We need to be one of them."

As such, the company's focus on growth continued. In 1999, it launched an online auction service entitled Amazon Auctions. It also began offering toys and electronics and then divided its product offerings into individual stores on its site to make it easier for customers to shop for certain items. During the holiday season that year, the firm ordered 181 acres of holiday wrapping paper and 2,494 miles of red ribbon, a sign that Bezos expected holiday shoppers to flock to his site as they had in the two past years. Sure enough, sales climbed to $1.6 billion proving that the founder's efforts to create an online powerhouse had indeed paid off. In 1999, Bezos reached the upper echelon of the corporate world when Time magazine honored him with its prestigious "Person of the Year" award.

While Amazon.com's growth story was remarkable, Bezos' focus on market share over profits had made Wall Street uneasy and left analysts speculating whether the company would ever be able to turn a profit. Sales continued to grow as the company added new products to its site--including lawn and patio furniture and kitchen wares. The company however, continued to post net losses. To top it off, the "dot-com boom" of the late 1990s came to a crashing halt in the early years of the new millenium as many startups declared bankruptcy amid intense competition and weakening economies.

Bezos remained optimistic, even as Amazon.com's share price faltered. During 2001, the company focused on cutting costs. It laid off 1,300 employees and closed a distribution facility. The company also added price reduction to its business strategy, which had traditionally been centered on vast selection and convenience. Amazon.com inked lucrative third-party deals with such well-known retailers as Target Corporation and America Online, Inc. By now, products from Toysrus.com Inc., Circuit City Stores Inc., the Borders Group, and a host of other retailers were available on the Amazon.com site.

Amazon.com's strategy worked. In 2001, sales grew to $3.12 billion, an increase of 13 percent over the previous year. During the fourth quarter, Amazon.com reached a milestone that many had regarded as unlikely; it secured a net profit of $5 million. In 2002, the company launched its apparel store, which included clothing from retailers The Gap and Lands' End. Overall, the company reported a net loss of $149 million for the year, an improvement from the $567 million loss reported in 2001. In the fourth quarter of 2002 however, the firm secured a quarterly net profit of $3 million--the second net profit in its history.

While securing quarterly net profits was a major turning point for the young company, a July 2002 Business Week article warned, "after seven years and more than $1 billion in losses, Amazon is still a work in process." Indeed, the company's foray into providing the "Earth's Biggest Selection" had yet to prove it could provide profits on a long-term basis. Nevertheless, Bezos and his Amazon team remained confident that the firm was on the right track. With $3.9 billion in annual sales, Amazon.com had without a doubt come a long way from its start as an online book seller.

Principal Subsidiaries

Amazon Global Resources, Inc.; Amazon.com.dedc, LLC; Fulfillco.ksdc, Inc.; Amazon.com.kydc, Inc.; Amazon.com Commerce Services, Inc.; Amazon.com Holdings, Inc.; Amazon.com International Sales, Inc.; Amazon.com LLC; Amazon.com Payments, Inc.; NV Services, Inc.; Amazon Fulfillment Services, Inc.; Amazon.com@Target.com, Inc.

Principal Competitors

Barnes & Noble Inc.; CDNow Inc.; eBay Inc.

Further Reading

"Chewing the Sashimi with Jeff Bezos," Business Week, July 15, 2002.

Colker, David, "Amazon Delivers Profit for the Second Time," Los Angeles Times, January 24, 2003.

Green, Lee, "Net Profits," Spirit Magazine, March 1998, pp. 52-54, 126-28.

Haines, Thomas, "Amazon.com Sales Grow While Loss Widens," Seattle Times, January 23, 1998, p. C1.

Hansell, Saul, "Amazon's Risky Christmas," New York Times, November 28, 1999.

Hazleton, Lesley, "Jeff Bezos: How He Built a Billion Dollar Net Worth Before His Company Even Turned A Profit," Success, July 1998, pp. 58-60.

"How Amazon Cleared the Profitability Hurdle," Business Week, February 4, 2002.

"Jeffrey Bezos," Chain Store Age Executive, December 1997, p. 124.

Jeffrey, Don, "Amazon.com Eyes Retailing Music Online," Billboard, January 31, 1998, pp. 8-9.

Martin, Michael, "The Next Big Thing: A Bookstore," Fortune, December 9, 1996, pp. 168-70.

Perez, Elizabeth, "Store On Internet Is Open Book: Amazon.com Boasts More Than 1 Million Titles On The Web," Seattle Times, September 19, 1995, p. E1.

Rose, Cynthia, "Site-Seeing," Seattle Times, March 10, 1996.

Soto, Monica, "Amazon Layoffs: What's It All Mean?," Seattle Times, February 5, 2001.

Zito, Kelly, "Amazon CEO Tells of Life at the Top," San Francisco Chronicle, December 23, 1999, p. B1.

— Robert Alan Passage; Updated by Christina M. Stansell


Oxford Dictionary of Celtic Mythology:

Amazon

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Although the Amazons of Greek tradition are cited briefly in Lebor Gabála [Book of Invasions], the figures mentioned more often in this role include female teachers of martial arts such as Scáthach, Aífe (1), and Búanann. See also BERREY DHONE.

Wikipedia on Answers.com:

Amazon.com

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Home > Library > Miscellaneous > Wikipedia
Amazon.com, Inc.
Type Public
Traded as NASDAQ: AMZN
NASDAQ-100 Component
S&P 500 Component
Founded 1994 (1994)
Founder(s) Jeff Bezos
Headquarters Seattle, Washington, U.S.
Area served Worldwide
Key people Jeff Bezos
(Chairman, President & CEO)
Industry Internet, Online retailing
Cloud computing
Products A2Z Development, A9.com, Alexa Internet, Amazon.com, Amazon Kindle, Amazon Studios, Amazon Web Services, Audible.com, dpreview.com, Endless.com, IMDb, LoveFilm, Zappos.com, Woot, Junglee.com
Revenue increase US$ 48.07 billion (2011)[1]
Operating income increase US$ 0862 million (2011)[1]
Net income increase US$ 0631 million (2011)[1]
Total assets increase US$ 25.27 billion (2011)[1]
Total equity increase US$ 07.75 billion (2011)[1]
Employees 65,600 (2012 Q1)[2]
Website Amazon.com (original US site)
various national sites
Alexa rank steady 11 (May 2012)[3]
Type of site E-commerce
Advertising Web banners, Videos
Available in English, French, German, Spanish, Italian, Japanese, Chinese
Launched 1995

Amazon.com, Inc. (NASDAQ: AMZN) is an American multinational electronic commerce company with headquarters in Seattle, Washington, United States. It is the world's largest online retailer.[4] The company also produces consumer electronics - notably the Amazon Kindle e-book reader - and is a major provider of cloud computing services.

Amazon has separate retail websites for the following countries: United States, Canada, United Kingdom, France, Germany, Italy, Spain, Japan, and China, with international shipping to certain other countries for some of its products. It is also expected to launch its websites in Poland,[5] Netherlands and Sweden.[6]

Jeff Bezos incorporated the company (as Cadabra) in July 1994, and the site went online as amazon.com in 1995.[7] The company was renamed after the Amazon River, one of the largest rivers in the world,[7] which in turn was named after Amazons, the legendary nation of female warriors in Greek mythology. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3 downloads, software, video games, electronics, apparel, furniture, food, toys, and jewelry.

Contents

History

Jeff Bezos, the founder of Amazon.com

The company was founded in 1994, spurred by what Bezos called his "regret minimization framework", which he described as his effort to fend off regret for not staking a claim in the Internet gold rush.[8]

The company began as an online bookstore.[9] While the largest brick-and-mortar bookstores and mail-order catalogs might offer 200,000 titles, an online bookstore could sell far more. Bezos wanted a name for his company that began with "A" so that it would appear early in alphabetic order.[7] He began looking through the dictionary and settled on "Amazon" because it was a place that was "exotic and different" and it was the river he considered the biggest in the world, as he hoped his company would be.[7] 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.[10]

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.[11] 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. 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. The profit, although it was modest, served to demonstrate that the business model could be profitable.[12] In 1999, Time magazine named Bezos the Person of the Year, recognizing the company's success in popularizing online shopping.

Barnes and Noble filed a lawsuit 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. Amazon continued to call itself "the world's largest bookstore."[13] Walmart subsequently filed suit on October 16, 1998, alleging that Amazon had stolen trade secrets by hiring former Walmart executives. Although this suit was settled out of court, it caused Amazon to implement internal restrictions and reassignment of the former Walmart executives.[13]

Acquisitions

Investment

Subsidiaries

  • 2004: A9.com, a company focused on researching and building innovative technology.[45]
  • 2004: Lab126, developers of integrated consumer electronics such as the Kindle.
  • 2007: Endless.com, an e-commerce brand focusing on shoes.[46]
  • 2007: Brilliance Audio, the largest independent audio book producer in the U.S.[47]

Merchant partnerships

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 due to a lawsuit.[48] Amazon also hosted and managed the website for Borders bookstores but this ceased in 2008.[49] From its inception until August 2011, Amazon hosted the retail website for Target.[50] 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.[51]

Amazon.com operates retail web sites for Sears Canada, 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.

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. These titles will be available for purchase exclusively through Amazon's new Kindle Fire tablet.[52]

Locations

Amazon has offices, fulfillment centers, customer service centers and software development centers across North America, Latin America, Europe and Asia.[53]

Headquarters

Amazon.com's former headquarters in the former U.S. Public Health Hospital (Merchant Marine & Indians) in Beacon Hill, Seattle.

The company's global headquarters are in Seattle's South Lake Union neighborhood. The European headquarters are in Luxembourg's capital, Luxembourg City. Amazon also has headquarters in Miami, Florida.

Amazon.com's new headquarters building in South Lake Union, Seattle, Washington.

Software development centers

While much of Amazon's software development occurs in Seattle, the company employs software developers in centers across the globe. Some of these sites are run by an Amazon subsidiary called A2Z Development.[54]

  • North America
  • Europe
  • Asia
  • Africa

Call Centers

Fulfillment and warehousing

Fulfillment centers are located in the following cities, often near airports. These centers also provide warehousing and order-fulfillment for third-party sellers:[59]

  • North America:
  • Europe:
Amazon.co.uk warehouse in Glenrothes, Scotland
  • Asia:

Closed fulfillment, warehousing & customer service locations

These U.S. distribution centers have been closed: SDC Seattle Distribution Center, located in Georgetown, a neighborhood just south of downtown Seattle. Red Rock, Nevada; Chambersburg, Pennsylvania; Munster, Indiana; and McDonough, Georgia.[71][72][73] From 2000 until Feb 2001 there was an Amazon customer service based in The Hague, Netherlands.

Products and services

Third-generation Amazon Kindle

Retail goods

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 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 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,[74] 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.[75] AmazonFresh also operated pick-up locations in the suburbs of Bellevue and Kirkland from summer 2007 through early 2008.

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.[76]

In November,[when?] 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.[74]

Consumer electronics

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 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 aggressively low pricing of Fire ($199 USD) was largely perceived as a strategy backed by Amazon's revenue from its content sales, to be stimulated by sales of Fire.

Digital content

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.[77]

Amazon MP3, its own online music store, launched in the U.S. on September 25, 2007, selling downloads exclusively in MP3 format without digital rights management.[78] (In addition to copyright law, Amazon's terms of use agreements restrict use of the MP3s, but Amazon does not use DRM to enforce those terms.)[79] Amazon MP3 sells music from the Big 4 record labels EMI, Universal, Warner Bros. Records, and Sony Music, as well as independents. Prior to the launch of this service, Amazon made an investment in Amie Street, a music store with a variable pricing model based on demand.[80] Amazon MP3 was the first online offering of DRM-free music from all four major record companies.[81][82][83][84]

In January 2008, Amazon began rolling out its MP3 service to subsidiary websites worldwide.[85] In December 2008, Amazon MP3 was made available in the UK.

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[86] and replaced by Amazon Payments.

In 2011, Amazon announced that it was releasing a Mac download store in order to offer dozens of games and hundreds of pieces of software for Apple computers.[87]

Amazon Prime

Amazon Prime is a service of two-day shipping on all eligible purchases, for a flat annual fee, as well as discounted one-day shipping rates.[88] Amazon launched the program in the contiguous United States in 2005, in Japan, the United Kingdom and Germany in 2007, and in France (as "Amazon Premium") in 2008.

Amazon Prime membership also provides the instant streaming of movies and TV shows at no additional cost, as of February 2011.[89] In November 2011, it was announced that Prime members have access to the Kindle Owners’ Lending Library, which allows users to borrow certain popular titles for free, up to one book a month, with no due date.[90]

Private labels and exclusive marketing arrangements

In August 2005,[91] 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.[91] 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".[92] Coverage by the trademark grew to include items such as paints, carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and jewelry.[92] 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.[93] The line was launched in 2009.[94]

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.[95]

Computing services

Amazon launched Amazon Web Services (AWS) in 2002, which provides programmatic access to latent features on its website. Amazon Web Services (AWS) was first launched as a public beta of Amazon Elastic Compute Cloud running Microsoft Windows Server and Microsoft SQL Server.[96] This was later expanded to several operating systems, including various flavors of Linux and OpenSolaris.

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.

Content production

Amazon Publishing is Amazon's publishing unit.[97] It is composed of AmazonEncore,[98] AmazonCrossing,[99] Montlake Romance,[100] Thomas & Mercer,[101] 47 North,[102] and Powered by Amazon. Additional imprints are planned.

Launched in 2005, Amazon Shorts offered 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. The program was discontinued on June 1, 2010.[103] [104]

In 2008 Amazon expanded into film production, producing the film The Stolen Child with 20th Century Fox.[105]

Donations

Amazon also created "channels" to benefit certain causes. In 2004, Amazon's "Presidential Candidates" allowed customers to donate $5 to $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.[106]

Other services

In 2007, Amazon launched Amapedia, a now-defunct wiki for user-generated content to replace ProductWiki, and the video on demand service Amazon Unbox.

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 a payment service specifically targeted at developers, Amazon FPS.[citation needed]

In September, IMDb and Amazon launched a Web site called SoundUnwound for browsing music metadata with wiki-like user contribution.[107] Amazon Connect enables authors to post remarks on their book pages to customers. Amazon Web Store allows businesses to create custom e-commerce websites using Amazon technology. Sellers pay a commission of 7%, including credit-card processing fees and fraud protection, and a subscription fee which ranges from $0 to $24.99 per month depending on the bundle option for an unlimited number of webstores and listings.

Website

The domain amazon.com attracted at least 615 million visitors annually by 2008, twice the number of walmart.com.[108] Amazon attracts approximately 65 million customers to its U.S. website per month.[109] The company has also invested heavily on a massive amount of server capacity for its website, especially to handle the excessive traffic during the December Christmas holiday season.[110] There are different versions of the website for different countries, such as amazon.co.uk, amazon.fr, amazon.de, amazon.it, amazon.at, amazon.jp, amazon.ca, india.amazon.com, amazon.es. These sites vary in assortment and prices.

Reviews

See also Amazon.com controversies#Amazon 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. As with most rating scales, one star stands for the product being abysmal, five stars meaning that the item is stellar. 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. A problem has been created by Amazon's habit of copying reviews onto pages on other editions of the 'same' book.[citation needed] But often the book is not the 'same' at all. For example, as of November 2011, editions of the new translation of the Roman Missal were accompanied on both amazon.com and amazon.co.uk by old reviews of the old translation, many of which advised the purchaser to wait for the new translation, and which discussed details of content and presentation that had nothing to do with the new edition.[citation needed]

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.[111][112] The feature started with 120,000 titles (or 33 million pages of text) on October 23, 2003.[113] 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 sellers

Amazon derives about 40% 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.[114] 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 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.[115]

A January 2010 survey of third-party sellers by Auctionbytes.com [116] found that Amazon was 4th overall.[117] 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.

Amazon sales rank

The 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.[118] 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.[118] 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.[119] 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.[120] 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 technology

Customer 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 send 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.[121]

Multi-level sales strategy

Amazon 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 earn a commission on click through sales, there is now a program which let those affiliates build entire websites based on Amazon’s platform.[122] 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.[123]

Revenue

Over the last decade,[when?] Amazon has developed a customer base of around 30 million people. Amazon.com is primarily a retail site with a sales revenue model. Amazon makes its money by taking a small percentage of the sale price of each item that is sold through its website. Amazon also allows companies to advertise their products by paying to be listed as featured products.[124]

Controversies

Main article: Amazon.com controversies

Since its founding, the company has attracted criticism and controversy from multiple sources over its actions. These include: rewarding customers for spying on Amazon's brick and mortar competitors,[125] poor warehouse conditions for workers; anti-unionization efforts; Amazon Kindle remote content removal; taking public subsidies; its "1-Click patent" claims; anti-competitive actions; price discrimination; various decisions over whether to censor or publish content such as the WikiLeaks web site; LGBT book sales rank; and works containing libel, facilitating dogfight, cockfight, or pedophile activities. In December 2011, Amazon faced backlash from small businesses for running a one-day deal to promote its new Price Check app. Shoppers who used the app to check prices in a brick-and-mortar store were offered a 5% discount to purchase the same item from Amazon.[126] Companies like Groupon, eBay, and Taap.it countered Amazon's promotion by offering $10 off from their products.[127][128]

Sales and use taxes

Main article: Amazon tax

Amazon collects sales tax from just five states in the US. Amazon is under increasing legal and political pressure from state governments, traditional retailers and other groups because of its refusal to collect sales tax in 40 of the 45 states with a statewide sales tax (as of May, 2011). Those 40 states include at least 12 where Amazon has a clear physical presence,[129] via distribution centers and wholly owned subsidiaries. Critics of Amazon argue that its refusal to collect sales taxes has given it an unfair advantage over traditional retailers. While customers are required to remit use tax directly to their state, few customers do so.

Amazon has said since at least 2006 that it would support a federal solution to the sales tax problem, as long as such legislation was fair and simple. The Main Street Fairness Act failed in committee in 2010, and several earlier versions of the bill failed to advance. Amazon lobbyists met four times with members of Congress or their aides in 2010 regarding the Main Street Fairness Act. The company spent $610,000 on lobbying in 2010, although these expenses also covered other bills discussed at the same time. Amazon has increased political contributions to federal lawmakers. Amazon's political action committee spent $214,000 during the 2010 election cycle, double what it spent for the 2008 elections.[130]

Small business advocates at the American Independent Business Alliance note that while proclaiming support for reform, Amazon has lobbied to apply sales tax collection duties to all businesses with $150,000 or more in annual sales.[131] Since all major proposals include an exemption of at least $500,000 or $1 million, AMIBA says[129] this amounts to opposing passage of tax reform.

Lobbying

Amazon.com lobbies the United States federal government and state governments on issues such as the enforcement of sales taxes on online sales, transportation safety, privacy and data protection, and intellectual property. According to regulatory filings, Amazon.com focuses its lobbying on the U.S. Congress, the Federal Communications Commission, and the Federal Reserve. Amazon.com spent $450,000 on lobbying in the second quarter of 2011, $630,000 in the first quarter of 2011, and $500,000 in the second quarter of 2010.[132]

Pricing

Amazon sometimes has different prices for the same objects. This situation is easiest to spot in Europe, where the euro is a common currency. Buying From France gives insights into the scale of these differences.

Notable businesses from former employees

A number of companies have been started and founded by former Amazon employees.[133]


See also

Portal icon Seattle portal
Portal icon Internet portal

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  • Annual revenue increase US$48 billion (2011)
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