Amazon.com, Inc
Facts About Amazon You Can Learn
Jeff Bezos founded Amazon in his garage in Bellevue, Washington, on July 5, 1994. In the beginning, it served as an online marketplace solely for books. However, it has since expanded its offerings to cover a wide range of product categories, leading to its nickname, The Everything Store. Through strategic expansion, Amazon has established various subsidiaries such as Amazon Web Services for cloud computing, Zoox for autonomous vehicles, Kuiper Systems for satellite internet, and Amazon Lab126 for computer hardware research and development. Additionally, the company has acquired several other subsidiaries including Ring, Twitch, IMDb, and Whole Foods Market. Notably, Amazon’s acquisition of Whole Foods Market in August 2017 for a staggering $13.4 billion significantly bolstered its presence as a physical retailer.
Amazon has gained a reputation for disrupting well-established industries through technological innovation and aggressive reinvestment of profits into capital expenditures. As of 2023, it holds the title of the world’s largest online retailer and marketplace, provider of smart speakers, and cloud computing service through AWS. It is also a leader in live-streaming services through Twitch and is considered a major Internet company based on its revenue and market share. In 2021, Amazon surpassed Walmart as the largest retailer globally, excluding China, thanks in large part to its paid subscription plan, Amazon Prime, which boasts nearly 200 million subscribers worldwide. Additionally, it ranks as the second-largest private employer in the United States.
Amazon is currently ranked as the twelfth most frequently visited website worldwide, with a majority of its website traffic, amounting to 82%, being directed from the United States.
Amazon Prime Video, MGM+, Amazon Music, Twitch, and Audible units are used by Amazon to distribute various downloadable and streaming content. Additionally, Amazon Publishing is responsible for publishing books, and Amazon MGM Studios handles the production of film and television content, including the recently acquired Metro-Goldwyn-Mayer studio. Moreover, Amazon is known for manufacturing consumer electronics such as Kindle e-readers, Echo devices, Fire tablets, and Fire TVs.
Amazon has faced criticism for its practices of collecting customer data. The company’s work culture has been described as toxic. Additionally, concerns have been raised regarding censorship on the platform. Amazon has also been accused of engaging in tax avoidance and anti-competitive behavior.
1994 – 2009: Amazon’s Early Years
Jeff Bezos established Amazon on July 5, 1994. He selected the Seattle region due to its considerable pool of technical expertise, influenced by Microsoft’s presence in the area.
Amazon made its initial public offering in May 1997, marking its entrance into the stock market. In 1998, the company expanded its product offerings to include music and videos. Additionally, Amazon expanded internationally by acquiring online book sellers in the United Kingdom and Germany. The following year, it further diversified its product range by introducing various items such as consumer electronics, home improvement products, software, games, and toys.
Amazon Web Services (AWS) was introduced in 2002, with its primary focus on offering APIs for web developers to create web applications on top of Amazon’s ecommerce platform. In 2004, AWS expanded its services to include website popularity statistics and web crawler data from the Alexa Web Information Service. The shift towards enterprise services began in 2006 with the introduction of Simple Storage Service (S3), which provided data storage, followed by Elastic Compute Cloud (EC2) in 2008, offering computing power on rent to companies. Additionally, in 2006, Amazon launched the Fulfillment by Amazon program, allowing individuals and small companies to sell their products through Amazon’s warehouses and fulfillment infrastructure.
From 2010 to the present day, there has been significant growth in Amazon’s operations. In 2017, the company acquired the supermarket chain Whole Foods Market, solidifying its presence in the market. With net sales of around US$178 billion in the same year, Amazon has emerged as the top e-retailer in the United States. Furthermore, it boasts a customer base of over 300 million active accounts worldwide.
During the COVID-19 pandemic, Amazon experienced significant expansion as it recruited over 100,000 employees in the United States and Canada. However, the company faced protests from its workers in the US, France, and Italy who disagreed with the decision to continue regular shifts due to the high risk of COVID-19 transmission in warehouses. Legal complaints were filed against Amazon in Spain regarding its policies, and a group of US Senators expressed their concerns about workplace safety by writing an open letter to Bezos.
Bezos declared his decision to resign as CEO on February 2, 2021, and assume the role of executive chair on Amazon’s board. The change was made official on July 5, 2021, when Andy Jassy, the former CEO of AWS, took over as CEO. In an effort to reduce expenses, Amazon eliminated more than 18,000 positions in January 2023, primarily in its consumer retail and human resources sectors.
Amazon Products and Services
Amazon.com is a well-known online marketplace that offers a wide range of product categories, such as media (books, movies, music, and software), clothing, baby items, electronics, cosmetics, high-quality food and groceries, health and personal care items, scientific supplies, kitchenware, jewelry, watches, outdoor and gardening products, musical instruments, sporting goods, tools, automotive products, toys and games, and even agricultural supplies. Additionally, Amazon provides consulting services. The Amazon websites are tailored to specific countries, like amazon.com for the United States and amazon.fr for France, although certain sites do offer international shipping.
In 2008, the number of annual visitors to amazon.com increased from 615 million to over 2 billion per month in 2022. Amazon.com is currently ranked as the 14th most popular website globally.
Merchant Partnerships
Toys “R” Us, a US toy retailer, signed a 10-year contract with Amazon in 2000. The agreement, worth $50 million annually, included a share of sales. The deal made Toys “R” Us the sole provider of toys and baby products on Amazon while directing customers to Amazon’s Toys & Games category through their website. In 2004, Toys “R” Us filed a lawsuit against Amazon, alleging that they allowed third-party sellers to offer items in categories that were supposed to be exclusive to Toys “R” Us. The court ruled in favor of Toys “R” Us in 2006, granting them the right to terminate their agreement with Amazon and establish their own independent e-commerce website. As a result, Toys “R” Us received $51 million in damages.
Amazon and Borders Group entered into a mutual agreement in 2001, wherein Amazon would collaborate with Borders.com as a co-branded service. However, in 2007, Borders withdrew from the agreement and decided to establish its own online store.
Amazon.com and DC Comics made a joint announcement on October 18, 2011, revealing their collaboration which granted Amazon exclusive digital rights to several highly acclaimed comics such as Superman, Batman, Green Lantern, The Sandman, and Watchmen. This alliance had significant repercussions, leading prominent bookstores like Barnes & Noble to eliminate these particular titles from their physical stores.
Amazon and the United States Postal Service formed a collaboration in November 2013 to introduce Sunday delivery for orders. The inclusion of this service in Amazon’s regular shipping rates was initially launched in Los Angeles and New York metropolitan areas due to the large number of orders and challenges in timely delivery. The plan was to extend this service to Dallas, Houston, New Orleans, and Phoenix by 2014.
Nike entered into an agreement with Amazon in June 2017 to sell their products on the platform, seeking improved measures against counterfeit goods. However, this endeavor did not yield the desired results, leading Nike to terminate the partnership in November 2019. In a similar fashion, companies like IKEA and Birkenstock also chose to discontinue their sales on Amazon during this period, due to concerns regarding business practices and the prevalence of counterfeit products.
Amazon partnered with JV Appario Retail, a seller owned by Patni Group, in September 2017. JV Appario Retail reported a total income of US$104.44 million (₹759 crore) in the financial year 2017–2018.
From October 11, 2017 onwards, in specific regions, AmazonFresh provided home delivery services for various Booths branded items.
Amazon and Apple Inc. came to a mutual agreement in November 2018 through which Amazon would be permitted to sell specific items on the platform, in collaboration with both Apple Inc. and selected Apple Authorized Resellers. Consequently, starting from January 4, 2019, Apple products can only be sold on Amazon by Apple Authorized Resellers.
Private-label Products
Amazon offers a variety of products using its own brand names, such as phone chargers, batteries, and diaper wipes. The AmazonBasics brand was launched in 2009 and currently offers numerous product lines, including smartphone cases, computer mice, batteries, dumbbells, and dog crates. As of 2019, Amazon had 34 private-label brands, which make up only 0.15% of its global sales, while other major retailers have an average of 18% in private-label brand sales. Additional Amazon retail brands include Presto!, Mama Bear, and Amazon Essentials.
Third-party Sellers
Amazon generates a significant portion of its revenue (approximately 40% in 2008) from sellers who utilize its platform to sell products. In addition to selling items on their own websites, other major e-commerce sellers also choose to list their products on Amazon. These sales transactions are facilitated through Amazon.com, with the final processing and order fulfillment being carried out by individual sellers. Amazon also provides space for these retailers through leasing arrangements. Individuals and businesses, both large and small, can access Amazon Marketplace to offer both new and used goods at a set price.
Affiliate Program
Publishers have the opportunity to become affiliates and earn a commission from Amazon by directing customers to their website through links. If the referral leads to a sale, publishers are rewarded. Amazon’s affiliate program have a global reach, with more than 900,000 members worldwide. As of mid-2014, the Amazon Affiliate Program is utilized by 1.2% of all websites, establishing itself as the second most popular advertising network, trailing only Google Ads. This program is commonly employed by websites and non-profit organizations to enable their supporters to earn a commission for them.
Associates have the ability to directly access the Amazon catalog on their websites through the Amazon Web Services (AWS) XML service. A fresh affiliate product called aStore permits Associates to incorporate a portion of Amazon products on another website or linked to another site. The launch of Amazon Seller Product Suggestions in June 2010 aimed to offer more visibility to sellers by suggesting specific products for third-party sellers to sell on Amazon. These recommended products are selected based on customers’ browsing history.
Product Reviews
Users of Amazon have the opportunity to submit reviews for each product listed on the website. These reviews require a rating on a scale of one to five stars. Amazon offers a badge system for reviewers, which either displays the reviewer’s real name (verified through a credit card account) or signifies that they are a top reviewer based on their popularity. However, as of December 16, 2020, Amazon has eliminated the ability for sellers and customers to leave comments on product reviews and has erased all previously posted comments. In an email to sellers, Amazon explained their decision by stating that the comments feature was rarely used. The only options that remain for responding to reviews are indicating whether the review was helpful or reporting it for violating Amazon’s policies (such as abuse). Reviews that receive sufficient “helpful” votes will appear on the product’s front page. In 2010, Amazon was recognized as the primary source of consumer reviews on the Internet.
Bezos responded to publishers questioning why Amazon would publish negative reviews by stating that Amazon.com was adopting a unique standpoint. According to him, they aimed to make all books accessible, including the good, bad, and ugly ones, in order to allow the truth to be revealed.
Public relations companies have been known to write and publish positive reviews on behalf of their clients. In addition, there have been occasions where authors have used fake names to post negative reviews about their competitors’ works.
The Amazon sales rank (ASR) is a measure of a product’s popularity on any Amazon website. It is a relative indicator updated every hour. Essentially, it is a list of best-selling products among the millions available on Amazon. Although the ASR does not directly impact product sales, Amazon uses it to determine which products to include in their bestsellers lists. Items featured in these lists receive more visibility on the website, which can result in increased sales. Certain products that experience significant changes in their sales ranks may be listed as “movers and shakers,” giving them even more exposure and potentially leading to increased sales. Amazon, for competition reasons, does not disclose actual sales figures publicly. However, they have recently started sharing point of sale data with verified authors through the Nielsen BookScan service. While the ASR has sparked speculation among publishers, manufacturers, and marketers, Amazon has not revealed the specifics of its sales rank calculation algorithm.
Physical Stores
Amazon introduced a physical Amazon Books store in University Village, Seattle, in November 2015. This store occupies an area of 5,500 square feet and offers products at the same prices as its online website. In 2017, Amazon inaugurated its tenth physical bookstore. Based on media conjectures, it is believed that Amazon has aspirations to establish 300 to 400 bookstores across the nation in the future.
In June 2018, it was disclosed that Amazon intended to establish physical bookshops in Germany.
Amazon submitted an application in August 2019 to establish a liquor store in San Francisco, California, with the intention of delivering beer and alcohol within the city limits.
In the year 2020, Amazon Fresh launched numerous brick-and-mortar outlets across the United States and the United Kingdom.
Hardware and Services
Amazon offers a wide range of products and services for customers, such as its digital assistant Alexa, Amazon Music, and Prime Video for music and videos respectively. Additionally, they have the Amazon Appstore for Android apps, the Kindle line of eink e-readers, and Fire and Fire HD color LCD tablets. In addition, Audible allows customers to purchase and listen to audiobooks.
Amazon unveiled Astro, its inaugural domestic robot in September 2021, which operates on the advanced Alexa smart home system. Designed to remotely monitor pets, individuals, and household security, Astro can be controlled from afar. In the event of detecting any irregular activity, it promptly alerts the owners through notifications.
Amazon introduced RXPass, a prescription medication delivery service, in January 2023. This service provides US Amazon Prime members with the option to pay a monthly fee of $5 in exchange for access to a range of 60 medications. The service was made available promptly following the announcement, with the exception of states that have certain regulations for prescription delivery. Individuals covered by government healthcare programs like Medicare and Medicaid are ineligible to register for RXPass.
Subsidiaries
Amazon is the holder of more than 100 affiliated companies, which consist of Amazon Web Services, Audible, Diapers.com, Goodreads, IMDb, Kiva Systems (currently known as Amazon Robotics), Shopbop, Teachstreet, Twitch, Zappos, and Zoox.
Amazon Web Services
Amazon Web Services (AWS) is an affiliate company that offers individuals, organizations, and governments with on-demand cloud computing platforms and APIs. These platforms operate on a pay-as-you-go model, allowing users to efficiently utilize computing resources. AWS server farms enable the provision of distributed computing processing capacity and software tools. According to Synergy Group’s data from Q4 of 2021, AWS currently possesses a 33% market share for cloud infrastructure, surpassing its closest competitors, Microsoft Azure and Google Cloud, who hold market shares of 21% and 10% respectively.
Audible
Audible is an online retailer and creator of audio content for entertainment, information, and education purposes. The company offers digital audiobooks, radio, television programs, and audio adaptations of magazines and newspapers. With Audible Studios, the company has effectively become the leading producer of downloadable audiobooks worldwide. In January 2008, Amazon made a public statement declaring its intention to acquire Audible for approximately $300 million. The acquisition process finalized in March 2008, resulting in Audible becoming a subsidiary company of Amazon.
Goodreads
In December 2006, Goodreads, a website for “social cataloging,” was established and then launched in January 2007 by Otis Chandler and Elizabeth Khuri. The platform enables users to freely explore a vast database of books, annotations, and reviews contributed by other users. By registering or signing up, users can compile their personal library catalogs and reading lists. Additionally, they have the option to form book recommendation groups and engage in related discussions. By December 2007, the website boasted more than 650,000 members and had accumulated over a million books. Subsequently, in March 2013, Amazon acquired the company.
Ring
Jamie Siminoff established Ring, a home automation company, in 2013. Mainly recognized for its smart doorbells that operate using WiFi, Ring also produces various security cameras. In 2018, Amazon acquired Ring for a substantial sum of US$1 billion.
Twitch
Twitch is a video streaming platform that focuses mainly on video gaming content. In August 2014, Amazon acquired Twitch for a staggering $970 million. The platform’s rapid expansion can be largely attributed to the popularity of major esports tournaments, which has led to it being compared to the “ESPN of esports” by GameSpot senior esports editor Rod Breslau. By 2015, Twitch boasted a staggering number of 1.5 million broadcasters and an impressive 100 million monthly viewers.
Whole Foods Market
Whole Foods Market is a supermarket chain in the United States that specializes in selling food products that do not contain artificial preservatives, colors, flavors, sweeteners, or hydrogenated fats. In August 2017, Amazon purchased Whole Foods for a total of $13.7 billion.
Other
Additional companies under the ownership of Amazon incorporate:
A9.com, a subsidiary since 2003, is a company that focuses on researching and developing innovative technology.
Amazon Maritime, Inc. holds a Federal Maritime Commission license that allows it to operate as a non-vessel-owning common carrier (NVOCC). This license enables the company to manage its shipments from China to the United States.
Amazon Pharmacy is an online prescription drug delivery service that was launched in November 2020. Prime subscribers can receive up to 80% discounts on generic drugs and up to 40% discounts on branded drugs. The products can be purchased on Amazon’s website or at over 50,000 physical pharmacies in the United States.
Annapurna Labs, an Israeli microelectronics company, was acquired by Amazon Web Services in January 2015 for approximately US$350–370 million.
Beijing Century Joyo Courier Services has applied for a freight forwarding license from the US Maritime Commission. Amazon is also expanding its logistics capabilities in trucking and air freight, potentially becoming a competitor to UPS and FedEx.
Brilliance Audio, an audiobook publisher founded in 1984 by Michael Snodgrass in Grand Haven, Michigan, was acquired by Amazon in 2007. Prior to the acquisition, Brilliance Audio was producing 12–15 new titles per month. It operates as an independent company within Amazon and is credited with revolutionizing the audiobook market in the mid-1980s.
ComiXology is a cloud-based digital comics platform with over 200 million comic downloads as of September 2013. It offers a selection of more than 40,000 comic books and graphic novels across various devices and web browsers. Amazon acquired the company in April 2014.
CreateSpace became a subsidiary of Amazon in 2009. It provides self-publishing services for independent content creators, publishers, film studios, and music labels.
Eero, an electronics company that specializes in mesh-networking Wifi devices, was founded as a startup in 2014. Amazon acquired Eero in 2019 for US$97 million. Despite concerns following the acquisition, Eero continues to operate independently and emphasizes its commitment to privacy.
. Health Navigator, an API development startup for online health services, was acquired by Amazon in October 2019 to become part of Amazon Care, the company’s employee healthcare service. This acquisition follows Amazon’s purchase of PillPack in 2018, which has also been integrated into Amazon Care.
Junglee, a former online shopping service provided by Amazon, allowed customers in India to search for products from both online and offline retailers. Originally, Junglee operated as a virtual database that extracted information from the internet and delivered it to enterprise applications. Over time, it evolved into a single-window marketplace that made every item from every supplier available for purchase. This led to the launch of the website Junglee.com in India in February 2012, serving as a comparison-shopping platform. In November 2017, Amazon closed down Junglee.com and redirected the domain to Amazon India.
Kuiper Systems, a subsidiary of Amazon, was established to deploy a constellation of 3,236 Low Earth orbit satellites for broadband satellite internet connectivity.
Lab126, a subsidiary acquired by Amazon in 2004, specializes in developing integrated consumer electronics like the Kindle.
Shelfari, a previous social cataloging website for books, allowed users to create virtual bookshelves, rate and review books, and participate in discussions. Amazon acquired Shelfari in August 2008, and it continued to operate independently until January 2016 when it merged with Goodreads.
Souq, the largest e-commerce platform in the Arab world at the time, was founded in Dubai in 2005 and served multiple regions in the Middle East. Amazon acquired Souq.com for $580 million in March 2017 and rebranded it as Amazon to expand its online platform in the Middle East.
Besides, Amazon has investments in renewable energy and has plans to expand its presence in the Canadian market through a new plant in Alberta.
Supply Chain
In 1997, Amazon initiated its distribution network by establishing two fulfillment centers located in Seattle and New Castle, Delaware. Amazon currently operates a variety of distribution facilities, including cross-dock centers, fulfillment centers, sortation centers, delivery stations, Prime now hubs, and Prime air hubs. With a total of 75 fulfillment centers and 25 sortation centers, Amazon employs over 125,000 individuals. The employees’ main responsibilities encompass unpacking and examining incoming goods, storing and documenting their locations, selecting items based on computer records for individual shipments, organizing and packing orders, and overseeing the shipping process. A crucial aspect of this operation involves a computer system that records the whereabouts of goods and constructs routes for pickers. Employees utilize handheld computers which connect with the central computer and allow for monitoring of their progress rate. In certain warehouses, Amazon Robotics has implemented partially automated systems.
Amazon introduced a program known as FBA (Fulfillment By Amazon) in September 2006, which enabled them to take care of storage, packaging, and delivery of goods and services on behalf of small-scale vendors.
Logistics
Amazon utilizes various transportation options for package delivery. Some of the services offered by Amazon include:
Amazon Air is a cargo airline that specializes in transporting large quantities of goods, with the final stage of delivery being managed by either Amazon Flex, Amazon Logistics, or the US Postal Service.
Individuals have the opportunity to work as independent contractors, using their own vehicles and without wearing uniforms, to deliver packages to customers. These packages include Prime Now orders that are delivered within one or two hours, Amazon Fresh groceries available for same or next day delivery, standard Amazon.com orders, and orders from local stores that have contracted with Amazon.
Amazon Logistics is a program where Amazon partners with small businesses, known as “Delivery Service Partners,” to carry out deliveries to customers. Each of these businesses operates a fleet of around 20–40 vans branded with Amazon’s logo, and their employees wear Amazon uniforms. This program currently operates in the United States, Canada, Italy, Germany, Spain, and the United Kingdom.
Amazon Prime Air is an experimental service that uses drones to deliver packages to Amazon Prime subscribers in certain cities.
Amazon directly employs individuals to work in its warehouses, bulk distribution centers, staffed “Amazon Hub Locker+” locations, and delivery stations where drivers pick up packages. However, as of December 2020, the company is not hiring delivery drivers as employees. According to Rakuten Intelligence, it was approximated that in the United States in 2020, Amazon’s directly contracted services accounted for 56% of last-mile deliveries, primarily in urban areas. The US Postal Service accounted for 30% of last-mile deliveries, mostly in rural areas, while UPS accounted for 14%.[152] In April 2021, Amazon informed investors that it had expanded its in-house delivery capacity by 50% within the previous 12 months, encompassing the initial year of the COVID-19 pandemic in the United States.
In conclusion, Amazon.com, Inc. has undoubtedly revolutionized the way we shop and conduct business online. As one of the world’s largest e-commerce platforms, Amazon has created a seamless and convenient shopping experience for millions of customers worldwide. With its vast product selection, competitive pricing, and efficient delivery services, Amazon has established itself as a trusted and reliable brand.
Moreover, Amazon’s innovative approach extends beyond e-commerce, with its expansion into various industries such as cloud computing (Amazon Web Services), smart home devices (Amazon Echo), and entertainment streaming (Amazon Prime Video). This diversification has contributed to the company’s continued growth and success.
However, it is important to acknowledge that Amazon’s dominance in the market has raised concerns about its impact on traditional retail businesses and competition. The company has faced criticism regarding labor practices, data privacy concerns, and the influence it holds over the market.
Overall, Amazon.com, Inc. remains a significant force in the global business landscape, continuously pushing boundaries and reshaping industries. Its ability to adapt, innovate, and meet the evolving needs of customers has solidified its position as a leader in the digital marketplace.
