Amazon.com - electronic commerce

Amazon.com (NASDAQ: AMZN) is an American electronic commerce company based in Seattle, Washington. It was one of the first major companies to sell goods over the Internet and was one of the iconic stocks of the late 1990s dot-com bubble. After the bubble burst Amazon faced scepticism about its business model, but it made its first annual profit in 2003. Amazon also owns Alexa Internet, A9.com, and the Internet Movie Database (IMDb).

Founded as Cadabra.com by Jeff Bezos in 1994 and launched in 1995, Amazon.com began as an online bookstore, though it soon diversified its product lines, adding DVDs, music CDs, computer software, video games, electronics, apparel, furniture, food, and more. Amazon has established separate websites in Canada, the United Kingdom, Germany, Austria, France, China and Japan and it ships globally.

Amazon offers web services for access to its catalog as well as for integration with retailers like Target and Marks & Spencer. A9.com provides search engine services directly on the Amazon.com site. Since November 2005, the company has been testing Amazon Mechanical Turk, an API allowing programs to dispatch tasks to human volunteers.

The company began as an online bookstore. Founder Bezos saw the potential of the Internet; while the largest brick-and-mortar bookstores might offer 200,000 titles, an online bookstore could offer many times more. Bezos renamed his company "Amazon" after the world's most voluminous river. The company was incorporated in 1994 in the state of Washington, began service in July 1995, and was reincorporated in 1996 in Delaware. Amazon.com had its initial public offering on May 15, 1997, trading on the NASDAQ stock exchange under the symbol AMZN at an IPO price of $18.00 per share (equivalent to $1.50 after three stock splits during the late 1990s).

Amazon's initial business plan was unusual: the company did not expect to turn a profit for four to five years. In retrospect, the strategy was sound. Amazon grew at a steady pace in the late 1990s while many other Internet companies grew at a blindingly fast pace. Amazon's "slow" growth caused a number of its stockholders to complain, saying that the company was not reaching profitability fast enough. When the Internet "bubble" burst and many e-companies went out of business, Amazon persevered and finally turned its first profit in the fourth quarter of 2002: a meager $5 million, just 1 cent per share, on revenues of over $1 billion, but it was important symbolically. The firm has since remained profitable: net profits were $35 million in 2003, $588 million in 2004 and $359 million in 2005. Revenue kept growing thanks to product diversification and international presence: $3.9 billion in 2002, $5.3 billion in 2003, $6.9 billion in 2004 and $8.5 billion in 2005. On November 21, 2005, Amazon entered the S&P 500 index, replacing the venerable AT&T after it merged with SBC Communications.

Time Magazine named Bezos its 1999 Man of the Year in recognition of the company's success in popularizing online shopping.

Partnerships and locations

Amazon.com operates retail websites not only for the United States, but also for Canada, the United Kingdom, Germany, Austria, France, China and Japan. In addition, the Web sites of Borders.com, Borders.co.uk, Waldenbooks.com, Virginmega.com, Waterstones.co.uk, CDNOW.com, and HMV.com now redirect to Amazon's site for the country in question, for which these companies are paid referral fees. Typing ToysRUs.com into one's browser will similarly bring up Amazon.com's Toys & Games tab. Amazon.com also operates retail Web sites for Target, the NBA, and Bombay Company.

Corporate headquarters

The company's headquarters are on Seattle, Washington's Beacon Hill. It has additional offices in the International District, Rainier Valley, and Downtown's Columbia Center. Additional development centers are in Slough, England; Edinburgh, Scotland; Bangalore, Chennai and Hyderabad, India; Phoenix, Arizona; and Iaşi, Romania.

In Europe, Amazon has sites in Germany, France, and the UK, with headquarters in Munich, Paris, and Slough respectively.

Fulfillment and warehousing

Fulfillment centers are located in the following cities, often near airports:

• North America:
  • Phoenix, Arizona
  • New Castle, Delaware
  • Coffeyville, Kansas
  • Kentucky: Campbellsville, Hebron (near CVG), and Lexington
  • Nevada: Fernley and Red Rock (near 4SD)
  • Tacoma, Washington
  • Pennsylvania: Chambersburg, Carlisle, and Lewisberry
  • Dallas/Fort Worth, Texas
  • Canada: Mississauga, Ontario
• Europe:
  • Cork, Ireland
  • Marston Gate, Bedfordshire
  • Gourock, Glenrothes, Scotland
  • Orléans, France
  • Bad Hersfeld, Germany
• Asia:
  • Tokyo, Japan
  • Guangzhou, Shanghai
  • Beijing, China (Joyo.com)

Customer service

Customer service for North American customers is now handled by centers in India. In Europe, it is handled in Slough, U.K. and Regensburg, Germany. Amazon also has customer service centers in Japan and, through Joyo.com, in China. Amazon.com does not offer a telephone number or e-mail address anywhere on its Web site. However, as of 2006, Amazon.com users have the option of providing a phone number at which customer service will call them back for immediate help. Amazon.com's American call center phone number is (800) 201-7575 (to avoid automated help and connect directly to a human being, one can dial (206) 266-2992). Its corporate headquarters phone number is (206) 622-2335. Amazon UK's telephone number is 0800 2796620 (freephone), +442086369451 (customer services from outside UK), 0800 2796630 (reception freephone) and +442086369200 (reception from outside UK). The customer service phone number for Amazon Associates (Amazon's referral program) is (701) 787-9740 and is staffed weekdays 7:00am-4:00pm Pacific Time.

Expansion of product lines and site features

Amazon's bookstore quickly began expanding, branching off into retail sales of music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, and more.

A popular feature of Amazon is the ability for users to submit reviews to the web page of each product. As part of their review, users must rate the product on a rating scale from one to five stars. Such rating scales provide crude indications of opinions, and are subject to a number of flaws and limitations, depending on the manner in which they are used.

Announced at the very end of 2005 was a feature called Amazon Connect, which allows authors to post remarks that appear at the bottom of the detail pages for each of their books and on the Amazon home page of those who have bought their books.

According to information in Amazon.com discussion forums, Amazon derives about 40% of its sales from affiliates, whom they call "Associates." An Associate is essentially an independent seller or business that receives a commission for referring customers to the Amazon.com site. Associates do this by placing links on their websites to the Amazon homepage or to specific products. If a referral results in a sale, the Associate receives a commission from Amazon. By the end of 2003, Amazon had signed up almost one million Associates. Associates can access the Amazon catalogue directly on their websites by using the Amazon Web Services (AWS) XML service. Amazon was the first online business to set up an Associates program. The idea has since been copied by many other online businesses.

Amazon bought the Internet Movie Database (IMDb) in April 1998, a move that upset a number of its longtime users; the transformation of IMDb from a public-domain, nonprofit site to a commercial venture was seen as a slap in the face to many Internet users. However, the IMDb has continued to grow and prosper.

Amazon bought Cambridge, Massachusetts-based PlanetAll in August 1998 for 800,000 shares of Amazon stock. PlanetAll operated a Web-based address book, calendar, and reminder service. In the same deal, Amazon acquired Sunnyvale-based Junglee.com, an XML-based data-mining startup for 1.6 million shares of Amazon stock. The two deals together were valued at about $280 million at the time. Most staff of both firms were absorbed by Amazon in early 1999. These employees went on to build community-focused features for the Amazon Web site, including Amazon.com Auctions, Amazon.com Marketplace, Friends & Favorites, and Purchase Circles.

Amazon.com launched Amazon.com Auctions, its own Internet auctions service, in March 1999. However it failed to chip away at industry pioneer eBay's juggernaut growth. Amazon Auctions was followed by the launch of a fixed-price marketplace business called zShops in September 1999, and a failed Sotheby's/Amazon partnership called sothebys.amazon.com in November. Although zShops failed to live up to its expectations, it laid the groundwork for the hugely successful Amazon Marketplace service launched in 2001 that let customers sell used books, CDs, DVDs, and other products alongside new items. Amazon Marketplace's main rival today is eBay's half.com service.

In June 1999, Amazon bought Alexa Internet, Accept.com, and Exchange.com in a set of deals worth approximately $645 million.

In 2002, Amazon became the exclusive retailer for the much-hyped Segway Human Transporter. Bezos was an early supporter of the Segway before its details were made public.

Search Inside the Book is a feature which makes it possible for customers to search for keywords in the full text of many books in the catalog. The feature started out with 120,000 titles (or 33 million pages of text) on October 23, 2003. There are currently about 250,000 books in the program. Amazon has cooperated with around 130 publishers to allow users to perform these searches. To avoid copyright violations, Amazon.com does not return the computer-readable text of the book but rather a picture of the page containing the found excerpt, disables printing of the pages, and puts limits on the number of pages in a book a single user can access. Amazon is planning to launch Search Inside the Book internationally.

In 2004, Amazon purchased Joyo.com, a Chinese e-commerce Web site. It also debuted A9.com, a company focused on researching, and building innovative technology. One of the technologies A9.com was working on was a search engine with a "Search Inside the Book" feature allowing users to search within the text of books as well as searching for text on the Web. Another A9.com technology was its "Find It on the Block" feature allowing users to find not just the phone number, address, map, and directions for a business; but to see a picture of it, and all the businesses and shops on that same street.

Also in 2004, Amazon launched its "Presidential Candidates" feature, whereby customers could donate from $5 to $200 to the campaigns of U.S. presidential hopefuls, resurrecting the Amazon Honor System for the purpose. The Honor System was originally launched in 2001 as a way for Amazon customers to "tip" their "favorite Web sites and to buy digital content on the Web," Amazon collecting 2.9% of the payment plus a flat fee of 30 cents. It has never been shut down, but had fallen into relative disuse.

At the end of the year, with the catastrophic earthquake and tsunami in the Indian Ocean, Amazon set up an online donation channel to the American Red Cross using the Honor System, waiving its processing fee. As of January 3, 2005, over 162,000 individuals had donated over $13.1 million in this way. The same week, Amazon created similar channels for the British, Canadian, French, German and Japanese Red Cross organisations via its international sites. Over 7,000 Britons donated over $350,000; over 900 Canadians, over $56,000; over 660 French, over $23,000; over 2,900 Germans, over $145,000; and over 1,900 Japanese, over $66,000.

Amazon reactivated its Red Cross donation channel when Hurricane Katrina struck at the end of August 2005. As of September 8, over 98,000 payments had been made totaling over $10.7 million.

In November 2005, Amazon added a wiki feature to their product database, allowing any customer who had purchased at least one item from the company to edit a section of each product page. In early March 2006, the company added the wiki feature, replacing a more conventional discussion board. ^[1]

Amazon Prime is a $79 per year service that allows you to get free two day shipping and upgraded overnight shipping for $3.99 on all eligible items.

In March 2006, Amazon launched an online storage service called Amazon S3. An unlimited number of data objects, weighing from 1 byte to 5 gigabytes each, can be stored in S3 and distributed via HTTP or BitTorrent. The service charges storage fees of 15 cents per gigabyte per month and data transfer fees of 20 cents per gigabyte.