1.History and business model:
Amazon was founded in 1994, spurred by what Bezos refers to as his regret minimization framework, his effort to fend off late in life regret for not staking a claim in the Internet gold rush.1 It is common lore that Bezos wrote its business plan while he and his wife drove a 1988 Chevrolet Blazer from Fort Worth, Texas to Bellevue, Washington,although this story is largely apocryphal according to early employees of the company.original research?
The company began operating as an online bookstore under the name Cadabra.com (as in abracadabra), a name that Bezos quickly abandoned due to its sounding like "cadaver". While the largest brick-and-mortar bookstores and mail-order catalogs for books might offer 200,000 titles, an online bookstore could offer many times more. Bezos renamed his company "Amazon" after the world's most voluminous river.
The company was incorporated in 1994, in the state of Washington, began service in July 1995, and was reincorporated in 1996 in Delaware. The first book ever sold by Amazon.com was Douglas Hofstadter's Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought.Amazon.com had its initial public offering on May 15, 1997, trading on the NASDAQ stock exchange under the symbol amazon at an IPO price of US$18.00 per share (equivalent to US$1.50 after three stock splits during the late 1990s).
Amazon's initial business plan was unusual: the company did not expect to turn a profit for four to five years. In retrospect, the strategy was effective. Amazon grew at a steady pace in the late 1990s while many other Internet companies grew at a blindingly fast pace.
Amazon's "slow" growth caused a number of its stockholders to complain, saying that the company was not reaching profitability fast enough. When the Dot-com bubble burst and many e-companies went out of business, Amazon persevered and finally turned its first profit in the fourth quarter of 2002: a meager US$5 million, just 1¢ per share, on revenues of over US$1 billion, but it was important symbolically.
The firm has since remained profitable: net income was US$35.3 million in 2003, US$588.5 million in 2004, US$359 million in 2005, and US$190 million in 2006 (including a US$662 million charge on R&D in 2006). Nevertheless, the firm's cumulative profits remain negative. As of September 2007, the accumulated deficit stood at US$1.58 billion.
Revenue continued to grow thanks to product diversification and international presence: US$3.9 billion in 2002, US$5.3 billion in 2003, US$6.9 billion in 2004, US$8.5 billion in 2005, and US$10.7 billion in 2006. On November 21, 2005, Amazon entered the S&P 500 index, replacing AT&T after it merged with SBC Communications.
Time Magazine named Bezos its 1999 Person of the Year in recognition of the company's success in popularizing online shopping
Merchant partnerships
The Web sites of Borders (borders.com, borders.co.uk), Waldenbooks (waldenbooks.com), Virgin Megastores (virginmega.com), CDNOW (cdnow.com), and HMV (hmv.com) are powered and hosted by Amazon. Until June 30, 2006, typing ToysRUs.com into a browser would similarly bring up Amazon.com's Toys & Games tab; however, this relationship was terminated as the result of a lawsuit.4.
Amazon.com powers and operates retail web sites for Target, the NBA, Sears Canada, Sears UK, Benefit Cosmetics, Bebe Stores, Timex Corporation, Marks & Spencer, Mothercare, Lacoste and Bombay Company now defunct. For a growing number of enterprise clients, currently including the UK merchants Marks & Spencer and Mothercare, Amazon provides a unified multichannel platform from where a customer can interchangeably interact with the retail website, standalone in-store terminals, and phone-based customer service agents.
It also powers AOL's Shop@AOL service via Web Services technology.
The company's global headquarters is located on Seattle, Washington's Beacon Hill. It has offices throughout other parts of greater Seattle including Union Station and The Columbia Center.
2.The Product lines:
Amazon has steadily branched into retail sales of music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, industrial & scientific supplies, groceries, and more.
The company launched Amazon.com Auctions, its own Web auctions service, in March 1999. However it failed to chip away at industry pioneer eBay's juggernaut growth. Amazon Auctions was followed by the launch of a fixed-price marketplace business called zShops in September 1999, and a failed Sotheby's/Amazon partnership called sothebys.amazon.com in November. Although zShops failed to live up to its expectations, it laid the groundwork for the hugely successful Amazon Marketplace service launched in 2001 that let customers sell used books, CDs, DVDs, and other products alongside new items. Amazon Marketplace's main rival today is eBay's Half.com service.
Beginning August 2005 5, Amazon began selling products under its own private label, "Pinzon"; the initial trademark applications suggested the company intended to focus on textiles, kitchen utensils, and other household goods.In March 2007, the company applied to expand the trademark to cover a larger and 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." 6. The list of products registered for coverage by the trademark grew to include items such as paints, carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and jewelry.
On May 16, 2007 Amazon announced its intention to launch its own online music store.The store launched in public beta September 25, 2007, selling downloads exclusively in MP3 format without digital rights management.
In August 2007, Amazon announced Amazon Fresh, a grocery service offering perishable and nonperishable foods. Customers can pick up orders or have them delivered to their homes. Delivery is initially restricted to residents of Mercer Island, Washington, a wealthy suburb of Seattle.
3.Website:
A popular feature of Amazon is the ability for users to submit reviews to the web page of each product. As part of their review, users must rate the product on a rating scale from one to five stars. Such rating scales provide a basic idea of the popularity and dependability of a product.
The review feature is an important and highly influential function for customers and one of the main reasons for amazon.com’s success at selling books. As with book reviews anywhere, the buyer must beware that all reviewers have bias. Under normal circumstances, reviews give the reader at least a modest basis for evaluating a given book.
Because it is an open forum, the reader can benefit from a variety of perspectives. However, the anonymity of web reviewers increases the chances of abuse in the form of self-praise, praise from friends, or malicious criticism. This situation was confirmed in 2004 when the origin of reviews was accidentally made public on an amazon site, and some authors openly confirmed their glowing reviews of their own books.
Amazon provides an optional badging option for reviewers, e.g., to indicate the “real name” of the reviewer (based on a credit card) or to indicate that the reviewer is one of the “top” (most popular) reviewers. Some books have well over one thousand reviews (e.g. Ayn Rand’s Atlas Shrugged), but many books, especially new ones, have none.
The U.S. site generally has the most reviews, but other country sites offer the perspectives of other reviewers. A review posted on one site is not necessarily visible on another site.
Search Inside the Book is a feature which allows customers to search for keywords in the full text of many books in the catalog.The feature started 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 matching page, disables printing, and puts limits on the number of pages in a book a single user can access. Amazon is planning to launch Search Inside the Book internationally. Additionally, customers can purchase access to the entire book online via the Amazon Upgrade program, although the selection of books eligible for this service is currently limited.
According to information in Amazon.com discussion forums, Amazon derives about 40% of its sales from affiliates, whom they call "Associates." An Associate is 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. Worldwide, Amazon has "over 900,000 members" in its affiliate programs. Associates can access the Amazon catalog directly on their websites by using the Amazon Web Services (AWS) XML service.
Amazon was one of the first online businesses to set up an affiliate marketing program.AStore is a new affiliate product that allows Associates to embedded a subset of Amazon products within, or linked to from, another website.
According to the Internet audience measurement website Compete.com, Amazon attracts approximately 50 million U.S. consumers to its website on a monthly basis.
4.Noteworthy events:
In 2002, Amazon became the exclusive retailer for the much-hyped Segway Human Transporter. Bezos was an early supporter of the Segway before its details were made public.
On June 21, 2003, Amazon coordinated what was at the time one of the largest sales and distribution events in e-commerce history with the sale of over 1.3 million copies of Harry Potter and the Order of the Phoenix, since beaten by Harry Potter and the Deathly Hallows with a sale of over 2 million copies preordered in 2007.
On July 16, 2005, Amazon celebrated its 10th anniversary by telecasting a worldwide live concert hosted by Bill Maher and artists such as Bob Dylan and Norah Jones.
5.Donations:
In 2001, Amazon was one of the first online stores to begin accepting donations to the Red Cross on behalf of 9/11 victims. For several days the company dedicated its entire home page for this cause.citation needed
In 2004, Amazon launched its Presidential Candidates feature, whereby customers could donate from US$5 to US$200 to the campaigns of U.S. presidential hopefuls, resurrecting the Amazon Honor System for the purpose. The Honor System was originally launched in 2001 as a way for Amazon customers to "tip" their "favorite Web sites and to buy digital content on the Web," Amazon collecting 2.9% of the payment plus a flat fee of US$0.30. It has never been shut down, but had fallen into relative disuse.
At the end of 2004, with the catastrophic earthquake and tsunami in the Indian Ocean, Amazon set up an online donation channel to the American Red Cross using the Honor System, waiving its processing fee. As of January 3, 2005, over 162,000 individuals had donated over US$13.1 million in this way.
The same week, Amazon created similar channels for the British, Canadian, French, German, and Japanese Red Cross organizations via its international sites. Over 7,000 Britons donated more than US$350,000; 900 Canadians over US$56,000; 660 French over US$23,000; 2,900 Germans over US$145,000; and 1,900 Japanese over US$66,000.
Amazon reactivated its Red Cross donation channel when Hurricane Katrina struck at the end of August 2005. As of September 8, over 98,000 payments had been made totaling over US$10.7 million.
6.Patent use:
The company has been controversial for its alleged use of patents as a competitive hindrance. The "1-click patent"is perhaps the best-known example of this. Amazon's use of the one-click patent against competitor Barnes and Noble's website led the Free Software Foundation to announce a boycott on Amazon in December 1999.The boycott was discontinued in September 2002.
On May 12, 2006, the USPTO ordered a reexamination of the "One-Click" patent, based on a request filed by Peter Calveley. Calveley cited as prior art an earlier ecommerce patent and the Digicash electronic cash system.
On February 22, 2000, the company was granted a patent covering an Internet-based customer referral system, or what is commonly called an "affiliate program". Reaction was swift and negative. Industry leaders Tim O'Reilly and Charlie Jackson spoke out strongly against this patent and O'Reilly published an open letter to Bezos protesting the 1-click patent and the affiliate-program patent, and petitioning him to "avoid any attempts to limit the further development of internet commerce".
O'Reilly collected 10,000 signatures with this petition. Bezos responded with his own open letter. The protest ended with O'Reilly and Bezos visiting Washington D.C. to lobby for patent reform.
On February 25, 2003, the company was granted a patent titled "Method and system for conducting a discussion relating to an item on Internet discussion boards".
7.Chris Benoit DVD:
In late June 2007, shortly after the death of professional wrestler Chris Benoit, Amazon displayed a special note on search results pages for the term "WWE" “Tragic news from the WWE. Wrestler Chris Benoit and his wife and son have been found dead in their Georgia home, and police are investigating the situation as a possible murder-suicide.”
The caption was then followed by a photo and a link to purchase the Hard Knocks: The Chris Benoit Story DVD. Amazon.com later removed the offending message after widespread complaints in the professional wrestling community
8.The Humane Society of the United States v. Amazon.com,Inc:
Amazon continues to carry two cockfighting magazines and two dog fighting videos although the Humane Society of the United States (HSUS) contends that the sale of these materials is a violation of U.S. Federal law. The Humane Society of the United States has filed a lawsuit against Amazon. The HSUS is actively advising supporters to write Amazon requesting the removal of the offensive materials.
This writing campaign gained momentum in August of 2007 after the much publicized dog fighting case involving NFL quarterback Michael Vick.Some supporters are also calling for a boycott of Amazon until the animal fighting materials are removed from sale.
