Amazon.com, Inc. 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 skepticism 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, France, China and Japan and it ships globally on selected products.

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 application programming interface (API) allowing programs to dispatch tasks to human processors.

Business model

Screenshot of Amazon.com Home PageThe company began as an online bookstore. Founder Bezos saw the potential of the World Wide Web; 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. 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 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 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, 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. Until June 30, 2006, typing ToysRUs.com into one's browser would similarly bring up Amazon.com's Toys & Games tab; however, this relationship was terminated as the result of a lawsuit.

Amazon.com also operates retail Web sites for Target, the NBA, Sears Canada 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; Kennewick, Washington; Cape Town, South Africa; Iasi, Romania; and Shibuya, Tokyo, Japan.

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), England

Gourock,Scotland

Glenrothes, Scotland

Orléans, France

Bad Hersfeld, Germany

Leipzig, Germany

Asia:

Chiba, Japan

Guangzhou, China

Shanghai, China

Beijing, China

Customer service

Customer service for North American customers is now handled by centers in Washington state, North Dakota, and West Virginia, as well as a number of outsourced centers. In Europe, it is handled in Cork, Ireland and Regensburg, Germany. Amazon also has customer service centers in Sapporo, Japan and, through Joyo.com, in China. Amazon.com does not offer a telephone number or e-mail address anywhere on its Web site (they do, however, have one in the UK to comply with local law). 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---after an initial phone tree which offers the same tracking information, etc, that you can find online, you can choose an option to speak to a customer service associate.

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 & 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.

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.

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 Web 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 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.

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. Additionally, customers can purchase access to read the entire book online via the Amazon Upgrade program, although the selection of books eligible for this service is currently limited.

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.

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 January 2006, Amazon established a partnership with travel meta-search company SideStep and used its service to power searches in Amazon's travel store.

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.

In July 2006, the site officially launched Amazon Grocery, a segment of the site vending non-perishable food and household items. In order to be competitive with brick-and-mortar grocery stores, they offer Super Saver Shipping (free shipping to a single location for purchases over $25 USD) for all Amazon Grocery purchases. 2

In August 2006, Amazon launched product wikis and discussion forums for certain lines wherein logged in customers can add or update product wikis, such as for books. There are set guidelines that follow standard message board conventions.

In August 2006, Amazon also introduced EC2 ("Elastic Compute Cloud"), a virtual site farm, allowing users to use the amazon infrastructure with its high reliability to run diverse applications ranging from running simulations to web hosting. (Currently in beta. EC2 official site).

In September 2006, Amazon launched Amazon Unbox, a digital video downloading service that offers thousands of television shows, movies and other videos from more than 30 studios and networks. At launch, Unbox did not support the Mac platform. The downloads can be transferred onto DVDs for storage, and the DVDs can be used to play the movie on the computer that downloaded the movie, but they cannot be played on a regular DVD player.

Amazon Honor System

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.

Trademark Infringement

In 1999 the Amazon Bookstore Cooperative of Minneapolis, Minnesota sued Amazon.com for trademark infringement. The cooperative had been using the name "Amazon" since 1970, but reached an out-of-court agreement to share the name with the on-line retailer 3 .

Patent controversies

The company has been controversial for its use of patents as an alleged hindrance to competitors. The "1-click patent" 4 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 5 . The boycott was discontinued in September 2002 6 .

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 .

Customer service

Amazon.com has caused frustration among those wishing for more active customer support. Its little-advertised customer service phone number (1-800-201-7575) is hard to find because Amazon's help pages omit contact numbers. However, Amazon customers also have the option of submitting their phone numbers and receiving a call from Amazon customer service. Customers can also submit queries and complaints via a form on their Web site. However Amazon does not offer an e-mail address that customers can send e-mail to directly.

Similarly, the UK service falls short of dealing with issues that go beyond the basic help topics on its website. At such times the only option a customer has is a feedback form which Amazon.co.uk promises to respond to. There is practically no way to reach the UK customer service via the website for problems other than the listed ones, while Amazon.com customer service informs that it is a strict policy not to interfere with issues relating to the UK service and steers customers to the UK help pages. A customer service telephone number is also not provided on the site, although it exists (Amazon.co.uk customer service line: +44 208 636 9451 or FreePhone 0800 279 6620 in the UK).

Amazon's customer service policy has been standard over the years despite complaints. Some customers consider person-to-person communication over the phone a more convenient support option, as opposed to e-mail, which can take hours or days to be acted upon. Of course, complaints about customer service are not unique to Amazon; many large web-oriented enterprises draw complaints about meager, ineffective, and outsourced customer support. However, Amazon's size and prominence in e-commerce has drawn a lot of focus to its policies and has prompted others to create Web sites for the sole purpose of distributing the appropriate customer service numbers. To understand the extent of customer dissatisfaction with this policy, it's worth noting that such a web page with Amazon contact numbers received in excess of 23,000 visits in December 2004 alone. 1

However, Amazon.com consistently receives customer satisfaction scores higher than other retailers. In fact, "No retailer or service provider in ACSI has higher customer satisfaction than Amazon. 2 , 3 "

Labor relations

Saying that they were frustrated with low wages, lack of advancement opportunities, and poor treatment, Amazon.com fulfillment workers at eight distribution centers sought to join the United Food and Commercial Workers (UFCW) in December 2000. Meanwhile, the Communications Workers of America undertook a campaign to unionize some 400 customer-service representatives in Seattle. Amazon.com management embarked on an aggressive counter-campaign that included shutting down its Seattle service center. 4 5 . Amazon.com succeeded in stalling the unions' efforts in part by appealing to workers' fear of finding jobs at the end of the dot com boom. Duane Stillwell, president of the Prewitt Organizing Fund, said: "It's unfortunate that this vaunted high-tech company is just saying the same crude things that factory owners have been saying for 100 years about unions. They're just scaring people out of wanting to do the right thing." Critics allege that Amazon.com's business practices are similar to those of the retail chain Wal-Mart, in that Amazon.com offers low prices for goods by underpaying its workers and cutting profits to publishers and other suppliers.

Trivia

Douglas Hofstadter's Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought was the first book sold by Amazon.com on July 15, 1995. 8

Some of the words in Amazon.com URLs are nods to the Amazon River and Brazil: obidos comes from Óbidos, the meeting place of the Amazon's tributaries; varzea is Portuguese (Brazil's main language) for a forest flooded after heavy rains, as parts of the Amazon forest are; gp is short for Gurupa, a region in Brazil near the mouth of the Amazon.

A 2002 glitch in Amazon.com's review system revealed that many well-established authors were anonymously giving themselves glowing reviews, with some revealed to be anonymously giving "rival" authors terrible reviews. The glitch in the system was fixed and those reviews have since been removed or made anonymous.

Reviewer Anthony Trendl was sued by self-published author Jeffrey Hammer in federal court alleging that the reviews violated federal copyright and state defamation law. The case was dismissed in January 2003 on the basis of lack of jurisdiction. Later appeals against Amazon.com directly upheld the initial decision, with the US Supreme Court denying Hammer's writ of certiorari in 2005.

The logo has an arrow between the first A and the Z, indicating that they have everything from A to Z.

Further reading

Robert Spector (2001). amazon.com--Get Big Fast: Inside the Revolutionary Business Model That Changed the World. Harper Collins Publishers. ISBN 0-06-662041-4.

Mike Daisey (2002). 21 Dog Years. Free Press. ISBN 0-7432-2580-5.

Mara Friedman (2004). Amazon.com for Dummies. Wiley Publishing. ISBN 0-7645-5840-4.

James Marcus (2004). Amazonia: Five Years at the Epicenter of the Dot.Com Juggernaut. W.W. Norton. ISBN 1-56584-870-5.

A conversation with Werner Vogels, the CTO of Amazon, ACM Queue vol.4, no.4 - May 2006.

References

As discussed at Everyone's an editor as wiki fever spreads to shopping, New York Times (registration required) and elsewhere.

Bezos, Jeff (2006). Press Release Amazon.com (accessed August 3, 2006)

"Amazon.com, Bookstore Settle Suit", InternetNews, 1994-11-04. Retrieved on 2006-09-24.

US5960411 (1997-09-12) Hartman; Peri (Seattle, WA), Bezos; Jeffrey P. (Seattle, WA), Kaphan; Shel (Seattle, WA), Spiegel; Joel (Seattle, WA) Method and system for placing a purchase order via a communications network

"Richard Stallman -- Boycott Amazon!", Linux Today, 1999-12-22. Retrieved on 2006-09-22.

From the FSF site: amazon philosophy

US6525747 (1999-08-02) Bezos; Jeffrey P. Method and system for conducting a discussion relating to an item

Amazon.com's company timeline

External links

Amazon.com (United States)

Amazon.ca (Canada)

Amazon.co.uk (United Kingdom)

Amazon.de (Germany)

Amazon.fr (France)

Amazon.co.jp (Japan)

Joyo.com (China)

Other International Amazon sites