The rise and rise of Amazon.com

Named after the world's longest river, Amazon is now the world's largest online retailer. Here's where it sprang from.

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Last Updated: 09 Oct 2013

Formative years

Founded in a garage in Seattle, Amazon.com made its first book sale (an esoteric tome by cognitive scientist Douglas Hofstadter now ranked a lowly 758,329th on the site) back in 1995, when the internet was barely potty-trained. The firm was the product of what its founder, Jeff Bezos, called his 'regret minimisation framework' (a fervent desire not to miss out on the dotcom gold rush) and the 31 year-old hit on the idea of a bookstore for what turned out to be two very good reasons. Firstly, books are easy to post and, secondly, he could offer a far greater range than a physical store. He was also keenly aware of a US tax loophole that meant retailers didn't have to collect sales tax in states where they had no physical presence.

In 1997 the firm floated on Nasdaq for $18.00 a share, despite a singular absence of profit. But the prescience of its 'get big fast' strategy became apparent after the dotcom bubble burst: while all around were crashing and burning, Amazon had grown 'too big to fail'. It made its first annual profit in 2003 ($35.2m on $5.3bn sales).

Recent history

Amazon now sells everything from kitchen utensils to sport equipment, and makes 40% of its income from third-party sellers. It can also claim joint authorship of cloud computing, whereby firms rent capacity from Amazon's worldwide server bank in lieu of buying their own.

But its biggest change came in 2007 with the Kindle e-reader, which now has worldwide sales estimated at four million. Amazon has also moved into e-book publishing, further Kindling the fears of traditional publishers that the firm wants to eat their breakfast, lunch and dinner too.

Who's the boss?

Bezos, now a seasoned 48 year-old with a $20bn fortune, remains firmly in charge. A Princeton computing graduate, his early career on Wall Street perhaps accounts for a financial savvy unusual in a first-generation dotcom entrepreneur. His leadership style famously manages to be both libertarian and micromanaging, but it works: Amazon shares now trade at around 14 times their IPO price.

The secret formula?

Amazon was the original online community, a place where readers gathered to write reviews, compile lists to share - and buy books, of course. It was also the first big e-tailer to nail the 'experience', proving that customers don't need to see the whites of an assistant's eyes to go away happy.

Don't mention

Tax. Amazon has always made the most of tax codes. In July this year it was reported that the firm pays no corporation tax on its £3.3bn UK revenues, and that its tax affairs are under investigation in several countries.

 

VITAL STATISTICS*

Revenues
 $48.1bn                                                                                                                         
Net profit
$631m
 Employees 70,000

* All figures for 2012

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