Amazon History: How Did They Start Out?

If you are in to books or have done online shopping before, then you must know Amazon.com, the Everything Shop. It is one of the biggest e-commerce marketplaces in the world today and new entrepreneurs can make millions selling products online on this platform.

In this review we are going to look at a brief history of how it all began and how amazon made its way to the top of the charts.

Before I start…

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Amazon History: How Did They Start Out? 5

Amazon History

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What is Amazon.com Inc?

Amazon.com Incorporation is an American multinational technology company that focuses on e-commerce, digital streaming, cloud computing and artificial intelligence. It is commonly known as ‘The Everything Shop’ as you can find literally anything on amazon, from high spec laptops to novelty cutlery.

It is an avenue for people to make money online too either through Amazon FBA, Amazon Liquidation, or affiliate marketing (you can read about the best affiliate marketing websites).

Amazon History

The company launched in 1994 and has since then become an iconic example of electrical commerce. It serves consumers through its retail websites while focusing on selection, price and convenience. Amazon also provides various marketing and promotional services such as online advertising and co-branded credit card agreements.

The design of their website is such that products can be sold by both the company and by third parties across dozens of product categories. Their considerable online presence is such that in 2012, one percent of all Internet traffic in North America was travelling in and out of Amazon.com data centers.

Amazon, which was initially an online marketplace for books, launched and makes the market-leading Kindle e-book readers. Its promotion of these devices has led to dramatic growth in e-book publishing and turned Amazon.com into the world’s largest bookstore.

The company operates in two principal sections: North America and International. The North America section incudes retail online sales of consumer products and subscriptions through websites focused on North America such as www.amazon.com and www.amazon.ca.

The International section includes the retail sales of consumer products and subscriptions through internationally-focused locations. It also consists of export sales from these internationally based locations, including export sales from those sites to customers in the United States and Canada.

The company headquarters are in Seattle, Washington, United States.

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Who founded Amazon?

Amazon was founded by Jeff Bezos in 1994 and he chose the name partly because it began with the first letter of the alphabet and partly because of its association with the vast South American river.

Jeff Bezos went to Princeton University and graduated in 1986 with a degree in Electrical Engineering and Computer Science. He then began working and had several jobs, including in a telecommunications startup and a banking firm.

Jeff Bezos

In 1994, Jeff began working at a wall street firm known as D.E. Shaw & Co. and he quickly went up the ranks becoming the Vice President in just four years. His main job was researching new business opportunities on the budding internet at the time.

Bezos proposed a list of 20 products they could sell online but the company was not on board and he finally decided to set out on his own. Jeff knew that he would sincerely regret not having participated in the internet as he saw that it was going to be a revolutionary event. This was after reading a report on the future of the Internet that projected annual web commerce growth of 2,300%

Jeff Bezos quit as Vice president and moved to Seattle, where in his very own garage, he began working on a business strategy to build his new online company. He narrowed the list of the 20 online products to sell to what he felt were the five most promising products that included: compact discs, computer hardware, computer software, videos and books.

Bezos finally decided that his new online business would sell books online due to the large worldwide demand for literature, the low price points for books, together with the huge number of titles available in print.

Since Amazon was not the first online bookstore, he planned to curb competition such as Computer Literacy (a Silicon Valley bookstore that began selling books from its inventory to its quick witted customers in 1991) through offering convenience; such that books could be accessible to every reader, no matter where they lived. This way it was going to be the go-to resource for people everywhere to purchase books.

Jeff at first wanted to name the company Cadabra to play off the magical incantation abracadabra. However, his lawyer, Todd Tarbert, said Cadabra sounded like “cadaver” on the phone and so the name fell through. He eventually decided to name it Amazon as it would appear early in alphabetical order and in reference to the biggest river in the world, would become the biggest online store.

Bezos was even recorded by a reporter saying:

“There’s nothing about our model that can’t be copied over time. But you know, McDonald‘s got copied. And it still built a huge, multibillion-dollar company. A lot of it comes down to the brand name. Brand names are more important online than they are in the physical world.”

Amazon launched as an online bookstore in July 1995 in Washington and due to Washington’s lack of sales tax, this allowed Amazon to sell nearly everywhere without having to collect sales tax from its customers.

The company’s slogan is now ‘From A to Z’ and since 2000, Amazon’s logotype has featured a curved arrow leading from A to Z, representing that they carry every product from A to Z The arrow is shaped like a smile.

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Amazon’s Early Days

Within the first two months of business, Amazon sold to all 50 states and to over 45 countries. In two months, Amazon’s sales were up to $20,000 per week. This was because while the largest brick and mortar bookstores and mail-order catalogs could offer 200,000 titles, an online bookstore could offer several times more, since they had an almost unlimited virtual warehouse: those of the actual product suppliers.

Amazon.com IncThe company offered discounts, affordable prices, offered topic areas to browse, books recently featured, a recommendation center, access to customer reviews and all this made the website as customer-friendly as possible and related the site to all types of customers.

Bezos financed Amazon with $10,000 of his own money in order to get things rolling as he and his wife, MacKenzie, together with a small staff, operated Amazon at its early stages from that garage in his rented home. Eventually, Bezos needed additional capital to meet increased demand as he was now up to 250 amazon employees.

In October 1995, the company went public and in 1997 May 15, Bezos decided to release Amazon’s IPO at just $18.00 per share. This was after it was reincorporated in Delaware in 1996.

Amazon’s initial business plan showed a ‘slow growth’ as it did not expect to make a profit for four to five years. This caused stockholders to complain that the company not reaching profitability fast enough justified not investing in it and thus might not survive in the long-term. Trouble began brewing as Barnes & Noble sued Amazon on May 12, 1997 claiming that Amazon’s claim to be “the world’s largest bookstore” was false since it was just a book broker.

The law suit was later settled out of court and Amazon went on to make the same claim, remaining steadfast. Walmart then sued Amazon on October 16, 1998, claiming that Bezos had stolen Walmart’s trade secrets by hiring former Walmart executives. Despite the suit being settled out of court, it caused Amazon to begin implementing internal restrictions and reassignment of the former Walmart executives.

Bezos dismissed all those with negative comments saying that they did not understand the massive growth potential of the Internet and argued that to succeed as an online retailer, a company needed to “Get Big Fast”. This slogan went on to be printed on employee T-shirts and Amazon did grow fast, reaching 180,000 customer accounts by December 1996, after its first full year in operation. Less than a year later, in October, it had 1,000,000 customer accounts. The company’s revenues jumped from $15.7 million in 1996 to $148 million in 1997 then to $610 million in 1998.

In 1998, Amazon announced that they would expand to sell more than just books and began selling computer games and music. During that same year it also began conducting international operations with the acquisition of online booksellers in the United Kingdom and Germany. In 1999 the company had began selling consumer electronics, video games, computer software, home-improvement items, toys and games etc.

In September 1999, Bezos patented a technology that allowed customers to purchase an item in one-click. This one click patent increased customer conversion rates thus reducing friction during the shopping experience. It eliminated those pesky seconds when a shopper reconsiders the contents of their cart. Other business that tried to illegally use the same idea were sued for patent infringement. Fortunately, the patent expired in 2017 thus allowing other companies to use this money making idea.

In that same year of 1999, Amazon designed a way for third-party sellers to sell used merchandise in what it called zShops, which are now known as the Marketplace. This was originally pitched as an idea to aid consumers in finding rare and unusual products and specialty items. Within the first four months of this project, over 250,000 customers had bought something through a third party on Amazon.

Amazon’s success led to its founder becoming Time magazine’s Person of the Year in 1999.

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The early 2000s

The dot-com bubble burst at the start of the 21st Century and destroyed many e-companies in the process. However. Amazon survived and grew on past the bubble burst to become a huge player in online sales. The company finally turned its first profit in the fourth quarter of 2001; $5 million i.e., 1¢ per share, on revenues of more than $1 billion.

By 2006, the company had launched its Fulfillment by Amazon service that managed the inventory the third party businesses. The growing inventory-management business eventually led to Amazon’s $775 million purchase in 2012 of Kiva Systems, a robotics company whose devices automate inventory-fulfillment duties.

Amazon web services

In 2002, Amazon took another huge step in its relentless evolution and launched Amazon Web Services (AWS). This is a cloud services platform that provides several infrastructure services including storage, networks, databases, application services, messaging, artificial intelligence and many others. It initially offered data on internet traffic patterns, web sites popularity and other statistics for developers and marketers.

Amazon Web Sevices

The company had been growing quickly and hiring new software engineers, yet they were still finding that they weren’t building applications any faster. The internal teams at Amazon required a set of common infrastructure services that everyone could access without having to reinvent the wheel every time. Thus came AWS.

AWS has a presence in 190 countries around the world and its data centers were situated in the United States, Japan, Australia, Brazil, Europe and Singapore. The AWS program is now the company’s biggest source of operating profit.

In 2006 Amazon expanded its AWS portfolio with its Elastic Compute Cloud (EC2). EC2 rents out computer processing power in small or large increments. In that same year, the Simple Storage Service (S3) became available and was used to rent data storage over the Internet.

The two quickly succeeded and helped popularize the idea that companies and individuals do not need to own computing resources since they could rent them as needed over the Internet, or in the cloud. In 2007, soon after its launch, the S3 service had more than 10 billion objects, or files and five years later, it held more than 905 billion. AWS is even used by some of Amazon’s rivals, such as Netflix (they use both S3 and EC2 for its competing video streaming service).

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Amazon prime service

In 2005, Jeff Bezos announced the launch of a customer loyalty program known as Amazon Prime that offered free two-day shipping on any order, along with other perks and benefits for only $79 per year. With the beginning of Amazon Prime came a great rise of loyalty and customer appreciation towards the company as Prime members were more likely than non-Prime members to spend more and place more frequent orders.

Amazon Prime has proved to be a huge success as it now has more than 112 million members across the planet.

The kindle

In 2007, Amazon released the Kindle e-readers which helped the growth of the e-book market. These devices created an entirely new reading experience for their customers and not only got more people reading, but also got more people buying from Amazon.

Amazon Kindle

Unfortunately, with the introduction of the Kindle began tensions between publishers and Amazon wanted to sell new e-books for a fixed price that was well below what new printed books sold for, causing a rise of complaints from the publishing industry. The publishing company Macmillan Books even threatened to pull its e-books from Amazon, which meant removal of all Macmillan books, both printed and electronic, from the site. Fortunately, within weeks, the company capitulated and allowed Macmillan and other publishers to set the prices of e-books.

By 2011 e-books were even outselling print books on Amazon and the company introduced a related low-cost tablet computer, the Kindle Fire. In 2012, the Kindle Fire was estimated to constitute 50% of the tablets sold that used Google’s Android mobile operating system.

The Kindle fire

In 2009 the company introduced its very own publishing line, AmazonEncore. It was dedicated to popular self-published and out-of-print books. This would also let individuals publish their own e-books as we’ve seen Sophie Howard do. By 2011, its e-book ambitions led to the launch of Amazon Publishing with the intention of developing and publishing its own titles.

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Amazon from 2010

By 2011, the company had 30,000 full-time employees in the U.S. and by the end of 2016, it had 180,000 employees. In 2014, Amazon launched the Fire Phone that was meant to deliver media streaming options. This project flopped leading to Amazon registering a $170 million loss and the project being shut down the following year.

In August 2014, the company finalized the acquisition of Twitch, a social video gaming streaming site, for $970 million. This was then integrated into the game production division of Amazon.

In 2015, Amazon began selling devices with the Echo and Alexa capabilities which had been undergoing development since 2011. The most popularly bought Alexa-equipped device happens to be the Echo Dot. However, Amazon has recently began linking Alexa with numerous smart home devices and has been updating Alexa’s functions daily. Amazon has currently sold over 100 million Alexa equipped devices.

In June 2017, Amazon announced that it would acquire Whole Foods for $13.4 billion. This was a high-end supermarket chain with over 400 stores. This move was seen by media experts as strategy to strengthen its physical holdings and challenge Walmart’s supremacy as a brick and mortar retailer. This speculation was increased by the fact that the announcement coincided with Walmart’s purchase of men’s apparel company Bonobos. By August 23, 2017, Whole Foods shareholders, as well as the Federal Trade Commission, had approved the deal.

Amazon announced plans to locate a second headquarters in a metropolitan area with at least a million people in September 2017 and called the project HQ2. Cities were required to submit their presentations by October 19, 2017. HQ2 would cost $5 billion and its opening was announced in November 2018 to be in Long Island City, Queens, New York City. This announcement was rescinded on February 14, 2019 and the company focused instead on its Arlington location.

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Amazon during the Covid-19 Pandemic and Lockdowns

In 2020, the breakout of Covid-19 disrupted the economy and daily lives of people all over the world including America. By the end of March 2020, some workers of the Amazon Staten Island warehouse staged a walkout in protest of the poor health situation at their workplace during the 2020 COVID-19 pandemic.

To protect their health and safety while working, frontline workers demanded personal protective gear, healthcare benefits, paid leave and hazard pay. One of the organizers, Chris Smalls, was put on quarantine without any other person being quarantined and was afterwards fired from the company

However, even with the decline in the economy in 2020, Amazon still reported $75.5 billion in the first quarter as the pandemic had caused a surge in online shopping. Jeff later announced that Amazon had plans to spend all of its expected $4 billion operating profit for the second quarter of this year on insulating measures for the company against COVID-19. These included:

  • More cleaning in the fulfillment centers
  • Protective gear
  • Changes to promote social distancing
  • Higher wages
  • Regular covid-19 testing for employees

Amazon hired approximately 175,000 additional warehouse workers and delivery contractors to deal with the surge in online shipping and temporarily raised wages by $2 per hour.

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Frequently Asked Questions

What made amazon so popular?

The main appeal of Amazon was the convenience that it offered its customers. They offered the ability to search, select and purchase a book from the comfort of your own home while delivering the product to the designated address in just a few days. This together with their service gained them significant customer loyalty and as a result, big profits in the long run.

Does Amazon use technology to increase efficiency?

Amazon has taken advantage of various technological innovations to increase its efficiency and service to its customers. This includes the use of drones and robots for order fulfillment and delivery and the implementation of artificial intelligence in various devices to make their customer’s lives easier.

Is Jeff Bezos the richest man on earth?

At the moment, Jeff is not the richest man on earth. However, he comes in as a close 4th with a net worth of $117.5 billion. The richest man on the globe as of 2022 is Elon Musk, founder of Tesla and SpaceX, with a net worth of $189 billion.

Conclusion

Despite having began in Jeff Bezos’ garage, Amazon now has over 1,000,000 square feet fulfillment centers and is one of the word’s leading companies.

Judging from just this brief history, the 26 year old multibillion dollar company has undergone and overcome various milestones and challenges that shaped it into what it is today. It goes to show that dreams do come true if you work towards achieving them.

Before you leave

If you’re tired of scams and want a real solution for making money online check out my no.1 recommendation.

It’s helped me earn over $300,000 in the last 12 months alone:

Go here to see my no.1 recommendation for making money online

(This is a 100% free training)

Amazon History: How Did They Start Out? 5