|Type||Public (NASDAQ: AMZN)
S&P 500 Component
|Founder(s)||Jeffrey P. Bezos|
|Headquarters||Seattle, Washington, U.S.|
|Key people||Jeffrey P. Bezos
(Chairman, CEO, & President), Tom Szkutak
|Revenue||US$ 24.509 billion (2009)|
|Operating income||US$ 1.129 billion (2009)|
|Net income||US$ 902 million (2009)|
|Total assets||US$13.8 billion (FY 2009)|
|Total equity||US$5.26 billion (FY 2009)|
Amazon.com, Inc. (NASDAQ: AMZN) is an American-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is America's largest online retailer, with nearly three times the Internet sales revenue of the runner up, Staples, Inc., as of January 2010.
Jeff Bezos founded Amazon.com, Inc. in 1994 and launched it online in 1995. The company was originally named Cadabra, Inc., but the name was changed when it was discovered that people sometimes heard the name as "Cadaver." The name Amazon.com was chosen because the Amazon River is the largest river in the world, and so the name suggests large size, and also in part because it starts with 'A' and therefore would show up near the beginning of alphabetical lists. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3 downloads, computer software, video games, electronics, apparel, furniture, food, and toys. Amazon has established separate websites in Canada, the United Kingdom, Germany, France, Japan, and China. It also provides international shipping to certain countries for some of its products. A 2009 survey found that Amazon was the UK's favorite music and video retailer, and third overall retailer.
Amazon was founded in 1994, spurred by what Bezos called "regret minimization framework", his effort to fend off regret for not staking a claim in the Internet gold rush. Company lore says Bezos wrote the business plan while he and his wife drove from New York to Seattle, although that account appears to be apocryphal. Bezos flew from New York to Texas, where he picked up a car from a family member, and then drove from Texas to Seattle.
The company began as an online bookstore; while the largest brick-and-mortar bookstores and mail-order catalogs for books might offer 200,000 titles, an online bookstore could offer more. Bezos named the company "Amazon" after the world's largest river. Since 2000, Amazon's logotype is an arrow leading from A to Z, representing customer satisfaction (as it forms a smile); a goal was to have every product in the alphabet.
Amazon was incorporated in 1994, in the state of Washington. In July 1995, the company began service and sold its first book on amazon.com - Douglas Hofstadter's Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought. In 1996, it was reincorporated in Delaware. Amazon issued its initial public offering of stock on May 15, 1997, trading under the NASDAQ stock exchange symbol AMZN, at an IPO price of US$18.00 per share ($1.50 after three stock splits in the late 1990s).
Amazon's initial business plan was unusual: the company did not expect a profit for four to five years. Its "slow" growth provoked stockholder complaints 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 2001: $5 million or 1¢ per share, on revenues of more than $1 billion, but the modest profit was important in demonstrating the business model could be profitable. In 1999, Time magazine named Bezos Person of the Year, recognizing the company's success in popularizing online shopping.
The Web site CDNOW is 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. Amazon also hosted and ran the website for Borders bookstores, but this ceased in 2008.
amazon.com powers and operates retail web sites for Target, Sears Canada, Benefit Cosmetics, bebe Stores, Timex, Marks & Spencer, Mothercare, and Lacoste. For a growing number of enterprise clients, currently including the UK merchants Marks & Spencer, Benefit Cosmetics' UK entity, edeals.com, and Mothercare, Amazon provides a unified multichannel platform where a customer can seamlessly interact with the retail website, standalone in-store terminals, or phone-based customer service agents. Amazon Web Services also powers AOL's Shop@AOL.
The Amazon business model has been used by a number of competing companies. The Middle East and Arab World are served regionally by neelwafurat.com, a competing business launched in 1998 in Beirut. Neelwafurat.com is known for offering books otherwise banned in many Middle Eastern nations, such as Cities of Salt by Abdul-Rahman Munif and The Insane Asylum by Ghazi al-Gosaibi.
The company remains profitable: net income was $35 million in 2003, $588 million in 2004, $359 million in 2005, and $190 million (including a $662 million charge for R&D) in 2006. Retained earnings were negative $1.8 billion in 2006, negative $1.4 billion in 2007, negative $730 million in 2008, and $172 million in 2009. Annual revenues, aided by product line expansion and rapid growth in international sales, grew from $3.9 billion in 2002 to $10.7 billion by 2006.
On November 21, 2005, Amazon entered the S&P 500 index, and, on December 31, 2008, the S&P 100 index. On March 26, 2010, Amazon had a higher market cap than Target Corporation, Home Depot, Costco, Barnes and Noble, and Best Buy, only lagging that of Walmart among American brick and mortar retailers. 
Amazon.com has offices, fulfillment centers, customer service centers and software development centers across North America, Latin America, Europe and Asia.
The company's global headquarters are located on Seattle's Beacon Hill. It has offices throughout other parts of greater Seattle, including Union Station and The Columbia Center.
Amazon has announced plans to move its headquarters to the South Lake Union neighborhood of Seattle beginning in mid-2010, with full occupancy by 2011. This move will consolidate all Seattle employees onto the new 11-building campus.
The company employs software developers in centers across the globe. While much of Amazon's software development is in Seattle, other locations include Slough and Edinburgh (United Kingdom), Dublin (Ireland), Bangalore, Chennai, and Hyderabad (India), Cape Town (South Africa), Iaşi (Romania), Shibuya, Tokyo (Japan), Beijing (China), and Tempe, Arizona (United States).
Fulfillment centers are located in the following cities, often near airports. None are within 500 miles (800 km) of Amazon's headquarters in Seattle. These centers also provide warehousing and order-fulfillment for third-party sellers:
Amazon product lines include books, 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, clothing, industrial & scientific supplies, and groceries.
The company launched amazon.com Auctions, a Web auctions service, in March 1999. However, it failed to chip away at industry pioneer eBay's large market share. amazon.com Auctions was followed by the launch of a fixed-price marketplace business, zShops, in September 1999, and the now defunct Sotheby's/Amazon partnership called amazon.com in November. Auctions and zShops evolved into Amazon Marketplace, a service launched in 2001 that let customers sell used books, CDs, DVDs, and other products alongside new items. Today, Amazon Marketplace's main rival is eBay's Half.com service.
In August 2005, Amazon began selling products under its own private label, "Pinzon"; the trademark applications indicated that the label would be used for textiles, kitchen utensils, and other household goods. In March 2007, the company applied to expand the trademark to cover a 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.". Coverage by the trademark grew to include items such as paints, carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and jewelry. On September 2008, Amazon filed to have the name registered. USPTO has finished its review of the application, but Amazon has yet to receive an official registration for the name.
Amazon MP3, its own online music store, launched in the US in September 25, 2007, selling downloads exclusively in MP3 format without digital rights management. This was the first online offering of DRM-free music from all four major record companies.
In August 2007, Amazon announced AmazonFresh, a grocery service offering perishable and nonperishable foods. Customers can have orders delivered to their homes at dawn or during a specified daytime window. Delivery was initially restricted to residents of Mercer Island, Washington, and was later expanded to several ZIP codes in Seattle proper. AmazonFresh also operated pick-up locations in the suburbs of Bellevue and Kirkland from summer 2007 through early 2008. In 2008 Amazon expanded into film production, producing the film The Stolen Child with 20th Century Fox.
Amazon's Honor System was launched in 2001 to allow customers to make donations or buy digital content, with Amazon collecting a percentage of the payment plus a fee. The service was discontinued in 2008. and replaced by Amazon Payments. Amazon launched Amazon Web Services (AWS) in 2002, which provides programmatic access to latent features on its website. Amazon also created "channels" to benefit certain causes. In 2004, Amazon's "Presidential Candidates" allowed customers to donate $5–200 to the campaigns of 2004 U.S. presidential hopefuls. Amazon has periodically reactivated a Red Cross donation channel after crises such as the 9/11, Hurricane Katrina, and the 2004 earthquake and tsunami in the Indian Ocean. By January 2005, nearly 200,000 people had donated over $15.7 million in the US.
Amazon Prime offers two day shipping with no minimum purchase amount for a flat annual fee, as well as discounted priority shipping rates. Amazon launched the program in the continental United States in 2005, in Japan, the United Kingdom and Germany in 2007, and in France (as "Amazon Premium") in 2008. Launched in 2005, Amazon Shorts offers exclusive short stories and non-fiction pieces from best-selling authors for immediate download. By June 2007, the program had over 1,700 pieces and was adding about 50 new pieces per week. In November 2005, amazon.com began testing Amazon Mechanical Turk, an application programming interface (API) allowing programs to dispatch tasks to human processors. In March 2006, Amazon launched an online storage service called Amazon Simple Storage Service (Amazon S3). An unlimited number of data objects, from 1 byte to 5 gigabytes in size, can be stored in S3 and distributed via HTTP or BitTorrent. The service charges monthly fees for data stored and transferred. In 2006, Amazon introduced Amazon Simple Queue Service (Amazon SQS), a distributed queue messaging service, and product wikis (later folded into Amapedia) and discussion forums for certain products using guidelines that follow standard message board conventions. Also in 2006, Amazon introduced Amazon Elastic Compute Cloud (Amazon EC2), a virtual site farm, allowing users to use the Amazon infrastructure to run applications ranging from running simulations to web hosting. In 2008, Amazon improved the service adding Elastic Block Store (EBS), offering persistent storage for Amazon EC2 instances and Elastic IP addresses, static IP addresses designed for dynamic cloud computing.
In November 2007, Amazon launched Amazon Kindle, an e-book reader which downloads content over "Whispernet", via the Sprint Nextel EV-DO wireless network. The screen uses E Ink technology to reduce battery consumption. In 2008 Amazon stated that its Kindle-based library included 200,000 titles. In December 2007, Amazon introduced SimpleDB, a database system, allowing users of its other infrastructure to utilize a high reliability high performance database system. In August 2007, Amazon launched an invitation-only beta-test for online grocery delivery. It has since rolled out in several Seattle, Washington suburbs.
In January 2008 Amazon began rolling out their MP3 service to subsidiary websites worldwide. In December, 2008, Amazon MP3 was made available in the UK. In September, IMDB and amazon.com launched a Music metadata browsing site with wiki-like user contribution. In November, Amazon partnered with Fisher-Price, Mattel, Microsoft and Transcend to offer products with minimal packaging to reduce environmental impact and frustration with opening "clamshell" type packaging. Amazon Web Services launched a public beta of Amazon Elastic Compute Cloud running Microsoft Windows Server and Microsoft SQL Server. Amazon Connect enables authors to post remarks on their book pages to customers. WebStore allows businesses to create custom e-commerce websites using Amazon technology. Sellers pay a commission of 7 percent, including credit-card processing fees and fraud protection, and a subscription fee of $59.95/month for an unlimited number of webstores and listings.
In July 2010 Amazon announced that e-book sales for its Kindle reader outnumbered sales of hardcover books for the first time ever during the second quarter of 2010. Amazon claims that during that period sold 143 e-books for every 100 hardcover books, including hardcovers for which there is no digital edition; and during late June and early July sales rose to 180 digital books for every 100 hardcovers.
The domain amazon.com attracted at least 615 million visitors annually by 2008, twice the numbers of walmart.com. Amazon attracts approximately 65 million customers to its U.S. website per month.
Amazon allows users to submit reviews to the web page of each product. Reviewers must rate the product on a rating scale from one to five stars. Amazon provides an optional badging option for reviewers which indicate the real name of the reviewer (based on confirmation of a credit card account) or which indicate that the reviewer is one of the top reviewers by popularity.
amazon.com's customer reviews are monitored for indecency, but do permit negative comments. Robert Spector, author of the book amazon.com, describes how "when publishers and authors asked Bezos why amazon.com would publish negative reviews, he defended the practice by claiming that amazon.com was 'taking a different approach...we want to make every book available – the good, the bad, and the ugly...to let truth loose'" (Spector 132). Allegations have been made that Amazon has selectively deleted negative reviews of Scientology related items despite compliance with comments guidelines.
"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. Instead, it returns a picture of the matching page, disables printing, and puts limits on the number of pages in a book a single user can access. Additionally, customers can purchase online access to some of the same books via the "Amazon Upgrade" program.
Amazon derives about 40 percent of its sales from affiliate marketing called Amazon Associates and third-party sellers who sell products on Amazon. Associates receive a commission for referring customers to Amazon by placing links on their websites to Amazon, if the referral results in a sale. Worldwide, Amazon has "over 900,000 members" in its affiliate programs. Amazon reported over 1.3 million sellers sold products through Amazon's World Wide Web sites in 2007. Unlike eBay, Amazon sellers do not have to maintain separate payment accounts; all payments are handled by Amazon.
Associates can access the Amazon catalog directly on their websites by using the Amazon Web Services (AWS) XML service. A new affiliate product, aStore, allows Associates to embed a subset of Amazon products within, or linked to another website. In June 2010, Amazon Seller Product Suggestions was launched (rumored to be internally called "Project Genesis") to provide more transparency to sellers by recommending specific products to third party sellers to sell on Amazon. Products suggested are based on customers' browsing history.
A January 2010 survey of third-party sellers by Auctionbytes.com  found that Amazon was 4th overall. . amazon.com placed second in "Profitability". Its lowest rating, but still above average, was in "Ease of Use". Sellers felt Amazon had clearly-defined rules, provided a steady stream of traffic to their listings, and put less emphasis on a community component. amazon.com came in second in the Recommended Selling Venue category.
In September 2000, price discrimination was found on amazon.com. Amazon offered to sell a buyer a DVD for one price, but after the buyer deleted cookies that identified him as a regular Amazon customer, he was offered the same DVD for a substantially lower price. Jeffrey P. Bezos subsequently apologized for the differential pricing and vowed that Amazon "never will test prices based on customer demographics". The company said the difference was the result of a random price test and offered to refund customers who paid the higher prices. Amazon had also experimented with random price tests in 2000 as customers comparing prices on a "bargain-hunter" Web site discovered that Amazon was randomly offering the Diamond Rio MP3 player for substantially less than its regular price.
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 & Noble's website led the Free Software Foundation to announce a boycott of Amazon in December 1999. The boycott was discontinued in September 2002. 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 against the 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". On May 12, 2006, the USPTO ordered a re-examination of the "One-Click" patent, based on a request filed by Peter Calveley, who cited as prior art an earlier e-commerce patent and the Digicash electronic cash system.
Amazon has a Canadian site in both English and French, but until a ruling in March 2010, was prevented from operating any headquarters, servers, fulfillment centers or call centers in Canada by that country's legal restrictions on foreign-owned booksellers. Instead, Amazon's Canadian site originates in the United States, and Amazon has an agreement with Canada Post to handle distribution within Canada and for the use of the Crown corporation's Mississauga, Ontario shipping facility. The launch of Amazon.ca generated controversy in Canada. In 2002, the Canadian Booksellers Association and Indigo Books and Music sought a court ruling that Amazon's partnership with Canada Post represented an attempt to circumvent Canadian law, but the litigation was dropped in 2004.
In March 2008, sales representatives of Amazon's BookSurge division started contacting publishers of print on demand titles to inform them that for Amazon to continue selling their POD-produced books, they were required to sign agreements with Amazon's own BookSurge POD company. Publishers were told that eventually, the only POD titles that Amazon would be selling would be those printed by their own company, BookSurge. Some publishers felt that this ultimatum amounted to monopoly abuse, and questioned the ethics of the move and its legality under anti-trust law.
In 2008, Amazon UK came under criticism for attempting to prevent publishers from direct selling at discount from their own websites. Amazon's argument was that they should be able to pay the publishers based on the lower prices offered on their websites, rather than on the full RRP. Also in 2008, Amazon UK drew criticism in the British publishing community following their withdrawal from sale of key titles published by Hachette Livre UK. The withdrawal was possibly intended to put pressure on Hachette to provide levels of discount described by the trade as unreasonable. Curtis Brown's managing director Jonathan Lloyd opined that "publishers, authors and agents are 100% behind [Hachette]. Someone has to draw a line in the sand. Publishers have given 1% a year away to retailers, so where does it stop? Using authors as a financial football is disgraceful."
In July 2009, The New York Times reported that amazon.com deleted all customer copies of certain books published by MobileReference, including the books 1984 and Animal Farm from users' Kindles. This action was taken with neither prior notification nor specific permission of individual users. Customers did receive a refund of the purchase price and, later, an offer of an Amazon gift certificate or a check for $30. The ebooks were initially published by MobileReference on Mobipocket for sale in Australia only—due to those works having fallen into public domain in Australia—however, when the ebooks were automatically uploaded to Amazon by MobiPocket, the territory restriction was not honored, and the book was allowed to be sold in territories such as the United States where the copyright term had not expired.
Amazon at one time carried 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 and filed a lawsuit against Amazon. A campaign to boycott Amazon was August 2007 gained attention after a dog fighting case involving NFL quarterback Michael Vick. In May 2008, Marburger Publishing agreed to settle with the Humane Society by requesting that Amazon stop selling their magazine, The Game Cock. The second magazine named in the lawsuit, The Feathered Warrior, remained available. 
In April 2009 it was publicized that some erotic, lesbian, gay, bisexual, transgender, feminist and politically liberal books were being excluded from Amazon's sales rankings. Various books and media were flagged as "Adult content," including children's books, self-help books, non-fiction, and non-explicit fiction. As a result, works by established authors E. M. Forster, Gore Vidal, Jeanette Winterson and D. H. Lawrence were unranked. The change first received publicity on the blog of author Mark R. Probst, who reproduced an e-mail from Amazon describing a policy of de-ranking "adult" material. However, Amazon later said that there was no policy of de-ranking LGBT material and blamed the change first on a "glitch" and then on "an embarrassing and ham-fisted cataloging error" that had affected 57,310 books.
In September 2009 it emerged that Amazon was selling MP3 music downloads falsely suggesting a well-known Premier League football manager was a child sex offender. Despite a campaign urging the retailer to withdraw the item, they refused to do so, citing freedom of speech. The company was then forced to withdraw the item when legal action was threatened. However, they continued to sell the item on their American, German and French websites.
A German information portal for consumers (Preisgenau.de) has criticized Amazon for selling tens of thousands of print on demand books which reproduced Wikipedia articles. These books are produced by three Mauritian subsidiaries of the German publisher VDM: Alphascript Publishing, Betascript Publishing and Fastbook Publishing. Amazon did not acknowledge this issue raised on a blog and some customers that have asked the company to withdraw all these titles from its catalog. The collaboration between amazon.com and VDM Publishing was started in 2007.
Amazon has been criticized for its refusal to collect sales taxes from customers in states in which it does not have a physical presence, thus giving it a comparative advantage over brick-and-mortar retailers. Possibly, such customers should pay the equivalent amount in use tax directly to their state; however, few customers do so. In 2008 New York passed a law that would force online retailers to collect sales taxes on shipments to New York State residents. Shortly after the law was signed, amazon.com filed a complaint in the New York Supreme Court objecting to the law. The complaint wasn't based on whether in-state customers should pay tax, but upon the long-standing practice of it being the responsibility of the customer to report the sales tax (known as use tax in this case) and not that of the out-of-state businesses. The lawsuit was tossed out of court in January, 2009, when New York State Supreme Court Justice Eileen Bransten stated "there is no basis upon which Amazon can prevail."
Amazon has created subsidiaries that are treated separately for tax matters, a legal technique called "entity isolation". The subsidiary that developed the Kindle is in California, but because it doesn't sell the Kindle directly to customers, Amazon's legal position is that it isn't required to collect sales taxes in California. In the company's financial report for the quarter ending September 30, 2009, the company stated that the imposition of sales-tax collection by more states or Congress could "decrease our future sales."
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. A 2004 glitch in Amazon.ca's review system temporarily revealed that some well-established authors were anonymously giving themselves glowing reviews and "rival" authors terrible reviews. According to Amazon, those reviews have since been removed or made non-anonymous.
In April 2009, BusinessWeek magazine reported that Amazon.com was one of 25 US companies that paid the least US taxes. Amazon.com paid a 4.1 percent annual tax rate, far less than the standard 35 percent corporate rate, based on an analysis of the company's financial figures for 2005-2008. According to SEC filings, this rate was caused in part by lower tax rates for Amazon.com's international subsidiaries.
Amazon has opposed efforts by trade unions to organize in both the United States and the United Kingdom. In 2001, 850 employees in Seattle were laid off by Amazon.com after a unionization drive. The Washington Alliance of Technological Workers (WashTech) accused the company of violating union laws, and claimed Amazon managers subjected them to intimidation and heavy propaganda. Amazon denied any link between the unionization effort and layoffs. Also in 2001, Amazon.co.uk hired a US management consultancy organization, The Burke Group, to assist in defeating a campaign by the Graphical, Paper and Media Union (GPMU, now part of Unite the Union) to achieve recognition in the Milton Keynes distribution depot. It was alleged that the company victimized or sacked four union members during the 2001 recognition drive and held a series of captive meetings with employees.
Following the announcement of the Apple iPad on January 27, 2010, Macmillan Publishers entered into a pricing dispute with Amazon.com regarding electronic publications. Macmillan asked Amazon to accept a new pricing scheme it had worked out with Apple, raising the price of e-books from $9.99 to $15. Amazon responded by pulling all Macmillan books, both electronic and physical, from their website (although affiliates selling the books were still listed). On January 31, 2010, Amazon "capitulated" to Macmillan's pricing request. Also in 2010, Amazon issued a partial refund for a PlayStation 3 in the UK following feature removals.
A number of companies have been started and founded by former Amazon.com employees.