Amazon.com

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Amazon.com, Inc.
TypePublic
Traded asNASDAQAMZN
NASDAQ-100 Component
S&P 500 Component
Foundation date1994 (1994)
HeadquartersSeattle, Washington, U.S.
Area servedWorldwide
Founder(s)Jeff Bezos
Key peopleJeff Bezos
(Chairman, President & CEO)
IndustryInternet, online retailing
ProductsA2Z Development, A9.com, Alexa Internet, Amazon.com, Amazon Kindle, Amazon Studios, Amazon Web Services, Audible.com, dpreview.com, Endless.com, IMDb, LoveFilm, The Book Depository, Zappos.com, Woot, Junglee.com, myhabit.com[1]
RevenueIncrease US$ 48.07 billion (2011)[2]
Operating incomeIncrease US$ 0862 million (2011)[2]
Net incomeIncrease US$ 0631 million (2011)[2]
Total assetsIncrease US$ 25.27 billion (2011)[2]
Total equityIncrease US$ 07.75 billion (2011)[2]
Employees69,100 (2012 Q2)[3]
WebsiteAmazon.com (original US site)
various national sites
Written inC++ and Java
Alexa rankSteady 9 (December 2012)[4]
Type of siteE-commerce
AdvertisingWeb banners, videos
Available inEnglish, French, German, Spanish, Italian, Japanese, Chinese, Brazilian Portuguese
Launched1995
 
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Amazon.com, Inc.
TypePublic
Traded asNASDAQAMZN
NASDAQ-100 Component
S&P 500 Component
Foundation date1994 (1994)
HeadquartersSeattle, Washington, U.S.
Area servedWorldwide
Founder(s)Jeff Bezos
Key peopleJeff Bezos
(Chairman, President & CEO)
IndustryInternet, online retailing
ProductsA2Z Development, A9.com, Alexa Internet, Amazon.com, Amazon Kindle, Amazon Studios, Amazon Web Services, Audible.com, dpreview.com, Endless.com, IMDb, LoveFilm, The Book Depository, Zappos.com, Woot, Junglee.com, myhabit.com[1]
RevenueIncrease US$ 48.07 billion (2011)[2]
Operating incomeIncrease US$ 0862 million (2011)[2]
Net incomeIncrease US$ 0631 million (2011)[2]
Total assetsIncrease US$ 25.27 billion (2011)[2]
Total equityIncrease US$ 07.75 billion (2011)[2]
Employees69,100 (2012 Q2)[3]
WebsiteAmazon.com (original US site)
various national sites
Written inC++ and Java
Alexa rankSteady 9 (December 2012)[4]
Type of siteE-commerce
AdvertisingWeb banners, videos
Available inEnglish, French, German, Spanish, Italian, Japanese, Chinese, Brazilian Portuguese
Launched1995

Amazon.com, Inc. (NASDAQAMZN) is an American multinational electronic commerce company with headquarters in Seattle, Washington, United States. It is the world's largest online retailer.[5] The company also produces consumer electronics—notably the Amazon Kindle e-book reader and the Kindle Fire tablet computer—and is a major provider of cloud computing services.

Amazon has separate retail websites for the following countries: United States, Canada, United Kingdom, France, Germany, Austria, Italy, Spain, Brazil, Japan, and China, with international shipping to certain other countries for some of its products. It is also expected to launch its websites in Poland,[6] Netherlands, and Sweden.[7]

Jeff Bezos incorporated the company (as Cadabra) in July 1994, and the site went online as amazon.com in 1995.[8] The company was renamed after the Amazon River, one of the largest rivers in the world,[8] which in turn was named after the Amazons, the legendary nation of female warriors in Greek mythology. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3 downloads, software, video games, electronics, apparel, furniture, food, toys, and jewelry.

Contents

History

Amazon founder Jeff Bezos

The company was founded in 1994, spurred by what Bezos called his "regret minimization framework", which he described as his effort to fend off regret for not staking a claim in the Internet gold rush.[9]

The company began as an offline bookstore.[10] While the largest brick-and-mortar bookstores and mail-order catalogs might offer 200,000 titles, an online bookstore could sell far more. Bezos wanted a name for his company that began with "A" so that it would appear early in alphabetic order. He began looking through the dictionary and settled on "Amazon" because it was a place that was "exotic and different" and it was one of the biggest rivers in the world, as he hoped his company would be.[8] Since 2000, Amazon's logotype has been an arrow leading from A to Z, representing that they carry every product from A to Z.[11]

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.[12] In October 1995, the company announced itself to the public.[13] 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 a 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. The profit, although it was modest, served to demonstrate that the business model could be profitable.[14] In 1999, Time magazine named Bezos the Person of the Year, recognizing the company's success in popularizing online shopping.

Barnes and Noble filed a lawsuit on May 12, 1997, alleging that Amazon's claim to be "the world's largest bookstore" was false. Barnes and Noble asserted, "[It] isn't a bookstore at all. It's a book broker." The suit was later settled out of court. Amazon continued to call itself "the world's largest bookstore."[15] Walmart subsequently filed suit on October 16, 1998, alleging that Amazon had stolen trade secrets by hiring former Walmart executives. Although this suit was settled out of court, it caused Amazon to implement internal restrictions and reassignment of the former Walmart executives.[15]

Acquisitions

Investment

Subsidiaries

Merchant partnerships

Until June 30, 2006, typing ToysRUs.com into a browser would bring up Amazon.com's "Toys & Games" tab; however, this relationship was terminated due to a lawsuit.[52] Amazon also hosted and managed the website for Borders bookstores but this ceased in 2008.[53] From 2001 until August 2011, Amazon hosted the retail website for Target.[54] Benefit Cosmetics, another merchant partner of Amazon, has also launched a major E-Commerce platform of their own based on Hybris and arvato systems NA, in the US, EU and China.[55]

Amazon.com operates retail web sites for Sears Canada, 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 some people that they call the retail website, standalone in-store terminals, or phone-based customer service agents. Amazon Web Services also powers AOL's Shop@AOL.

On October 18, 2011, Amazon.com announced a partnership with DC Comics for the exclusive digital rights to many popular comics, including Superman, Batman, Green Lantern, The Sandman, and Watchmen. The partnership has caused well-known bookstores like Barnes & Noble to remove these titles from their shelves. These titles will be available for purchase exclusively through Amazon's new Kindle Fire tablet.[56]

Locations

Amazon has offices, fulfillment centers, customer service centers and software development centers across North America, Latin America, Europe, Africa, and Asia.[57]

Headquarters

Amazon.com's former headquarters in the Pacific Medical Center building in Beacon Hill, Seattle.

The company's global headquarters are in Seattle's South Lake Union neighborhood. The European headquarters are in Luxembourg's capital, Luxembourg City. Amazon also has headquarters in Miami, Florida.

One of Amazon.com's new buildings at its headquarters in South Lake Union, Seattle, Washington.

Software development centers

While much of Amazon's software development occurs in Seattle, the company employs software developers in centers across the globe. Some of these sites are run by an Amazon subsidiary called A2Z Development.[58]

Call centers

Fulfillment and warehousing

Fulfillment centers are located in the following cities, often near airports. These centers also provide warehousing and order-fulfillment for third-party sellers:[63]

Warehouses have a high level of automation since Amazon's 2012 acquisition of Kiva Systems, a warehouse automation company.

Amazon.co.uk warehouse in Glenrothes, Scotland, UK

Other

Closed fulfillment, warehousing and customer service locations

These U.S. distribution centers have been closed: SDC Seattle Distribution Center, located in Georgetown, just south of downtown Seattle; Red Rock, Nevada; Chambersburg, Pennsylvania; Munster, Indiana; and McDonough, Georgia.[77][78][79] From 2000[80] until February 2001, there was an Amazon customer service based in The Hague, Netherlands.[81][82]

Products and services

Third-generation Amazon Kindle

Retail goods

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 the large market share of the industry pioneer, eBay. Later, the company launched a fixed-price marketplace business, zShops, in September 1999, and the now defunct partnership with Sotheby's, called amazon.com, in November. Auctions and zShops evolved into Amazon Marketplace, a service launched in November 2000 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 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.[83] AmazonFresh also operated pick-up locations in the suburbs of Bellevue and Kirkland from summer 2007 through early 2008.

In 2012, Amazon announced Vine.com for buying green products, including groceries, household items and apparel.[84] It is part of Quidsi, the company that Amazon bought in 2010 that also runs the sites Diapers.com (baby), Wag.com (pets) and YoYo.com (toys).[84] Amazon also owns other e-commerce sites like Zappos.com, Shopbop.com and Woot.[84]

Amazon's Subscribe & Save program offers a discounted price on an item (usually sold in bulk), free shipping on every Subscribe & Save shipment, and automatic shipment of the item every one, two, three, or six months.[85]

Consumer electronics

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 and to provide a more legible display. As of March 2011, the stated library numbers over 850,000 titles.

In September 2011, Amazon announced its entry into the tablet computer market by introducing the Kindle Fire, which runs a customized version of the operating system Android. The aggressively low pricing of Fire ($199 USD) was largely perceived as a strategy backed by Amazon's revenue from its content sales, to be stimulated by sales of Fire.

Digital content

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, 143 e-books were sold 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.[86]

Amazon MP3, its own online music store, launched in the U.S. on September 25, 2007, selling downloads exclusively in MP3 format without digital rights management.[87] (In addition to copyright law, Amazon's terms of use agreements restrict use of the MP3s, but Amazon does not use DRM to enforce those terms.)[88] Amazon MP3 sells music from the Big 4 record labels EMI, Universal, Warner Bros. Records, and Sony Music, as well as independents. Prior to the launch of this service, Amazon made an investment in Amie Street, a music store with a variable pricing model based on demand.[89] Amazon MP3 was the first online offering of DRM-free music from all four major record companies.[90][91][92][93]

In January 2008, Amazon began rolling out its MP3 service to subsidiary websites worldwide.[94] In December 2008, Amazon MP3 was made available in the UK.

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[95] and replaced by Amazon Payments.

In 2011, Amazon announced that it was releasing a Mac download store to offer dozens of games and hundreds of pieces of software for Apple computers.[96]

On August 2012, Amazon announced it would be adding a gaming department to its company titled Amazon Game Studios. Amazon states that they will be bringing, "innovative, fun and well-crafted games."[97]

Amazon Prime

Amazon Prime is a service of free two-day shipping on all eligible purchases, for a flat annual fee, as well as discounted one-day shipping rates.[98] Amazon launched the program in the contiguous United States in 2005, in Japan, the United Kingdom and Germany in 2007, and in France (as "Amazon Premium") in 2008.

Amazon Prime membership also provides Amazon Instant Video, the instant streaming of selected movies and TV shows at no additional cost, as of February 2011.[99] In November 2011, it was announced that Prime members have access to the Kindle Owners’ Lending Library, which allows users to borrow certain popular titles for free reading on Kindle hardware, up to one book a month, with no due date.[100]

Private labels and exclusive marketing arrangements

In August 2005,[101] 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.[101] 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".[102] Coverage by the trademark grew to include items such as paints, carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and jewelry.[102] In 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.

AmazonBasics is a private-label consumer electronics product line. It sells AV cables, blank DVD media and other electronics products under the AmazonBasics product label.[103] The line was launched in 2009.[104]

An Amazon.com exclusive is a product, usually a DVD, that is available exclusively on Amazon.com. Some DVDs are produced by the owner of the film/product, while others are produced by Amazon.com itself. The DVDs produced by Amazon are made using their "CreateSpace" program, in which DVDs are created, upon ordering, using DVD-R technology. The DVDs are then shipped about two days later. Some DVDs (such as the Jersey Shore Season 1 or The Unusuals Season 1) first release their DVD on Amazon as an Amazon.com Exclusive for a limited time before being released elsewhere. On May 23, 2011, Amazon.com allowed customers to download Lady Gaga's Born This Way album for $0.99, resulting in some downloads being delayed, due to an extremely high volume of downloads.[105]

Computing services

Amazon launched Amazon Web Services (AWS) in 2002, which provides programmatic access to latent features on its website. Amazon Web Services (AWS) was first launched as a public beta of Amazon Elastic Compute Cloud running Microsoft Windows Server and Microsoft SQL Server.[106] This was later expanded to several operating systems, including various flavors of Linux and OpenSolaris.

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 terabytes 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 by adding Elastic Block Store (EBS), offering persistent storage for Amazon EC2 instances and Elastic IP addresses, and offering static IP addresses designed for dynamic cloud computing. Amazon introduced SimpleDB, a database system, allowing users of its other infrastructure to utilize a high-reliability, high-performance database system.

Amazon continues to refine and add services to AWS, adding such services as Scalable DNS service (Amazon Route 53), payment handling, and AWS specific APIs for their Mechanical Turk service.

In August 2012, Amazon announced Amazon Glacier, a low-cost online storage web service that provides reliable data archiving, storage, and backup.[107]

In November 2012 at AWS' web developer converence in Las Vegas it announced it was targeting large companies as cloud storage clients. It will further cut its S3 prices to customers with long-term contracts in its "Redshift" storage service launching in 2013 with per-Terabyte-per-year prices going from the low $20,000s to around $1,000.

Content production

Amazon Publishing is Amazon's publishing unit.[108] It is composed of AmazonEncore,[109] AmazonCrossing,[110] Montlake Romance,[111] Thomas & Mercer,[112] 47 North,[113] and Powered by Amazon. Additional imprints are planned.

Launched in 2005, Amazon Shorts offered 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. The program was discontinued on June 1, 2010.[114][115]

In 2008, Amazon expanded into film production, producing the film The Stolen Child with 20th Century Fox.[116]

Donations

Amazon also created "channels" to benefit certain causes. In 2004, Amazon's "Presidential Candidates" allowed customers to donate $5 to $200 to the campaigns of 2004 U.S. presidential hopefuls. Amazon has periodically reactivated a Red Cross donation channel after crises such as the September 11 attacks, 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.[117]

AmazonLocal

AmazonLocal is a daily deal service launched in June 2011 in Boise, Idaho.[118] As of June 2012, AmazonLocal offers daily deals to over 100 regions in 29 U.S. states. AmazonLocal acts primarily as a deal aggregator; most of the deals are actually offered by LivingSocial, a firm in which Amazon has heavily invested.[119]

AmazonWireless

In July 2009, Amazon.com launched their AmazonWireless website[120], which offers cellular devices and service plans for Verizon Wireless, AT&T, Sprint Nextel and T-Mobile in the US.[121]

Other services

In 2007, Amazon launched Amapedia, a now-defunct wiki for user-generated content to replace ProductWiki, and the video on demand service Amazon Unbox.

Also in 2007, Amazon launched Amazon Vine, which allows reviewers free access to pre-release products from vendors in return for posting a review, as well as a payment service specifically targeted at developers, Amazon FPS.[citation needed]

IMDb and Amazon launched a Web site called SoundUnwound for browsing music metadata with wiki-like user contribution in September 2007; this data was also used for Amazon's Artist Pages.[122] Soundunwound ceased existence on June 18, 2012, and the site redirected to Amazon.

Amazon Connect enables authors to post remarks on their book pages to customers.

Amazon Web Store allows businesses to create custom e-commerce websites using Amazon technology. Sellers pay a commission of 7%, including credit-card processing fees and fraud protection, and a subscription fee which ranges from $0 to $24.99 per month depending on the bundle option for an unlimited number of webstores and listings.

Website

The domain amazon.com attracted at least 615 million visitors annually by 2008, twice the number of walmart.com.[123] Amazon attracts approximately 65 million customers to its U.S. website per month.[124] The company has also invested heavily on a massive amount of server capacity for its website, especially to handle the excessive traffic during the December Christmas holiday season.[125] In addition to amazon.com, there are different versions of Amazon for several different countries, each varying in assortment and prices. As of 2012, in alphabetical order by region, these are:

Reviews

See also Amazon.com controversies#Amazon reviews

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. As with most rating scales, one star stands for the product being abysmal, five stars meaning that the item is stellar. Amazon provides a 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. Customers may comment or vote on the reviews, indicating whether or not they found it helpful to them. If a review is given enough "helpful" hits, it appears on the front page of the product. A problem has been created by Amazon's habit of copying reviews onto pages on other editions of the 'same' book.[citation needed] Often the book is not the 'same' at all. For example, as of November 2011, editions of the new translation of the Roman Missal were accompanied on both amazon.com and amazon.co.uk by old reviews of the old translation, many of which advised the purchaser to wait for the new translation, and which discussed details of content and presentation that had nothing to do with the new edition.[citation needed]

Content search

"Search Inside the Book" is a feature which allows customers to search for keywords in the full text of many books in the catalog.[126][127] The feature started with 120,000 titles (or 33 million pages of text) on October 23, 2003.[128] There are currently about 300,000 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, instructs the web browser to disable 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.

Third-party sellers

Amazon derives about 40% of its sales from affiliate marketing called "Amazon Associates" and third-party sellers who sell products on Amazon[citation needed]. 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.[129] 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 another website, 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.[130]

A January 2010 survey of third-party sellers by Auctionbytes.com[131] found that Amazon was 4th overall.[132] Amazon.com placed second in "Profitability". Its lowest rating, but still above average, was in "Ease of Use". Sellers felt it had clearly defined rules, provided a steady stream of traffic to their listings, and put less emphasis on a community component. Amazon came in second in the Recommended Selling Venue category.

Amazon sales rank

The Amazon sales rank (ASR) provides an indication of the popularity of a product sold on any Amazon locale. It is a relative indicator of popularity that is updated hourly. Effectively, it is a "best sellers list" for the millions of products stocked by Amazon.[133] While the ASR has no direct effect on the sales of a product, it is used by Amazon to determine which products to include in their best sellers lists.[133] Products that appear in these lists enjoy additional exposure on the Amazon website, and this may lead to an increase in sales. In particular, products that experience large jumps (up or down) in their sales ranks may be included within Amazon's lists of "movers and shakers," and this also provides additional exposure that may lead to an increase in sales.[134] For competitive reasons, Amazon does not release actual sales figures to the public. However, Amazon has now begun to release point of sale data via the Nielsen BookScan service to verified authors.[135] While the ASR has been the source of much speculation by publishers, manufacturers and marketers, Amazon itself does not release the details of its sales rank calculation algorithm. In addition, it states:

Please keep in mind that our sales rank figures are simply meant to be a guide of general interest for the customer and not definitive sales information for publishers - we assume you have this information regularly from your distribution sources
—Amazon.com Help, [136]

Amazon technology

Customer Relationship Management (CRM) and Information Management (IM) support Amazon’s business strategy. The core technology that keeps Amazon running is Linux-based. As of 2005, Amazon had the world’s three largest Linux databases, with capacities of 7.8 TB, 18.5 TB, and 24.7 TB. The central data warehouse of Amazon is made of 28 Hewlett Packard servers with four CPUs per node running Oracle database software. Amazon’s technology architecture handles millions of back-end operations every day, as well as queries from more than half a million third-party sellers. With hundreds of thousands of people sending their credit card numbers to Amazon’s servers everyday, security becomes a major concern. Amazon employs Netscape Secure Commerce Server using the Secure Socket Layer protocol which stores all credit card details in a separate database. The company also records data on customer buyer behavior which enables them to offer or recommend to an individual specific item, or bundles of items based upon preferences demonstrated through purchases or items visited.[137]

Multi-level sales strategy

Amazon employs a multi level e-commerce strategy. Amazon started off by focusing on Business-to-Consumer relationships between itself and its customers, and Business-to-Business relationships between itself and its suppliers but it then moved to incorporate Customer-to-Business transactions as it realized the value of customer reviews as part of the product descriptions. It now also facilitates customer to customer with the provision of the Amazon marketplace which act as an intermediary to facilitate consumer to consumer transactions. The company lets almost anyone sell almost anything using its platform. In addition to affiliate program that lets anybody post Amazon links earn a commission on click through sales, there is now a program which let those affiliates build entire websites based on Amazon’s platform.[138] Some other large e-commerce sellers use Amazon to sell their products in addition to selling them through their own websites. The sales are processed through Amazon.com and end up at individual sellers for processing and order fulfillment and Amazon leases space for these retailers. Small sellers of used and new goods go to Amazon Marketplace to offer goods at a fixed price.[139] Amazon also employs the use of dropshippers or meta sellers. These are members or entities that advertise goods on Amazon who order these goods direct from other competing websites but usually from other Amazon members. These meta sellers may have millions of products listed, have large transaction numbers and are grouped alongside other less prolific members giving them credibility as just someone who has been in business for a long time. Markup is anywhere from 50% to 100% and sometimes more, these sellers maintain that items are in stock when the opposite is true. As Amazon increases their dominance in the marketplace these dropshippers have become more and more commonplace in recent years. The resulting damage to a supply and demand marketplace remains to be seen but advertising contracts with large search engines eliminating smaller websites from overall exposure these practices should have a negative effect on the industry on the whole.

Revenue

Over the last decade,[when?] Amazon has developed a customer base of around 30 million people. Amazon.com is primarily a retail site with a sales revenue model. Amazon makes its money by taking a small percentage of the sale price of each item that is sold through its website. Amazon also allows companies to advertise their products by paying to be listed as featured products.[140]

In Q1 2012 Amazon reported a loss [141] due to its stake in Living Social.

Controversies

Since its founding, the company has attracted criticism and controversy from multiple sources over its actions. These include: rewarding customers for spying on Amazon's brick and mortar competitors,[142] poor warehouse conditions for workers; anti-unionization efforts; Amazon Kindle remote content removal; taking public subsidies; its "1-Click patent" claims; anti-competitive actions; price discrimination; various decisions over whether to censor or publish content such as the WikiLeaks web site; LGBT book sales rank;[143][144], and works containing libel, facilitating dogfight, cockfight, or pedophile activities. In December 2011, Amazon faced backlash from small businesses for running a one-day deal to promote its new Price Check app. Shoppers who used the app to check prices in a brick-and-mortar store were offered a 5% discount to purchase the same item from Amazon.[145] Companies like Groupon, eBay, and Taap.it countered Amazon's promotion by offering $10 off from their products.[146][147]

Sales and use taxes

Amazon collects sales tax from just eight states in the US. Amazon is under increasing legal and political pressure from state governments, traditional retailers and other groups because of its refusal to collect sales tax in 40 of the 45 states with a statewide sales tax (as of May 2011). Those 40 states include at least 12 where Amazon has a clear physical presence,[148] via distribution centers and wholly owned subsidiaries. Critics of Amazon argue that its refusal to collect sales taxes has given it an unfair advantage over traditional retailers. While customers are required to remit use tax directly to their state, few customers do so.

Amazon has said since at least 2006 that it would support a federal solution to the sales tax problem, as long as such legislation was fair and simple. The Main Street Fairness Act failed in committee in 2010, and several earlier versions of the bill failed to advance. Amazon lobbyists met four times with members of Congress or their aides in 2010 regarding the Main Street Fairness Act. The company spent $610,000 on lobbying in 2010, although these expenses also covered other bills discussed at the same time. Amazon has increased political contributions to federal lawmakers. Amazon's political action committee spent $214,000 during the 2010 election cycle, double what it spent for the 2008 elections.[149]

Small business advocates at the American Independent Business Alliance note that while proclaiming support for reform, Amazon has lobbied to apply sales tax collection duties to all businesses with $150,000 or more in annual sales.[150] Since all major proposals include an exemption of at least $500,000 or $1 million, AMIBA says[148] this impedes passage of tax reform.

Alleged tax avoidance in the UK

In November 2012, the UK government announced plans to investigate Amazon.com, along with Starbucks and Google, for tax avoidance.[151] Amazon has also faced a huge backlash from the general public and other business' in the UK. [152]

Alleged Mistreatment of Individual Sellers

Amazon has faced scrutiny from numerous individual sellers who have claimed that Amazon unexpectedly closed their accounts, and subsequently witheld their funds for indefinite time frames.[153] According to Section 5.k of the Amazon Seller's Participation agreement,[154] Amazon may earn interest on funds collected from buyers before they are disbursed to sellers, meaning Amazon can increase their earnings by delaying disbursement.

Lobbying

Amazon.com lobbies the United States federal government and state governments on issues such as the enforcement of sales taxes on online sales, transportation safety, privacy and data protection, and intellectual property. According to regulatory filings, Amazon.com focuses its lobbying on the U.S. Congress, the Federal Communications Commission, and the Federal Reserve. Amazon.com spent $450,000 on lobbying in the second quarter of 2011, $630,000 in the first quarter of 2011, and $500,000 in the second quarter of 2010.[155]

Amazon.com was a corporate member of the American Legislative Exchange Council (ALEC) until it dropped membership following protests at its shareholders' meeting May 24, 2012.[156]

Notable businesses from former employees

A number of companies have been started and founded by former Amazon employees.[157]

See also

References

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External links

Business data