History of Amazon

This is the history of Amazon, an American internet sales company.

Amazon founder Jeff Bezos
This article is about the history of the internet company. For other topics, see Amazon (disambiguation).

Founding

The company was created as a result of what Jeff Bezos called his "regret minimization framework", which described his efforts to fend off any regrets for not participating sooner in the Internet business boom during that time.[1] In 1994, Bezos left his employment as vice-president of D. E. Shaw & Co., a Wall Street firm, and moved to Seattle, Washington, where he began to work on a business plan[2] for what would become Amazon.com.

On July 5, 1994, Bezos initially incorporated the company in Washington state with the name Cadabra, Inc.[3] After a few months he changed the name to Amazon.com, Inc because a lawyer misheard its original name as "cadaver".[4] In its early days, the company was operated out of the garage of Bezos's house on Northeast 28th Street in Bellevue, Washington.[5] In September 1994, Bezos purchased the domain name relentless.com and briefly considered naming his online store Relentless, but friends told him the name sounded a bit sinister. The domain is still owned by Bezos and still redirects to the retailer.[6]

Choosing a name

Bezos selected the name by looking through a dictionary; he settled on "Amazon" because it was a place that was "exotic and different", just as he had envisioned for his Internet enterprise. The Amazon River, he noted, was the biggest river in the world, and he planned to make his store the biggest bookstore in the world.[7] Additionally, a name that began with "A" was preferred because it would probably be at the top of an alphabetized list.[7] Bezos placed a premium on his head start in building a brand and told a reporter, "There's nothing about our model that can't be copied over time. But you know, McDonald's got copied. And it's 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."[8]

Online bookstore and IPO

After reading a report about the future of the Internet that projected annual web commerce growth at 2,300%, Bezos created a list of 20 products that could be marketed online. He narrowed the list to what he felt were the five most promising products, which included: compact discs, computer hardware, computer software, videos, and books. Bezos finally decided that his new business would sell books online, because of the large worldwide demand for literature, the low unit price for books, and the huge number of titles available in print.[9] Amazon was founded in the garage of Bezos' rented home in Bellevue, Washington.[7][10][11] Bezos' parents invested almost $250,000 in the start-up.[12]

In July 1995, the company began service as an online bookstore.[13] The first book sold on Amazon.com was Douglas Hofstadter's Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought.[14] In the first two months of business, Amazon sold to all 50 states and over 45 countries. Within two months, Amazon's sales were up to $20,000/week.[15] In October 1995, the company announced itself to the public.[16] In 1996, it was reincorporated in Delaware. Amazon issued its initial public offering of stock on May 15, 1997, at $18 per share, trading under the NASDAQ stock exchange symbol AMZN.[17]

Barnes & Noble sued Amazon on May 12, 1997, alleging that Amazon's claim to be "the world's largest bookstore" was false because it "...wasn't a bookstore at all. It's a book broker." The suit was later settled out of court and Amazon continued to make the same claim.[18] Walmart sued Amazon on October 16, 1998, alleging that Amazon had stolen Walmart's trade secrets by hiring former Walmart executives. Although this suit was also settled out of court, it caused Amazon to implement internal restrictions and the reassignment of the former Walmart executives.[18]

In 1999, Amazon first attempted to enter the publishing business by buying a defunct imprint, "Weathervane", and publishing some books "selected with no apparent thought", according to The New Yorker. The imprint quickly vanished again, and as of 2014 Amazon representatives said that they had never heard of it.[19] Also in 1999, Time magazine named Bezos the Person of the Year when it recognized the company's success in popularizing online shopping.[20]

Amazon Toys Team employees circa 2000 during a summer Amazon party. Jeff Bezos is wearing the black shirt.

2000s

Since June 19, 2000, Amazon's logotype has featured a curved arrow leading from A to Z, representing that the company carries every product from A to Z, with the arrow-shaped like a smile.[21]

According to sources, Amazon did not expect to make a profit for four to five years. This comparatively slow growth caused stockholders to complain that the company was not reaching profitability fast enough to justify their investment or even survive in the long-term. In 2001, the dot-com bubble burst destroyed many e-companies in the process, but Amazon survived and moved forward beyond the tech crash to become a huge player in online sales. The company finally turned its first profit in the fourth quarter of 2001: $0.01 (i.e., 1¢ per share), on revenues of more than $1 billion. This profit margin, though extremely modest, proved to skeptics that Bezos' unconventional business model could succeed.[22][23]

2010s to present

In 2011, Amazon had 30,000 full-time employees in the US, and by the end of 2016, it had 180,000 employees.

In 2014, Amazon launched the Fire Phone. The Fire Phone was meant to deliver media streaming options but the venture failed, resulting in Amazon registering a $170 million loss. This would also lead to the Fire Phone production being stopped the following year. In August of the same year, Amazon would finalize the acquisition of Twitch, a social video gaming streaming site for $970 million. This new acquisition would be integrated into the game production division of Amazon.

Day 1 building in Seattle

In June 2017, Amazon announced that it would acquire Whole Foods, a high-end supermarket chain with over 400 stores, for $13.4 billion.[24][25] The acquisition was seen by media experts as a move to strengthen its physical holdings and challenge Walmart's supremacy as a brick and mortar retailer. This sentiment was heightened by the fact that the announcement coincided with Walmart's purchase of men's apparel company Bonobos.[26] On August 23, 2017, Whole Foods shareholders, as well as the Federal Trade Commission, approved the deal.[27][28]

In September 2017, Amazon announced plans to locate a second headquarters in a metropolitan area with at least a million people.[29] Cities needed to submit their presentations by October 19, 2017 for the project called HQ2.[30] The $5 billion second headquarters, starting with 500,000 square feet and eventually expanding to as much as 8 million square feet, may have as many as 50,000 employees.[31] In 2017, Amazon announced it would build a new downtown Seattle building with space for Mary's Place, a local charity in 2020.[32]

As 2017 came to a close, Amazon had over 566,000 employees worldwide.[33][34]

According to an August 8, 2018 story in Bloomberg Businessweek, Amazon has about a 5 percent share of US retail spending (excluding cars and car parts and visits to restaurants and bars), and a 43.5 share of American online spending in 2018. The forecast is for Amazon to own 49 percent of the total American online spending in 2018, with two-thirds of Amazon's revenue coming from the US.[35]

Amazon launched the last-mile delivery program and ordered 20,000 Mercedes-Benz Sprinter Vans for the service in September 2018.[36][37]

To make data transfers from space cheaper and easier Amazon added 12 antennas for the satellite data in November 2018.[38]

Amazon will generate $258.22 billion in US retail ecommerce sales this year, up 29.2% over last year. Amazon's Marketplace sales will represent an increasingly dominant portion of its ecommerce business—68.0% this year, compared with 32.0% for Amazon direct sales. By the end of 2018, sales generated from Amazon's Marketplace will be more than double that of Amazon's direct sales in the US.[39]

HQ2

In November 2018, Amazon announced it would open its highly sought-after new headquarters, known as (HQ2) in Long Island City, Queens, New York City,[40][41] and in the Crystal City neighborhood of Arlington, Virginia.[42] On February 14, 2019, Amazon announced it was not moving forward with plans to build HQ2 in Queens[43] but would instead focus solely on the Arlington location. The company plans to locate at least 25,000 employees at HQ2 by 2030 and will invest more than US$2.5 billion[44] to establish its new headquarters in Crystal City as well as neighboring Pentagon City and Potomac Yard, an area jointly marketed as "National Landing." The announcement also created a new partnership with Virginia Tech to develop a revolutionary Innovation Campus to fill demand for high-tech talent in National Landing and beyond.

COVID-19

At the end of March 2020, some workers of the Staten Island warehouse staged a walkout in protest the poor health situation at their workplace amidst the 2020 COVID-19 pandemic. One of the organizers, Chris Smalls, was first put on quarantine without anybody else being quarantined, and soon afterwards fired from the company.[45][46][47][48][49]

The pandemic caused a surge in online shopping, and resulted in shortages of household staples both online and in some brick and mortar stores. From March 17[50] to April 10, 2020,[51] Amazon warehouses stopped accepting non-essential items from third-party sellers. The company hired approximately 175,000 additional warehouse workers and delivery contractors to deal with the surge, and temporarily raised wages by $2/hour.[51]

Amazon Go

On January 22, 2018, Amazon Go, a store that uses cameras and sensors to detect items that a shopper grabs off shelves and automatically charges a shopper's Amazon account, was opened to the general public in Seattle.[52][53] Customers scan their Amazon Go app as they enter, and are required to have an Amazon Go app installed on their smartphone and a linked Amazon account to be able to enter.[52] The technology is meant to eliminate the need for checkout lines.[54][55][56] Amazon Go was initially opened for Amazon employees in December 2016.[57][58][59] By the end of 2018, there will be 8 total Amazon Go stores located in Seattle, Chicago, San Francisco and New York.[60]

Amazon 4-Star

Amazon announced to debut the Amazon 4-star in New York, Soho neighborhood Spring Street between Crosby and Lafayette on 27 September 2018. The store carries the 4-star and above rated products from around New York.[61] The Amazon website searches for the most rated, highly demanded, frequently bought and most wished for products which are then sold in the new Amazon store under separate categories. Along with the paper price tags, the online-review cards will also be available for the customers to read before buying the product.[62][63]

Mergers and acquisitions

Amazon has grown through a number of mergers and acquisitions.

Main article: List of mergers and acquisitions by Amazon

The company has also invested in a number of growing firms, both in the United States and internationally.[64][65] In 2014, Amazon purchased top level domain .buy in auction for over $4 million.[66][67] The company has invested in brands that offer a wide range of services and products, including Engine Yard, a Ruby-on-Rails platform as a service company,[68] and Living Social, a local deal site.[69]

Timeline

Overview
Time periodKey developments at Amazon
1994–1998Amazon starts off as an online bookstore selling books, primarily competing with local booksellers and Barnes & Noble. It IPOs in 1997.
1998–2004Amazon starts to expand its services beyond books. It also starts offering convenience services, such as Free Super Savers Shipping.
2005–2011Amazon moves into the cloud computing area with Amazon AWS, as well as the crowdsourcing area with Amazon Mechanical Turk. By being an early player, it eventually dominates the cloud computing scene, allowing it to control much of the physical infrastructure of the Internet.[70] Amazon also offers the Amazon Kindle for people to purchase their books as eBooks, and by 2010, more people buy ebooks than physical books off of Amazon.
2011–2015Amazon starts offering streaming services like Amazon Music and Amazon Video. By 2015, its market capitalization surpasses that of Walmart.

Full timeline
YearMonth and dateEvent typeDetails
1994July 5CompanyAmazon founded.[71]
1997May 15CompanyAmazon IPOs at $18.00/share, raising $54 million.[71]
1998April 27AcquisitionsAmazon acquires the Internet Movie Database, a comprehensive repository for movie information on the Internet.[72]
1998August 5Company DirectionAmazon announces that it will move beyond books.[73]
1998DecemberCompetitionJack Ma launches Alibaba in China, which would later grow to dominate the Chinese online retail market, and provide an obstacle to Amazon's attempts to expand in China.[74][75]
2002JanuaryProductAmazon launches Free Super Saver Shipping, which allows customers to get free shipping for orders above $99.[71]
2002MarchLegal, CompetitionAmazon settles its October 1999 patent infringement suit against Barnes & Noble (over its 1-Click checkout system, which it received a patent for in September 1999). It originally charged that Barnes&Noble.com had essentially copied Amazon's 1-Click technology.[76]
2003OctoberProductAmazon launches A9.com, a subsidiary of Amazon.com based in Palo Alto, California that develops search and advertising technology.[77]
2003 December Company First profit announced.[78]
2004August 19InternationalAmazon acquires Joyo, an online bookstore in China, for $75 million, which then becomes the 7th regional website of Amazon.com. joyo later becomes Amazon China.[79]
2005FebruaryProductAmazon launches Amazon Prime, a membership offering free two-day shipping within the contiguous United States on all eligible purchases for a flat annual fee of $79.[71]
2005NovemberProductAmazon launches Amazon Mechanical Turk, an application programming interface (API) allowing any Internet user to perform "human-intelligence" tasks such as transcribing podcasts, often at very low wages.[71]
2006August 25ProductAmazon launches 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.[80]
2006September 19ProductAmazon launches Fulfillment by Amazon, giving small businesses the ability to use Amazon.com's own order fulfillment and customer service infrastructure – and customers of Amazon.com shipping offers when buying from 3rd-party sellers.[81]
2006LegalAmazon agrees to settle a legal dispute with Toys R Us (over a partnership that gave Toys R Us exclusive rights to supply some toy products on Amazon's website) and pays $51 million.[82]
2006MarchProductAmazon launches Amazon Simple Storage Service (Amazon S3), which allows other websites/developers to store computer files on Amazon's servers.[71]
2007AugustProductCreateSpace announces launch of Books on Demand service, which makes it easy for authors who want to self-publish their books to distribute them on Amazon.com.[83]
2007AugustProductAmazon launches AmazonFresh, a grocery service offering perishable and nonperishable foods.[84]
2007September 25ProductAmazon launches Amazon Music, an online music store and music locker.[85]
2007November 19ProductAmazon launches the Amazon Kindle.[71]
2009July 22Acquisitions, CompetitionAmazon acquires Zappos for $850 million.[86]
2009October 20CompetitionBarnes & Noble announces the Nook, an eReader.[87]
2010JanuaryCompetitionApple introduces its own virtual bookstore, called iBooks, and then partners with five major book publishers.[88] It later convinces them to raise the price of ebooks (using the agency pricing model that gives publishers full control over ebook prices).
2010February 1CompetitionMicrosoft launches Microsoft Azure, a cloud computing platform that will compete with Amazon AWS over cloud services.
2010JulyProductAmazon announced that e-book sales for its Kindle reader outnumbered sales of hardcover books for the first time ever.[89]
2011JanuaryAcquisitions, InternationalAmazon acquires Lovefilm, a DVD rental service known as the Netflix of Europe.[90]
2011February 16CompetitionBorders Group, outcompeted by Amazon, applies for Chapter 11 bankruptcy.[91]
2011February 22ProductAmazon rebrands its Amazon Video service as Amazon Instant Video and adds access to 5,000 movies and TV shows for Amazon Prime members.[92][93]
2011March 22ProductAmazon launches the Amazon Appstore for Android devices and the service was made available in over 200 countries.[94]
2011July 1LegalCalifornia starts collecting sales taxes on Amazon.com purchases.[95]
2011SeptemberProductAmazon launches Amazon Locker, a delivery locker system that allows users to get items delivered at specially-designed lockers.[96]
2011September 28ProductAmazon announces the Kindle Fire, a tablet computer that takes aim at Apple's iPad with a smaller device that sells at $199, compared with the $499 value of Apple's cheapest iPad.[97]
2012AprilLegalThe Department of Justice files suit against Apple Inc and five major publishing houses (the "Big Five"), alleging that they colluded in 2010 to raise the price of ebooks (using the agency pricing model that gives publishers full control over ebook prices).[98] Amazon had originally set the price of ebooks at $9.99 (using the wholesale pricing model giving Amazon full control over ebook prices).
2012March 19AcquisitionsAmazon acquires Kiva Systems for $775 million, a robotics company that creates robots that can move items around warehouses.[99]
2012AprilLegalAmazon agrees to allow collection of sales taxes in both Nevada and Texas (starting on July 1), and agrees to create 2,500 jobs and invest $200 million in new distribution centers in Texas.[100]
2012September 6ProductAmazon announces the Kindle Fire HD series of touchscreen tablet computers.[101]
2013MarchAcquisitionsAmazon acquires social reading and book-review site GoodReads.[102]
2013JuneInternationalAmazon launches in India.[103][104]
2014July 25ProductAmazon launches the Amazon Fire.[105]
2014August 25AcquisitionsAmazon announced its intent to acquire the video game streaming website Twitch for $970 million.[106]
2014OctoberLegalAmazon reaches agreement with Simon & Schuster, allowing the publisher to adopt the agency pricing model and set prices on its books sold on Amazon.[107]
2014November 6 (announcement), actual rollout occurs through 2015ProductAmazon unveils Amazon Echo, a wireless speaker and voice command device that can take commands and queries, and be used to add items to the Amazon.com shopping cart, among other things.[108][109] The Alexa Voice Service that is built into Amazon Echo can also be added to other Amazon devices.[110]
2014NovemberLegalAmazon resolves dispute with Hachette, allowing Hachette to adopt the agency-pricing model and set prices on Hachette books sold on Amazon.[111]
2015JulyCompetition, InternationalAlibaba announces that it will invest $1 billion into its Aliyun cloud computing arm, some of which would go into new Aliyun international data centers. This would allow Aliyun to compete with Amazon Web Services outside of China.[112]
2015August 26ProductAmazon launches Amazon Underground, an Android app through which users can get gaming and other apps for free that they would otherwise have to pay for, and also get in-app purchases for free. App creator participation is voluntary. App creators are paid $0.002 for every minute a user spends in the app.[113][114][115]
2015September 8ProductAmazon launches its Amazon Restaurants service that delivers food from nearby restaurants, for Amazon Prime customers in Seattle.[116][117] The service would subsequently be rolled out to many other cities.
2015November 2ProductAmazon opened its first physical retail store, a bookstore in the University Village shopping center in Seattle. The store, known as Amazon Books, has prices matched to those found on the Amazon website and integrate online reviews into the store's shelves.[118]
2015December 14CompanyAmazon begins moving into their new headquarters campus in the Denny Triangle neighborhood of Seattle, beginning with the 38-story Amazon Tower I (nicknamed "Doppler" after the codename for Amazon Echo).[119] The three towers are scheduled to be completed by 2020.
2016December 7DeliveryAmazon Prime Air (Amazon's drone-based delivery system) makes its first delivery in Cambridge in the United Kingdom. The successful delivery is announced a week later, on December 14, along with video.[120][121]
2017 June 15 Acquisitions Amazon acquires Whole Foods for $13.7 billion, a high end grocery store located throughout the United States, United Kingdom, and Canada.[122]
2017 September 7 Company Amazon began search for Amazon HQ2, a second company headquarters to house up to 50,000 employees.[123][124]
2018 January 18 Company Amazon narrows down the choices of its second headquarters location to 20 places.[125]
2018 January 22 Company Amazon opens a cashier-less grocery store (Amazon Go) to the public.[126]
2018 September 19 International Amazon launches in Turkey.[127]
2018 October 2 Company After widespread criticism, Amazon raises its minimum wage for all U.S. and U.K. employees to $15 an hour, including Whole Foods and seasonal employees, beginning November 1, 2018.[128][129]
2018 November 13 Company Amazon CEO announces that the new headquarters HQ2 will be split between New York City and Northern Virginia.[130]
2019 February 14 Company Amazon cancels plans to open new HQ2 in New York City after massive backlash from local politicians and community members. Plans in Northern Virginia remain unchanged.[131]

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