How Jeff Bezos and Amazon took over the world in 25 years

Amazon CEO Jeff Bezos in 1999
Jeff Bezos, CEO of Amazon, in 1999. Chris Carroll/Corbis via Getty Images

Amazon celebrates its 25th anniversary on Friday, a quarter century since Jeff Bezos used $10,000 of his own money to start an online bookstore in Seattle on July 5, 1994.

When he and his earliest Amazon staff began selling books from his garage, they started an enterprise that is now the largest retailer in the world. Today Amazon is the world’s most valuable public company, and Bezos is the wealthiest person on the planet — taking the top spot from another Seattle-area digital pioneer, Bill Gates.

At the time in ’94, the National Science Foundation (NSF) had oversight of the internet, originally established for communications by academics and the U.S. military. No commercial use was allowed during the Internet’s early years, but in early 1994 the NSF removed the restriction.

Before Bezos launched Amazon, many original net users, or netizens, disagreed with the NSF’s decision to open up the internet. On April 12, 1994, when husband-and-wife attorneys Laurence Canter and Martha Siegel launched the first advertising campaign on Usenet, they were criticized, shunned, and reportedly received death threats. Today we would term what Canter and Siegel sent out as spam, but they made history as the first (hated) commercial Internet users.

According to Brad Stone’s  <a href="https://www.nsf.gov/news/news_summ.jsp?cntn_id=103050">The Everything Store: Jeff Bezos and the Age of Amazon</a>, Amazon had customers in 45 countries and all 50 states within a month of starting the business.

Growing quickly in just a few years, Amazon found itself in competition with Barnes & Noble when the then-dominant bookseller began online sales. To raise capital to continue to fund its growth, Amazon went public in May 1997, valued at $300 million. While the 1997 valuation is impressive, consider that when the stock market closed on July 3, 2019, Amazon’s market capitalization was $960.65 billion.

Amazon’s astounding growth has not come without challenges and travails. Workers in fulfillment centers in the U.S., the U.K., and other countries have complained about continuous pressure to pack boxes for shipping customer orders at prodigious rates. Workers can easily lose their jobs under a productivity rating system if they don’t meet demanding quotas, The Verge reported.

Privacy issues have also dogged Amazon, particularly in light of Amazon’s responses to inquiries about the retention of customer voice recordings by Alexa, its voice-enabled smart assistant. Recent Amazon claims that recordings preserved even after consumers took steps to delete them were used to train the voice assistant to help improve customer communication strain credibility. Amazon now says the incomplete erasures resulted from a software bug and the problem has been resolved.

Along with other technology mega-forces, Amazon has come under federal scrutiny for potential antitrust violations. “The internet is broken,” claimed Antitrust Subcommittee Chairman David N. Cicilline (D-RI), announcing an investigation of Amazon, Facebook, Apple, and Google. The concerns center on the unarguable reality that a small number of companies dominate digital content, communications, and commerce. Lawmakers from both parties have issued concerns about Big Tech. Future ramifications of the investigations for technology companies and consumers may take years to unfold.

Amazon’s relentless growth stems in part from a business strategy that eschews quarter-to-quarter focus on profit.  From the beginning, Amazon re-invested in itself. Even though revenue grew dramatically starting in 2005, net income remained close to zero until 2015. In 2018, the last full year reported, Amazon reported $232.89 billion in revenue but only $10.07 billion in profit. Re-investing paid off as the company expanded its reach.

Amazon began by selling books but quickly expanded to other categories, including launching a third-party marketplace from which other purveyors could sell their goods. In 2003, the company launched Amazon Web Services (AWS). In the beginning, AWS licensed Amazon’s e-commerce platform to other companies. Now, AWS is a dominant cloud hosting service and a significant revenue source for Amazon.

In the relatively few years since Amazon’s cloud computing venture launched, Amazon has spread its interests in many directions, including music and video streaming.

In 2014, Amazon launched the Amazon Echo smart speaker, the first device in what has since become an entire voice-controlled smart home platform. Amazon has since purchased other smart home device brands, including Blink security cameras and Ring video doorbells, smart lights, and alarm systems.

When Amazon launched its Prime membership program in 2005, the promise of free two-day shipping for all orders seemed unrealistic, even with the then $79 annual fee. Prime now has 100 million members worldwide. Membership costs $110 per year and, depending on the shopper’s location, orders can be delivered in as little as two hours. Most Prime products include free one-day delivery.

The effects of Prime membership cannot be overstated. According to a survey by CouponFollow in late May 2109, 95% of U.S. adults had purchased from Amazon within the previous 12 months. Of those who had made purchases on Amazon.com, 71.3% have an Amazon Prime membership. Prime membership includes a long list of benefits, but surveyed shoppers list Prime shipping, Prime Video, and discounts at Whole Foods Stores (a 2017 Amazon acquisition that gave Amazon a physical presence in major market areas throughout the U.S.)

The first Amazon Prime Day, a summer sales event open only to Prime members, was in 2015. Prime Day sales have snowballed. According to Kelly Herrell, CEO of Hazelcast, during last year’s Prime Day, Amazon processed more than 1,150 transactions representing an average of $41,000 of purchases every second for the 36 hours. Amazon sold more than 100 million products with revenues of approximately $3.6 billion during Prime Day 2018.

This year Amazon Prime Day runs for 48 hours, from 12:01 A.M. PT on July 15 until midnight July 16. Other retailers have jumped on Prime Day as both a much-appreciated summer season sales event and in reaction to Amazon’s growing dominance in online selling. In all, Amazon has grown from a tiny bookseller to the single most powerful force in retail — not bad for its 25th birthday.

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