Case: Amazon.com

Amazon.com, Inc. […] is a US-based multinational e-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 January 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 all over the world[…], and it also provides international shipping to certain countries for some of its products.

Amazon was founded in 1995, 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[…]. The company began as an online bookstore;while the largest bookstores and mail-order catalogs for books might offer 200,000 titles, an online bookstore could offer more. […] 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 – In 1996, it was reincorporated in Delaware. Amazon issued its initial public offering (IPO) of stock on May 15, 1997, […]

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.

How Amazon.Com survived the dot.com bubble?

It is the business model!

Soon after Amazon.com Inc. debuted 10 years ago, Jeff Bezos and his handful of employees spent late summer nights packing books in a tiny warehouse, scrambling to ship a growing gush of orders.[…] “I think Amazon’s biggest challenge is itself. They’ve really raised the bar for the entire industry,” said Kurt Peters, editor of Internet Retailer[…] .In the beginning, Bezos said he had no plans to sell anything but books online. […] “We actually started to get e-mails from customers saying, `Would you consider selling music, because I’d really like to buy music this way, and DVDs, and electronics?” Bezos said […].

Amazon has nearly 49 million active customers. They bought more electronics during last year’s holiday blitz than books, a first for the company. Because of the company’s straight on customer view on business. 5 critical secrets for Amazons.Com:

• Work from the customer backward. Focus on value you want to deliver for the customer.
• Force developers to focus on value delivered to the customer instead of building technology first and then figuring how to use it.
• Only way to manage as large distributed system is to keep things as simple as possible.
• Create a frugal culture. Amazon used doors for desks, for example.
• Embrace innovation. In front of the whole company, Jeff Bezos would give an old Nike shoe as a “Just do it” award to those who innovated.

With $6.92 billion in sales in 2004, Amazon ranked at the top of Internet Retailer’s annual top 400 list, well ahead of computer maker Dell Inc., which posted $3.25 billion in online business-to-consumer sales. Office Depot Inc.,which has a partnership with Amazon, wasn’t far behind with $3.1 billion.
[…]
Amazon’s groundwork paved the way for competitors to follow, but Devitt says he thinks most retailers, especially brick-and-mortar shops, have a lot of catching up to do: “Amazon is always one step ahead.” “[…]  More than 900,000 third-party sellers now hawk their wares on Amazon, making up more than a quarter of last year’s overall sales — a sure sign that Amazon is getting serious about taking on eBay.
[…]
Amazon first ventured beyond books when it added music and DVDs in 1998. Electronics, toys, games, home improvement items, software and video games came a year later. Today it has 31 product categories and does business in seven countries.
[…]
“They’ve developed an extremely loyal customer base, and they’ve cultivated that by continually lowering prices and adding features to their Web site,” said Dan Geiman, an analyst with McAdams Wright Ragen in Seattle.[…] As the dot-com craze reached fever pitch, it made some bad investments in failures like living.com and pets.com. When the bubble burst in 2000, it scaled back and laid off 1,300 employees. And it took several years to post a profit.

The bumps in the road and the lingering volatility of the company’s stock price don’t seem to phase Amazon’s eternally ebullient CEO. “During those bubble years while the stock price was going up 30 percent a month, we would have all-hands meetings, and I would ask employees, `Please do not feel 30 percent smarter because the stock went up 30 percent, because when it goes down 30 percent in a month, we’d have to feel 30 percent dumber,”‘ Bezos said. […]

The Kindle Story

The Amazon Kindle is an e-book reader […] which uses wireless connectivity to enable users to shop for, download, browse, and read e-books, newspapers, magazines, blogs, and other digital media. The first Kindle was launched in 2007, when first rumours spread of tablets being the next generation computers. Kindle was Amazon’s answer to the integration of hardware, software and content. The first generation was only sold in the US and sold out in a few months. Because of problems signing up wireless network operators outside the US the Kindle never left the US.

The second generation Kindle was launched in 2009 and got an international version. Amazon always kept a sharp pricing for his Kindle, since competition was fierce of Barnes & Nobles Nook.

Both Nook and Kindle aren’t full option tablets, and are merely an extension of Amazon’s and Barns & Nobles content offered though the Kindle or Nook – distribution channel.  But in 2011 Amazon stept up a notch with the Kindle Fire based on the Android operating system.This set fire to the tablet market initially, but after a closer look this still wasn’t a real threat to the iPad or other tablets. (Although the Amazon Kindle boosted the Stock price of Amazon, again!)

Sources:

Wikipedia – http://en.wikipedia.org/wiki/Amazon.com
YouTube –  http://www.youtube.com/watch?v=5AVpuCMIk2A
37 Secrets to Amazon’s success – http://37signals.com/svn/posts/600-secrets-to-amazons-success
Kieran Levis – Winners & Losers – Creators & casualties of the age of the Internet (2009)
CBS-News – http://www.cbsnews.com/stories/2005/07/05/tech/main706351.shtml
Crunchbase – http://www.crunchbase.com/company/amazon