Amazon is one of, if not the most popular online store today, as many people around the world know about Amazon and have actually bought something from the company’s web store. Its popularity is attributed to how well it has marketed its brand over the years, and the company’s numerous expansions and subsidiaries have also helped in expanding its reach across numerous countries. 

How was Amazon able to amass incredible success and popularity in the very overcrowded e-commerce industry? And how did it actually start? We will find out the answers to these questions as we visualize the expansion of Amazon’s businesses from its origins to its current status as one of the biggest companies in the world.

Origins of Amazon

Amazon started with the idea created by Jeff Bezos, the then-vice president of a Wall Street firm called D.E. Shaw & Co. During the 1990s, Bezos conceptualized the “Regret Minimization Framework,” which is a very simple model that consists of one question. This question is, “in X years, will I regret not doing this?” [1] 

In the case of Jeff Bezos, he was thinking about regretting not starting his own company, especially during the internet business boom that was happening during the 90s. So, in 1994, Bezos resigned from D.E. Shaw & Co. to start working on a business plan in Seattle, Washington.

Cadabra Inc.

After moving to Seattle, Jeff Bezos incorporated a company in Washington State on July 5, 1994, and this company was initially called Cadabra, Inc. [2] Then, in the early days of the business, Bezos would operate it in the garage of his house on Northeast 28th Street in Bellevue, Washington, which is just near Seattle. Interestingly, Bezos’s parents invested about $250,000 in the company.

Bezos quickly changed the name of the company to Amazon.com, Inc. after a lawyer misheard the business’s first name as “cadaver.” As for why Bezos chose the name “Amazon,” he said that he was just looking for names in a dictionary and found the word “Amazon” to be quite unique and exotic. In addition to having a “different” name, the name of the business was chosen by Bezos so that it would always appear as one of the first names on an alphabetized list.

Amazon’s Online Bookstore

When thinking about what he would sell on the Amazon online store, Bezos eventually chose books, as there was a high demand for different genres of books during that time, and books are also quite easy to sell because of their affordable price. Before deciding on selling books, Bezos first created a list of potential products that could be marketed online. Bezos then shortened the list to include videotapes, computer parts, computer programs or software, CDs, and books.

The Amazon online bookstore was officially launched on July 16, 1995, and quickly became the world’s largest online bookstore with a large selection of books available on the web. The first book ever ordered or sold on the Amazon store was “Fluid Concepts and Creative Analogies: Computer Models of The Fundamental Mechanisms of Thought,” which was written by Douglas Hofstadter and published in 1995, the same year Amazon was launched. The buyer of the book, John Wainwright, actually ordered it on April 3 through a beta invite. [3]

In just two months, the Amazon store sales were hitting about $20,000 per week, and capitalizing on the early success of the brand, Bezos decided to make the company public. In 1996, Amazon was reincorporated in Delaware, and in the following year, it entered its initial public offering at $18 per share on the NASDAQ stock market.

Amazon’s Expansion Beyond Selling Books

It was in 1998 when Amazon started selling other products besides books, and the first one they sold during that year was music CDs. These CDs were then followed by toys, tools, and electronic products. [4] By the end of 1999, the Amazon web store was able to ship more than 20 million products or items across 150 countries. Because of the massive success of the brand, Jeff Bezos was awarded the title of “Person of the Year” by Time magazine in the year 1999.

In June 2000, Amazon featured a new logo that has a curved arrow on the bottom that goes from the letter A to the letter Z of the brand name. The “A to Z” logo was supposed to mean that the company offers every product available on the market from A to Z. As of 2022, the “A to Z” is still used on Amazon’s logo. It was also in 2000 when Amazon launched a service wherein individual, and independent sellers would be able to sell their products on the Amazon web store.

Amazon Web Services (AWS)

The very successful Amazon Web Services or AWS was launched in 2002, but Amazon didn’t really release the said services without prior experience. In 2000, Amazon created merchant.com, which is an e-commerce platform that provides services for companies or brands that want to sell their products online. Through that experience, Amazon launched the Amazon.com Web Services platform in July 2002 and offered it to individual sellers that wanted to have a fully functioning e-commerce platform for their business.

Throughout the years, Amazon Web Services continued to expand, and by 2021, AWS already has a 33% market share in the cloud infrastructure against the 21% market share of Microsoft Azure and 10% market share of Google Cloud. [5] Some of the tools that AWS provides for clients or customers include AWS Lambda, Amazon Connect, and Amazon Elastic Compute Cloud (EC2).

Amazon Prime Video

Amazon Prime Video, which is one of the most popular video-on-demand platforms today, was launched on September 7, 2006, as Amazon Unbox. Over the years, the TV shows and films available on the platform grew in numbers, and Amazon would eventually create the Prime subscription that allows members in the United States to view an unlimited number of films and shows for a monthly fee. Amazon Unbox would then be renamed Amazon Instant Video on Demand before officially being named Amazon Prime Video in 2016 when Amazon released the subscription service to various countries, including Canada, India, France, Italy, and Spain.

Amazon Kindle

To expand Amazon’s reach in the tech industry, the brand launched Amazon Kindle in 2007. Amazon Kindle is a series or range of e-readers that allow you to have a vast collection of books on just one device. The Amazon Kindle device was already conceptualized in 2004 when Jeff Bezos wanted his employees to design and develop the best e-reader in the market before their competitors could release one.

During the development stage of the Kindle, Amazon employees gave the codename “Fiona” for the device they were working on. As to how they came up with the “Kindle” name, it was the branding consultant Karin Hibma and Michael Cronan that suggested the name because the meaning of kind was to light a fire, and it can serve as a great metaphor for gaining knowledge or wisdom through reading.

The Amazon Kindle has evolved into different categories and ranges, which include the Kindle Fire (a tablet), the Kindle Keyboard (an e-reader with a built-in keypad), and the Kindle Paperwhite (an e-reader with lighted screens). Most of the books that you can read on Kindle can be bought or downloaded through the Kindle Store, which was launched alongside the first-generation Kindle. [6]

Amazon Studios

In order to strengthen the Amazon Prime Video service of the company, Amazon Studios was launched on November 26, 2010. Amazon Studios is primarily focused on producing and distributing TV shows and movies that are mostly aired on the Amazon Prime Video service, which is the brand’s digital video streaming service that competes with Hulu, Netflix, and other streaming platforms today.

Before the creation of Amazon Studios, Amazon had already produced a film titled “The Stolen Child” in collaboration with 20th Century Fox in 2008. Some of the shows and movies that Amazon Studios produced or distributed include Wonder Wheel, Transparent, Manchester by the Sea, The Salesman, and The Marvelous Mrs. Maisel.

The Fire Phone

While Amazon has been very successful in most of its endeavors, there are still some business decisions that are not as successful, and one of these is the launch of the Fire Phone. The Amazon Fire Phone was a smartphone that was manufactured by Foxconn, a Taiwanese electronics company, and developed by Amazon as the brand’s entry into the smartphone market. 

The Fire Phone was launched on July 25, 2014, and although critics praised its Dynamic Perspective feature with four front-facing cameras and a built-in gyroscope that provide the impression of depth on the smartphone, it was ultimately criticized for its operating system, design, and build. According to reports, Amazon suffered a $170 million loss from the failure of the Fire Phone, and the smartphone was eventually discontinued in August 2015, just one year after its release. [7]

Acquisition of Whole Foods

Despite the failure of Amazon’s Fire Phone, the company is still quite profitable due to the many business endeavors that are already operating for the brand during that time. And to further expand the reach of Amazon in other industries, the company decided to acquire Whole Foods in 2017. Whole Foods is a supermarket chain in the United States, United Kingdom, and Canada that sells high-end grocery items or products. [8] Many experts believed that Amazon acquired Whole Foods to compete with Walmart, which has been the superior supermarket chain in the US for many years.

Acquisition of MGM

Although Amazon has already acquired numerous businesses or companies over the years, none is really as big as their acquisition of MGM in 2021. On May 17, 2021, Amazon entered negotiations with MGM to acquire the latter for $9 billion. The merger deal between the two big companies was finally approved on May 26, 2021, and the total value of the Amazon-MGM deal was estimated to be $8.45 billion. [9]

Through the merger deal, Amazon is able to add the library of movies and TV shows produced and distributed by MGM while also keeping MGM in operations as a subsidiary. The finalization of the merger deal occurred on March 17, 2022.

Timeline of Amazon’s Business Expansion

What’s interesting about Amazon is that it never really stopped expanding its reach not only in the e-commerce industry but also in other industries through acquisitions and subsidiaries. Here is a time of Amazon’s business expansion and how the brand has grown over the years.

The Major Businesses of Amazon in Operation

Because of how big Amazon is today, it operates more than 20 services and subsidiaries, which is quite a lot compared to most companies in the United States. Here is a list of the major businesses of Amazon that are still in operation.

Growth of Amazon as a Company

It isn’t surprising that Amazon is considered one of the biggest companies in the world. In terms of its main industry, which is the online retailer and marketplace industry, it is regarded as the world’s largest. From $500,000 revenue in 1995, Amazon quickly grew to have annual revenue of $8.49 billion in 2005, which is a very impressive 10-year growth for a company. [10]

By 2021, the net sales of Amazon grew to $469.8 billion, which is an all-time high for the company. [11] The amazing revenue and net sales figures that Amazon was able to get were mostly attributed to the global pandemic, which forced people to buy more items or products online since a lot of them couldn’t go outside and the nearby grocery stores and physical shops in there are don’t have stocks of the things they like to buy. 

However, right after the end of the pandemic, Amazon experienced only a 7.2 percent increase in income in the early months of 2022, and this is the slowest growth of the company in more than two decades of its operations. [12] The slow growth of Amazon in early 2022 is most likely attributed to everything going back to normal after the pandemic, and many people who exclusively bought products online for two years have now gone back to buying most of those products in physical stores or malls.

Despite how big Amazon is as an online store, the company only has about 5% of control over US retail sales in 2021, which means that are still a lot more people the prefer to buy products or items in physical stores compared to online shops. However, if you put only the perspective of the online shopping market, we will see that Amazon had control of about 40% of the US’s e-commerce spending in 2021. [13] The second-largest online store in the US, Walmart, only has 7% control of the e-commerce market, which further proves Amazon’s dominance in the said industry.

To know more about the annual growth of Amazon in terms of net sales, here are the stats that Statista provided on the annual net sales of Amazon from 2004 to 2021. [14]

Biggest Acquisitions of Amazon

While Whole Foods and MGM are two of the biggest and most popular acquisitions of Amazon, there are several more companies that Amazon acquired at a very high value or cost. According to Forex.com, here are ten of the biggest acquisitions of Amazon in terms of overall acquisition cost value. [15]

Growth of Amazon’s Major Businesses

Besides Amazon’s web store, the other businesses that the company handles are also quite profitable. One of Amazon’s biggest businesses, Amazon Web Services or AWS, is rapidly growing in terms of annual revenue. From $3.108 million in 2013, Amazon Web Services was able to grow to $63.202 million in annual revenue in 2021. Here are the stats of AWS’s annual revenue for you to know more. [16]

Another business of Amazon that experiences rapid growth is Amazon Prime, which is the paid subscription service found on various platforms operated by Amazon. According to a study conducted by Jason Wise of EarthWeb, there are over 200 million people in the world that are subscribed to Amazon Prime. Here are the stats of Amazon Prime users from 2013 and the number of users that are predicted for the platform to have until 2025. [17]

As for the subsidiaries, there are some that are not as successful as the others, but there are still more subsidiaries that are profitable compared to the ones that are not. One of the most profitable subsidiaries of Amazon is Twitch, the very popular video streaming platform that is dedicated to providing video content for video game fans or enthusiasts. 

In a study conducted by Backlinko, there were 140 million unique visitors on Twitch every month in 2021, while in 2015, there were only 55 million unique visitors. Here is the number of Twitch visitors per month in 2011, 2012, 2013, 2014, 2015, and 2021 so that you can see how big Twitch has grown over the years. [18]

Another successful subsidiary of Amazon is the supermarket chain Whole Foods, although the brand had already built a loyal customer base way before Amazon acquired them in 2017. In the said year, right before the acquisition of Amazon, Whole Food grew to have about 500 locations in the United States, United Kingdom, and Canada, while in 2008, the brand only had 275 locations. [19] However, reports have shown that more Americans prefer to shop at other supermarket chains like Aldi and Walmart compared to Whole Foods, and this resulted in slower growth for the said brand.

Besides Whole Foods, MGM is also a great acquisition for Amazon, as the said company is already quite established and earned about $100 million per year on average. However, MGM Holdings, which handles the MGM brand for films and TV shows, has experienced a $428 million loss in net income in 2019, which then forced the company to seek help from another business that was willing to acquire them. Take a look at the annual net income of MGM Holdings from 2013 to 2020 to see the rise and fall of the company before it entered a merger deal with Amazon in 2021. [20]

As Amazon continues to expand its reach in numerous industries, it wouldn’t be surprising that the company will become bigger and bigger in the near future. With the acquisition of MGM, Amazon will certainly have a better grasp on the movie and TV show industry, which the company has been eyeing since the creation of Amazon Prime Video (formerly Amazon Unbox). 

Interesting Facts About Amazon

1. Because website listings were usually alphabetical during the 1990s, Jeff Bezos settled on renaming his company “Amazon” in order for it to be one of the first websites on the listings.
2. The very first book ever sold on Amazon, “Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought,” was actually stored in Jeff Bezos’s garage.
3. You cannot buy regular cigarettes on Amazon. But, the online store does offer tobacco and nicotine-free herbal cigarettes.
4. Amazon currently owns more than 40 subsidiaries, which include MGM, Whole Foods, Zappos, and Souq. [21]
5. At the Seattle headquarters or campus of Amazon, there are more than 6000 dogs living in various offices. Amazon emphasizes that its offices are pet-friendly.
6. There is a service called AmazonSmile that allows customers to donate money to charities using the small amount they paid for specific products.
7. At the end of 2020, it was reported that Amazon employed more than 1.2 million employees in different countries around the world.
8. The number of employees working for Amazon is more than the number of people working for Alibaba, Meta (formerly Facebook), and Google combined.
9. According to a former Amazon employee named Jonathan Kochmer, there used to be a bell in the office that would ring every time a purchase was made during the early years of the Amazon online store. [22]
10. Besides Cadabra and Amazon, other names that Jeff Bezos thought of as company name is MakeItSo.com and Relentless.com. MakeItSo.com is based on a quote stated by Picard, a character in the original Star Trek TV show that was played by Patrick Stewart.
11. Amazon used to own the patent to the “1-click” trademark, and the company actually patented it in 1997. However, the patent expired in 2017.
12. Employees that just got a job on Amazon would enter a 2-day call center training so that they will be able to know how to listen and understand customers, even if it is not their line of job.
13. If you are an enrolled student, you will be given a 50% discount on Amazon Prime memberships through the Amazon Prime Student feature. The said feature also allows students to buy textbooks at a more affordable price.
14. Amazon Web Services created the Elastic Compute Cloud (EC2) and the Simple Storage Service (S3) features in 2006 to expand their services to clients or customers. Some of the companies that use these AWS features include LinkedIn, Facebook, Twitter, ESPN, and Netflix. Most of these companies are rivals of Amazon in various industries.
15. There is an affiliate program created by Amazon called Amazon Affiliate, which allows bloggers and owners of websites to earn money by simply adding links to Amazon products on their articles or posts.
16. If you are an Amazon employee that plans to resign or quit from the company, you will be given a $2000-$5000 separation fee as part of the “Pay to Quit” program that was launched in 2014. The amount of “Pay to Quit” money you receive would depend on how long you have worked for Amazon.
17. Amazon Flex is a membership service wherein members or workers will be able to earn money by simply delivering Amazon packages to customers. In addition to packages, Amazon Flex members can also deliver restaurant items and groceries to areas and establishments near them.
18. Amazon Mechanical Turk is a crowdsourcing website wherein businesses (referred to on the website as “requesters”) are able to hire work-from-home or remote workers to perform tasks called “Human Intelligence Tasks” or HITs.
19. Amazon Prime Day is a special sale wherein more than 170 million items on the Amazon online store are on sale. The 2019 Amazon Prime Day lasted for 48 hours and was the second-biggest shopping day for Amazon during that year after the Cyber Monday sale. [23]
20. If you want to rent textbooks instead of buying them, you can use the Amazon Rentals service. This service is very useful for students that don’t want to pay a lot of money on textbooks for school.
21. On Amazon Prime, one of the most popular categories of products is electronics, which include mobile phones, TV sets, and other types of gadgets.
22. In 1997, Amazon was sued by Barnes and Noble over Amazon’s claims that they are the “Earth’s biggest bookstore,” even if they had just opened one year before. However, Amazon was able to keep the claim or tagline, but they had to settle the lawsuit with Barnes and Noble outside of the courtroom.
23. Another company that sued Amazon is Walmart, which claimed that Amazon hired former Walmart executives to steal trade secrets in 1998. Much like the lawsuit with Barnes and Noble, the case with Walmart was also settled out of court, although it resulted in Amazon changing its policies and restrictions when it comes to hiring former executives of rival companies.
24. Interestingly, Jeff Bezos, along with his wife Mackenzie Bezos and Amazon’s first employee, Shel Kaphan, would conduct meetings at a local Barnes and Noble store in Washington State.
25. Amazon entered the publishing industry with the acquisition of a defunct imprint called “Weathervane” in 1999. However, there were only a few Amazon books were published under the imprint, which led many people to believe that Amazon just immediately abandoned the publishing idea. [24]
26. The Amazon Kindle was so popular during its release that it sold out in just 5 hours after its launch on the Amazon store. The e-reader market would eventually become highly profitable and led to other companies creating their own e-readers to compete with the Kindle.
27. As of 2022, Jeff Bezos is considered the world’s second-wealthiest person, and he has a net worth of about $159 billion.
28. In 2021, the most searched product on the Amazon store in the United States is the Nintendo Switch, which is a portable gaming console designed and produced by Nintendo.
29. It is reported that about two million people visit the Amazon web store every month. The highest number of visitors for Amazon was recorded in June 2021, when there were 2.72 billion people that visited the website.
30. The online marketplace platform of Amazon has more than 300 million users or customers. On the other hand, the number of sellers on the Amazon marketplace is about 9.3 million. It is important to note that Amazon takes 6% to 20% of the sales from third-party sellers. [25]

References

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[20] Navarro, J.G. (2022, August 4). MGM net income 2013-2020. Statista. Retrieved August 24, 2022, from https://www.statista.com/statistics/720809/mgm-net-income/ 

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[25] Mitchell L. (2022, March 22). Cool Amazon Facts & Statistics. PIRS Capital. Retrieved August 25, 2022, from https://pirscapital.com/blog/cool-amazon-facts-statistics/