Amazon (company)
Amazon.com, Inc., doing business as Amazon (/ˈæməˌzɒn/), is an American electronic commerce and cloud computing company based in Seattle, Washington, that was founded by Jeff Bezos on July 5, 1994. The tech giant is the largest Internet retailer in the world as measured by revenue and market capitalization, and second largest after Alibaba Group in terms of total sales.[6] The Amazon.com website started as an online bookstore and later diversified to sell video downloads/streaming, MP3 downloads/streaming, audiobookdownloads/streaming, software, video games, electronics, apparel, furniture, food, toys, and jewelry. The company also owns a publishing arm, Amazon Publishing, a film and television studio, Amazon Studios, produces consumer electronics lines including Kindlee-readers, Fire tablets, Fire TV, and Echo devices, and is the world's largest provider of cloud infrastructure services (IaaS and PaaS) through its AWS subsidiary.[7] Amazon also sells certain low-end products under its in-house brand AmazonBasics.
Amazon has separate retail websites for the United States, the United Kingdom and Ireland, France, Canada, Germany, Italy, Spain, Netherlands, Australia, Brazil, Japan, China, India, Mexico, Singapore, and Turkey. In 2016, Dutch, Polish, and Turkish language versions of the German Amazon website were also launched.[8][9][10] Amazon also offers international shipping of some of its products to certain other countries.[11]
In 2015, Amazon surpassed Walmart as the most valuable retailer in the United States by market capitalization.[12] Amazon is the third most valuable public company in the United States (behind Apple and Microsoft),[13] the largest Internet company by revenue in the world, and after Walmart, the second largest employer in the United States.[14] In 2017, Amazon acquired Whole Foods Market for $13.4 billion, which vastly increased Amazon's presence as a brick-and-mortar retailer.[15] The acquisition was interpreted by some as a direct attempt to challenge Walmart's traditional retail stores.[16]
In 2018, for the first time, Jeff Bezos released in Amazon's shareholder letter the number of Amazon Prime subscribers, which is 100 million worldwide.[17][18] In 2018, Amazon.com contributed US$1 million to the Wikimedia Endowment.[19]
In November 2018, Amazon announced it would be splitting its second headquarters project between two cities. They are currently in the finalization stage of the process.[20]
History
The company was founded 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.[21] 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[22] for what would become Amazon.com.
On July 5, 1994, Bezos initially incorporated the company in Washington State with the name Cadabra, Inc.[23] He later changed the name to Amazon.com, Inc. a few months later, after a lawyer misheard its original name as "cadaver".[24] In September 1994, Bezos purchased the URL 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.[25][26]
Choosing a name
Bezos selected the name Amazon by looking through the 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.[27] Additionally, a name that began with "A" was preferential due to the probability it would occur at the top of an alphabetized list.[27] 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."[28]
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, due to the large worldwide demand for literature, the low price points for books, along with the huge number of titles available in print.[29] Amazon was founded in the garage of Bezos' rented home in Bellevue, Washington.[27][30][31] Bezos' parents invested almost $250,000 in the start-up.[32]
In July 1995, the company began service as an online bookstore.[33] The first book sold on Amazon.com was Douglas Hofstadter's Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought.[34] 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.[35] In October 1995, the company announced itself to the public.[36] 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.[37]
Barnes & Noble sued Amazon on May 12, 1997, alleging that Amazon's claim to be "the world's largest bookstore" was false because it "...isn'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.[38] 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.[38]
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.[39] Also in 1999, Time magazine named Bezos the Person of the Year when it recognized the company's success in popularizing online shopping.[40]
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.[41]
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. The dot-com bubble burst at the start of the 21st century and 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: $5 million (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.[42]
2010 to present
In 2011, Amazon had 30,000 full-time employees in the USA, and by the end of 2016, it had 180,000 employees.
 | Wikinews has related news:Amazon.com to acquire Whole Foods at US$42 per share |
In June 2017, Amazon announced that it would acquire Whole Foods, a high-end supermarket chain with over 400 stores, for $13.4 billion.[15][43] 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.[44] On August 23, 2017, Whole Foods shareholders, as well as the Federal Trade Commission, approved the deal.[45][46]
In September 2017, Amazon announced plans to locate a second headquarters in a metropolitan area with at least a million people.[47] Cities needed to submit their presentations by October 19, 2017 for the project called HQ2.[48] 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.[49] In 2017, Amazon announced it would build a new downtown Seattle building with space for Mary's Place, a local charity in 2020.[50]
According to an August 8, 2018 story in Bloomberg Businessweek, Amazon has about a 5 percent share of U.S. 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 U.S.[53]
Amazon launched the last-mile delivery program and ordered 20,000 Mercedes-Benz Sprinter Vans for the service in September 2018.[54][55]
In November 2018, Amazon announced it would open its highly sought-after new headquarters (HQ2) in Crystal City, Virginia[56] and New York City.[57][58] Few of the public subsidies being offered to Amazon have been disclosed. Maryland has offered an incentive package worth an estimated $8.5 billion. The Newark, New Jersey subsidies are estimated at $7 billion.[59][60] Despite mixed reception, HQ2 is expected to expand the job ecosystem on Long Island.[61]
To make data transfers from space cheaper and easier Amazon added 12 antennas for the satellite data in November 2018.[62]
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.[63][64] 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.[63] The technology is meant to eliminate the need for checkout lines.[65][66][67] Amazon Go was initially opened for Amazon employees in December 2016.[68][69][70] By the end of 2018, there will be 8 total Amazon Go stores located in Seattle, Chicago, San Fransico and New York.[71] Amazon has plans to open as many as 3,000 Amazon Go locations across the United States by 2021.[72]
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.[73] 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.[74][75]
Mergers and acquisitions
Amazon has grown through a number of mergers and acquisitions over the years.
The company has also invested in a number of growing firms, both in the United States and Internationally.[76][77] In 2014, Amazon purchased top level domain .buy in auction for over $4 million.[78][79] 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,[80] and Living Social, a local deal site.[81]
Board of directors
As of May 2018, the board of directors is:[82]
- Jeff Bezos, President, CEO, and Chairman
- Tom Alberg, Managing partner, Madrona Venture Group
- John Seely Brown, Visiting Scholar and Advisor to the Provost at University of Southern California
- Jamie Gorelick, partner, Wilmer Cutler Pickering Hale, and Dorr
- Daniel P. Huttenlocher, Dean and Vice Provost, Cornell University
- Judy McGrath, former CEO, MTV Networks
- Jon Rubinstein, former Chairman, and CEO, Palm, Inc.
- Thomas O. Ryder, former Chairman, and CEO, Reader's Digest Association
- Patty Stonesifer, President, and CEO, Martha's Table
- Wendell P. Weeks, Chairman, President, and CEO, Corning Inc.
Merchant partnerships
In 2000, U.S. toy retailer Toys "R" Us entered into a 10-year agreement with Amazon, valued at $50 million per-year plus a cut of sales, under which Toys "R" Us would be the exclusive supplier of toys and baby products on the service, and the chain's website would redirect to Amazon's Toys & Games category. In 2004, Toys "R" Us sued Amazon, claiming that due to a perceived lack of variety in Toys "R" Us stock, Amazon had knowingly allowed third-party sellers to offer items on the service in categories that Toys "R" Us had been granted exclusivity. In 2006, a court ruled in favor of Toys "R" Us, giving it the right to unwind its agreement with Amazon and establish its own independent e-commerce website. The company was later awarded $51 million in damages.[83][84][85]
In 2001, Amazon entered into a similar agreement with Borders Group, under which Amazon would co-manage Borders.com as a co-branded service,[86] Borders pulled out of the arrangement in 2007, with plans to also launch its own online store.[87]
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.[88]
In November 2013, Amazon announced a partnership with the United States Postal Service to begin delivering orders on Sundays. The service, included in Amazon's standard shipping rates, initiated in metropolitan areas of Los Angeles and New York due to the high-volume and inability to deliver timely, with plans to expand into Dallas, Houston, New Orleans and Phoenix by 2014.[89]
In June 2017, Nike confirmed a "pilot" partnership with Amazon to sell goods directly on the platform.[90][91][92]
As of October 11, 2017, AmazonFresh sells a range of Booths branded products for home delivery in selected areas.[93]
In September 2017, Amazon ventured with one of its sellers JV Appario Retail owned by Patni Group which has recorded a total income of $104.44 Mn (INR 759 Cr) in financial year 2017-18.[94]
In November 2018, Amazon reached an agreement with Apple Inc. to sell selected products through the service, via the company and selected Apple Authorized Resellers. As a result of this partnership, only Apple Authorized Resellers may sell Apple products on Amazon effective January 4, 2019.[95][96]
Products and services
Amazon.com's product lines available at its website include several media (books, DVDs, music CDs, videotapes and software), apparel, baby products, consumer electronics, beauty products, gourmet food, groceries, health and personal-care items, industrial & scientific supplies, kitchen items, jewelry, watches, lawn and garden items, musical instruments, sporting goods, tools, automotive items and toys & games.[citation needed]
Amazon is now gearing up in India to play a role in the grocery retail sector aimed at delivering customer needs.[97]
Amazon.com has a number of products and services available, including:
In November 2018 the company announced a new service called Amazon Quantum Ledger Database, or QLDB, which is a fully managed ledger database with a central trusted authority. The service offers an append-only, immutable journal that tracks the history of all changes. All the changes are cryptographically chained and verifiable.[98]
Subsidiaries
Amazon owns over 40 subsidiaries, including Zappos, Shopbop, Diapers.com, Kiva Systems (now Amazon Robotics), Audible, Goodreads, Teachstreet and IMDb.[99]
A9.com
A9.com, a company focused on researching and building innovative technology, has been a subsidiary since 2003.[100]
Amazon Maritime
Amazon Maritime, Inc. holds a Federal Maritime Commission license to operate as a non-vessel-owning common carrier (NVOCC), which enables the company to manage its own shipments from China into the United States.[101]
Audible.com
Audible.com is a seller and producer of spoken audio entertainment, information and educational programming on the Internet. Audible sells digital audiobooks, radio and TV programs and audio versions of magazines and newspapers. Through its production arm, Audible Studios, Audible has also become the world's largest producer of downloadable audiobooks. On January 31, 2008, Amazon announced it would buy Audible for about $300 million. The deal closed in March 2008 and Audible became a subsidiary of Amazon.[102]
Beijing Century Joyo Courier Services
Beijing Century Joyo Courier Services is a subsidiary of Amazon and it applied for a freight forwarding license with the US Maritime Commission. Amazon is also building out its logistics in trucking and air freight to potentially compete with UPS and FedEx.[103][104]
Brilliance Audio
Brilliance Audio is an audiobook publisher founded in 1984 by Michael Snodgrass in Grand Haven, Michigan.[105] The company produced its first 8 audio titles in 1985.[105] The company was purchased by Amazon in 2007 for an undisclosed amount.[106][107] At the time of the acquisition, Brilliance was producing 12–15 new titles a month.[107] It operates as an independent company within Amazon.
In 1984, Brilliance Audio invented a technique for recording twice as much on the same cassette.[108] The technique involved recording on each of the two channels of each stereo track.[108] It has been credited with revolutionizing the burgeoning audiobook market in the mid-1980s since it made unabridged books affordable.[108]
ComiXology
ComiXology is a cloud-based digital comics platform with over 200 million comic downloads as of September 2013. It offers a selection of more than 40,000 comic books and graphic novels across Android, iOS, Fire OS and Windows 8 devices and over a web browser. Amazon bought the company in April 2014.[109]
CreateSpace
CreateSpace, which offers self-publishing services for independent content creators, publishers, film studios and music labels became a subsidiary in 2009.[110][111]
Goodreads
Goodreads is a "social cataloging" website founded in December 2006 and launched in January 2007 by Otis Chandler, a software engineer, and entrepreneur, and Elizabeth Chandler. The website allows individuals to freely search Goodreads' extensive user-populated database of books, annotations, and reviews. Users can sign up and register books to generate library catalogs and reading lists. They can also create their own groups of book suggestions and discussions. In December 2007, the site had over 650,000 members and over 10 million books had been added. Amazon bought the company in March 2013.[112]
Lab126
Lab126, developers of integrated consumer electronics such as the Kindle became a subsidiary in 2004.[113]
Shelfari
Shelfari was a social cataloging website for books. Shelfari users built virtual bookshelves of the titles which they owned or had read and they could rate, review, tag and discuss their books. Users could also create groups that other members could join, create discussions and talk about books, or other topics. Recommendations could be sent to friends on the site for what books to read. Amazon bought the company in August 2008.[112] Shelfari continued to function as an independent book social network within the Amazon until January 2016, when Amazon announced that it would be merging Shelfari with Goodreads and closing down Shelfari.[114][115]
Twitch
Twitch is a live streaming platform for video, primarily oriented towards video gaming content. The service was first established as a spin-off of a general-interest streaming service known as Justin.tv. Its prominence was eclipsed by that of Twitch, and Justin.tv was eventually shut down by its parent company in August 2014 in order to focus exclusively on Twitch.[116] Later that month, Twitch was acquired by Amazon for $970 million.[117] Through Twitch, Amazon also owns Curse, Inc., an operator of video gaming communities and a provider of VoIP services for gaming.[118] Since the acquisition, Twitch began to sell games directly through the platform,[119] and began offering special features for Amazon Prime subscribers.[120]
The site's rapid growth had been boosted primarily by the prominence of major esports competitions on the service, leading GameSpot senior esports editor Rod Breslau to have described the service as "the ESPN of esports".[121] As of 2015, the service had over 1.5 million broadcasters and 100 million monthly viewers.[122]
Whole Foods Market
Whole Foods Market is an American supermarket chain exclusively featuring foods without artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats.[123]
On August 23, 2017, it was reported that the Federal Trade Commission approved the merger between Amazon.com and Whole Foods Market.[124] The following day it was announced that the deal would be closed on August 28, 2017.[125]
Junglee
Junglee is a former online shopping service provided by Amazon that enabled customers to search for products from online and offline retailers in India. Junglee started off as a virtual database that was used to extract information off the internet and deliver it to enterprise applications. As it progressed, Junglee started to use its database technology to create a single window marketplace on the internet by making every item from every supplier available for purchase. Web shoppers could locate, compare and transact millions of products from across the Internet shopping mall through one window.[126]
Amazon acquired Junglee in 1998, and the website Junglee.com was launched in India in February 2012[127] as a comparison-shopping website. It curated and enabled searching for a diverse variety of products such as clothing, electronics, toys, jewelry and video games, among others, across thousands of online and offline sellers. Millions of products are browse-able, whereby the client selects a price, and then they are directed to a seller. In November 2017, Amazon closed down Junglee.com and the former domain currently redirects to Amazon India.[128]
Website
show
Screenshot
| |
Type of site
| E-commerce |
|---|---|
| Available in | |
| Owner | Amazon.com |
| Website | amazon |
| Alexa rank |  10(Global, January 2018)[129] |
| Commercial | Yes |
| Registration | Optional |
| Launched | 1995 |
| Current status | Online |
| Written in | C++ and Java[130] |
The domain amazon.com attracted at least 615 million visitors annually by 2008.[131] Amazon attracts over 130 million customers to its US website per month by the start of 2016.[132] 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.[133]
Results generated by Amazon's search engine are partly determined by promotional fees.[134]
Amazon's localized storefronts, which differ in selection and prices, are differentiated by top-level domain and country code:
| Region | Sovereignty | Domain name | Since |
|---|---|---|---|
| Asia |  China | amazon.cn | September 2004 |
 India | amazon.in | June 2013 | |
 Japan | amazon.co.jp | November 2000 | |
 Singapore | amazon.com.sg | July 2017 | |
 Turkey | amazon.com.tr | September 2018 | |
| Europe |  France | amazon.fr | August 2000 |
 Germany | amazon.de | October 1998 | |
 Italy | amazon.it | November 2010 | |
 Netherlands | amazon.nl | November 2014 | |
 Spain | amazon.es | September 2011 | |
 United Kingdom | amazon.co.uk | October 1998 | |
| North America |  Canada | amazon.ca | June 2002 |
 Mexico | amazon.com.mx | August 2013 | |
 United States | amazon.com | July 1995 | |
| Oceania |  Australia | amazon.com.au | November 2017 |
| South America |  Brazil | amazon.com.br | December 2012 |
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. 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 they found a review helpful to them. If a review is given enough "helpful" hits, it appears on the front page of the product. In 2010, Amazon was reported as being the largest single source of Internet consumer reviews.[135]
When publishers asked Bezos why Amazon would publish negative reviews, he defended the practice by claiming that Amazon.com was "taking a different approach ... we want to make every book available—the good, the bad and the ugly ... to let truth loose".[136]
There have been cases of positive reviews being written and posted by public relations companies on behalf of their clients[137] and instances of writers using pseudonyms to leave negative reviews of their rivals' works.
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.[138][139] The feature started with 120,000 titles (or 33 million pages of text) on October 23, 2003.[140] There are about 300,000 books in the program. Amazon has cooperated with around 130 publishers to allow users to perform these searches.[citation needed]
To avoid copyright violations, Amazon 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.[citation needed]
Third-party sellers
Amazon derives many of its sales (around 40% in 2008) from third-party sellers who sell products on Amazon.[141] Associates receive a commission for referring customers to Amazon by placing links to Amazon on their websites if the referral results in a sale. Worldwide, Amazon has "over 900,000 members" in its affiliate programs.[142] In the middle of 2014, the Amazon Affiliate Program is used by 1.2% of all websites and it is the second most popular advertising network after Google Ads.[143] It is frequently used by websites and non-profits to provide a way for supporters to earn them a commission.[144] Amazon reported over 1.3 million sellers sold products through Amazon's websites in 2007. Unlike eBay, Amazon sellers do not have to maintain separate payment accounts; all payments are handled by Amazon.[citation needed]
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.[145]
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.[146] 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 its bestsellers lists.[146] 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"; such a listing provides additional exposure that might lead to an increase in sales.[147] 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.[148] 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. Some companies have analyzed Amazon sales data to generate sales estimates based on the ASR,[149] though Amazon states:
Technology
Amazon runs data centers for its online services and owns generators or purchases electricity corresponding to its consumption, mostly renewable energy.[151] Amazon contracted with Avangrid to build and operate the first wind farm in North Carolina to power Amazon's Virginia data centers. The wind farm was built and began operating in December 2016 despite opposition from President Trump and some North Carolina Republican legislators.[152][153][154][155][156]
Amazon records data on customer buyer behavior which enables them to offer or recommend to an individual specific item or bundles of items based upon preferencesdemonstrated through purchases or items visited.[157][better source needed]
On May 5, 2014, Amazon unveiled integration with Twitter, allowing users to link their Amazon accounts to the service, and automatically add items to their carts by replying to tweets linking to Amazon products with the hashtag #AmazonCart.[158][159]
In December 2016, Amazon conducted its first delivery via drone in Cambridgeshire, England, as part of a conceptual pilot project known as Prime Air. The test was not held in the United States, due to having failed to receive permission from the Federal Aviation Administration (FAA).[160]
Multi-level sales strategy
Amazon employs a multi-level e-commerce strategy. Amazon started by focusing on business-to-consumer relationships between itself and its customers and business-to-business relationships between itself and its suppliers and then moved to facilitate customer-to-customer with the Amazon marketplace which acts as an intermediary to facilitate transactions. The company lets anyone sell nearly anything using its platform. In addition to an affiliate program that lets anyone post-Amazon links and earn a commission on click-through sales, there is now a program which lets those affiliates build entire websites based on Amazon's platform.[161]
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.[162] Amazon also employs the use of drop shippers 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 drop shippers have become more and more commonplace in recent years.[citation needed]
In November 2015, Amazon opened a physical Amazon Books store in University Village in Seattle. The store is 5,500 square feet and prices for all products match those on its website.[163] Amazon will open its tenth physical book store in 2017;[164] media speculation suggests Amazon plans to eventually roll out 300 to 400 bookstores around the country.[163] Amazon plans to open brick and mortar bookstores in Germany.[165]
Finances
Amazon.com is primarily a retail site with a sales revenue model; Amazon takes a small percentage of the sale price of each item that is sold through its website while also allowing companies to advertise their products by paying to be listed as featured products.[166] As of 2018, Amazon.com is ranked 8th on the Fortune 500 rankings of the largest United States corporations by total revenue.[167]
For the fiscal year 2017, Amazon reported earnings of US$3.03 billion, with an annual revenue of US$177.866 billion, an increase of 30.8% over the previous fiscal cycle. Since 2007 sales increased from 14.835 billion to 177.866 billion, thanks to continued business expansion.[168] Amazon's market capitalization was valued at over US$803 billion in early November 2018.[169]
| Year | Revenue in mil. USD$ | Net income in mil. USD$ | Total Assets in mil. USD$ | Employees |
|---|---|---|---|---|
| 2007[170] | 14,835 | 476 | 6,485 | 17,000 |
| 2008[171] | 19,166 | 645 | 8,314 | 20,700 |
| 2009[172] | 24,509 | 902 | 13,813 | 24,300 |
| 2010[173] | 34,204 | 1,152 | 18,797 | 33,700 |
| 2011[174] | 48,077 | 631 | 25,278 | 56,200 |
| 2012[175] | 61,093 | −39 | 32,555 | 88,400 |
| 2013[176] | 74,452 | 274 | 40,159 | 117,300 |
| 2014[177] | 88,988 | −241 | 54,505 | 154,100 |
| 2015[178] | 107,006 | 596 | 64,747 | 230,800 |
| 2016[179] | 135,987 | 2,371 | 83,402 | 341,400 |
| 2017[180] | 177,866 | 3,033 | 131,310 | 566,000 |
October 2018 wage increase
After the introduction of the September 5, 2018 'Stop Bad Employers by Zeroing Out Subsidies (Stop BEZOS) Act', Amazon announced to its workers on October 2, 2018, that the minimum wage paid to salaried workers be increased to $15 per hour.[181] The wage increase applies to about 350,000 workers. It does not apply to the majority of Amazon's employees who are contract workers. Furthermore, Amazon has also removed some grants and stock options.
Controversies
Since its founding, the company has attracted criticism and controversy from multiple sources over its actions. These include: supplying law enforcement with facial recognition surveillance tools;[182] forming cloud computing partnerships with the CIA;[183] luring customers away from the site's brick and mortar competitors;[184] placing a low priority on warehouse conditions for workers; participating in anti-unionization efforts; remotely deleting content purchased by Amazon Kindle users; taking public subsidies; claiming that its 1-Click technology can be patented; engaging in anti-competitive actions and price discrimination;[185] and reclassifying LGBT books as adult content.[186][187] Criticism has also concerned various decisions over whether to censor or publish content such as the WikiLeaks website, works containing libel and material facilitating dogfight, cockfight, or pedophileactivities. In December 2011, Amazon faced a 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.[188] Companies like Groupon, eBay and Taap.it countered Amazon's promotion by offering $10 off from their products.[189][190] The company has also faced accusations of putting undue pressure on suppliers to maintain and extend its profitability. One effort to squeeze the most vulnerable book publishers was known within the company as the Gazelle Project, after Bezos suggested, according to Brad Stone, "that Amazon should approach these small publishers the way a cheetah would pursue a sickly gazelle."[134] In July 2014, the Federal Trade Commission launched a lawsuit against the company alleging it was promoting in-app purchases to children, which were being transacted without parental consent.[191]
Selling counterfeit items
On October 16, 2016, Apple filed a trademark infringement case against Mobile Star LLC for selling counterfeit Apple products to Amazon. In the suit, Apple provided evidence that Amazon was selling these counterfeit Apple products and advertising them as genuine. Through purchasing, Apple was able to identify that nearly 90% of the Apple accessories sold and fulfilled by Amazon were counterfeit. Amazon was sourcing and selling items without properly determining if they are genuine. Mobile Star LLC settled with Apple for an undisclosed amount on April 27, 2017.[192]
Sales and use taxes
Amazon's state sales tax collection policy has changed over the years since it did not collect any sales taxes in its early years. In the U.S., state and local sales taxes are levied by state and local governments, not at the federal level. In most countries where Amazon operates, a sales tax or value added tax is uniform throughout the country, and Amazon is obliged to collect it from all customers. Proponents of forcing Amazon.com to collect sales tax—at least in states where it maintains a physical presence—argue the corporation wields an anti-competitive advantage over storefront businesses forced to collect sales tax.[193]
Many U.S. states in the 21st century have passed online shopping sales tax laws designed to compel Amazon.com and other e-commerce retailers to collect state and local sales taxes from its customers. Amazon.com originally collected sales tax only from five states as of 2011, but as of April 2017, Amazon collects sales taxes from customers in all 45 states that have a state sales tax and in Washington, D.C.[194]
Comments by President Trump and Senator Sanders
In early 2018, President Donald Trump repeatedly criticized Amazon's use of the United States Postal Service and pricing of its deliveries, stating, "I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy," Trump tweeted. "Amazon should pay these costs (plus) and not have them bourne [sic] by the American Taxpayer."[195] Amazon's shares fell by 6 percent as a result of Trump's comments. Shepard Smith of Fox News disputed Trump's claims and pointed to evidence that the USPS was offering below market prices to all customers with no advantage to Amazon. However, analyst Tom Forte pointed to the fact that Amazon's payments to the USPS are not public and that their contract has a reputation for being "a sweetheart deal".[196][197]
Throughout the summer of 2018, Vermont Senator Bernie Sanders criticized Amazon's wages and working conditions in a series of YouTube videos and media appearances. He also pointed to the fact that Amazon had paid no federal income tax in the previous year.[198] Sanders solicited stories from Amazon warehouse workers who felt exploited by the company.[199] One such story, by James Bloodworth, described the environment as akin to "a low-security prison" and stated that the company's culture used an Orwellian newspeak.[200] These reports cited a finding by New Food Economy that one third of fulfilment center workers in Arizona were on the Supplemental Nutrition Assistance Program(SNAP).[201] Responses by Amazon included incentives for employees to tweet positive stories and a statement which called the salary figures used by Sanders "inaccurate and misleading". The statement also charged that it was inappropriate for him to refer to SNAP as "food stamps".[199] On September 5, 2018, Sanders along with Ro Khanna introduced the Stop Bad Employers by Zeroing Out Subsidies (Stop BEZOS) Act aimed at Amazon and other alleged beneficiaries of corporate welfare such as Wal-mart, McDonald's and Uber.[202] Among the bill's supporters were Tucker Carlson of Fox News and Matt Taibbi who criticized himself and other journalists for not covering Amazon's contribution to wealth inequality earlier.[203][204]
On October 2, Amazon announced that its minimum wage for all American employees would be raised to $15 per hour. Sanders congratulated the company for making this decision.[205]
Working conditions
Amazon has attracted widespread criticism for poor working conditions by both current employees, who refer to themselves as Amazonians,[206] and former employees,[207][208] as well as the media and politicians. In 2011, it was publicized that at the Breinigsville, Pennsylvania warehouse, workers had to carry out work in 100 °F (38 °C) heat, resulting in employees becoming extremely uncomfortable and suffering from dehydration and collapse. Loading-bay doors were not opened to allow in fresh air, due to the company's concerns over theft.[209] Amazon's initial response was to pay for an ambulance to sit outside on call to cart away overheated employees.[209] The company eventually installed air conditioning at the warehouse.[210]
Some workers, "pickers", who travel the building with a trolley and a handheld scanner "picking" customer orders can walk up to 15 miles during their workday and if they fall behind on their targets, they can be reprimanded. The handheld scanners give real-time information to the employee on how fast or slowly they are working; the scanners also serve to allow Team Leads and Area Managers to track the specific locations of employees and how much "idle time" they gain when not working.[211][212] In a German television report broadcast in February 2013, journalists Diana Löbl and Peter Onneken conducted a covert investigation at the distribution center of Amazon in the town of Bad Hersfeld in the German state of Hessen. The report highlights the behavior of some of the security guards, themselves being employed by a third party company, who apparently either had a neo-Nazi background or deliberately dressed in neo-Nazi apparel and who were intimidating foreign and temporary female workers at its distribution centers. The third party security company involved was delisted by Amazon as a business contact shortly after that report.[213][214][215][216][217]
In March 2015, it was reported in The Verge that Amazon will be removing non-compete clauses of 18 months in length from its US employment contracts for hourly-paid workers, after criticism that it was acting unreasonably in preventing such employees from finding other work. Even short-term temporary workers have to sign contracts that prohibit them from working at any company where they would "directly or indirectly" support any good or service that competes with those they helped support at Amazon, for 18 months after leaving Amazon, even if they are fired or made redundant.[218][219]
A 2015 front-page article in The New York Times profiled several former Amazon employees[220] who together described a "bruising" workplace culture in which workers with illness or other personal crises were pushed out or unfairly evaluated.[12] Bezos responded by writing a Sunday memo to employees,[221] in which he disputed the Times's account of "shockingly callous management practices" that he said would never be tolerated at the company.[12]
In an effort to boost employee morale, on November 2, 2015, Amazon announced that it would be extending six weeks of paid leave for new mothers and fathers. This change includes birth parents and adoptive parents and can be applied in conjunction with existing maternity leave and medical leave for new mothers.[222]
In 2018, investigations by journalists and media outlets such as The Guardian have also exposed poor working conditions at Amazon's fulfillment centers.[223][224]
A September 11, 2018 article exposed poor working conditions for Amazon's delivery drivers.[225]
In response to criticism that Amazon doesn't pay its workers a livable wage, Jeff Bezos announced beginning November 1, 2018, all U.S. and U.K. Amazon employees will earn a $15 an hour minimum wage.[226] Amazon will also lobby to make $15 an hour the federal minimum wage.[227] At the same time, Amazon also eliminated stock awards and bonuses for hourly employees.[228]
On Black Friday 2018, Amazon warehouse workers in several European countries, including Italy, Germany, Spain and the United Kingdom, went on strike to protest inhumane working conditions and low pay.[229]
Conflict of interest
In 2013, Amazon secured a US$600 million contract with the CIA, which poses a potential conflict of interest involving the Bezos-owned The Washington Post and his newspaper's coverage of the CIA.[230] Kate Martin, director of the Center for National Security Studies, said, "It's a serious potential conflict of interest for a major newspaper like The Washington Post to have a contractual relationship with the government and the most secret part of the government."[231] This was later followed by a US$10 billion contract with the Department of Defence.[183]
Seattle head tax and houselessness services
In May 2018, Amazon threatened the Seattle City Council over an employee head tax proposal that would have funded houselessness services and low-income housing. The tax would have cost Amazon about $800 per employee, or 0.7% of their average salary.[232] In retaliation, Amazon paused construction on a new building, threatened to limit further investment in the city, and funded a repeal campaign. Although originally passed, the measure was soon repealed after an expensive repeal campaign spearheaded by Amazon.[233]
Facial recognition technology and law enforcement
While Amazon has publicly opposed secret government surveillance, as revealed by Freedom of Information Act requests it has supplied facial recognition support to law enforcement in the form of the "Rekognition" technology and consulting services. Initial testing included the city of Orlando, Florida, and Washington County, Oregon. Amazon offered to connect Washington County with other Amazon government customers interested in Rekognition and a body camera manufacturer. These ventures are opposed by a coalition of civil rights groups with concern that they could lead to expansion of surveillance and be prone to abuse. Specifically, it could automate the identification and tracking of anyone, particularly in the context of potential police body camera integration.[182][234][235] Due to the backlash, the city of Orlando has publicly stated it will no longer use the technology.[236]
Lobbying
Amazon 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 United States Congress, the Federal Communications Commissionand the Federal Reserve. Amazon.com spent roughly $3.5 million, $5 million and $9.5 million on lobbying, in 2013, 2014 and 2015, respectively.[237]
Amazon.com was a corporate member of the American Legislative Exchange Council (ALEC) until it dropped membership following protests at its shareholders' meeting on May 24, 2012.[238]
In 2014, Amazon expanded its lobbying practices as it prepared to lobby the Federal Aviation Administration to approve its drone delivery program, hiring the Akin Gump Strauss Hauer & Feld lobbying firm in June.[239] Amazon and its lobbyists have visited with Federal Aviation Administration officials and aviation committees in Washington, D.C. to explain its plans to deliver packages.[240]
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