Top 100 InterBrand – Rank no.19 – Amazon.com – US
|Traded as||NASDAQ: AMZN
S&P 500 Component
|Headquarters||Seattle, Washington, United States|
|Key people||Jeff Bezos
(Chairman, President & CEO)
|Industry||Internet, online retailing|
|Products||A2Z Development, A9.com,Alexa Internet, Amazon.com,Amazon Kindle, Amazon Studios, Amazon Web Services, Audible.com,dpreview.com, Endless.com,IMDb, LoveFilm, The Book Depository, Zappos.com, Woot,Junglee.com, goodreads.com, myhabit.com, askville|
|Revenue||US$ 61.09 billion (2012)|
|Operating income||US$ 676 million (2012)|
|Net income||US$ −39 million (2012)|
|Total assets||US$ 32.535 billion (2012)|
|Total equity||US$ 8.19 billion (2012)|
|Employees||97,000 (June 2013)|
|Subsidiaries||Amazon Instant Video
|Website||Amazon.com (original US site)
various national sites
|Written in||C++, Perl and Java|
|Alexa rank||8 (October 2013)|
|Type of site||E-commerce|
|Advertising||Web banners, videos|
|Available in||English, French, German, Spanish, Italian, Japanese, Chinese, Brazilian Portuguese|
Amazon.com, Inc. is an American international multibillion dollar electronic commercecompany with headquarters in Seattle, Washington, United States. It is the world’s largestonline retailer. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs, video and MP3 downloads/streaming, software, video games,electronics, apparel, furniture, food, toys, and jewelry. The company also producesconsumer electronics—notably the Amazon Kindle e-book reader and the Kindle Firetablet computer—and is a major provider of cloud computing services.
Jeff Bezos incorporated the company (as Cadabra) in July 1994 and the site went online as Amazon.com in 1995. The company was renamed after the Amazon River, one of the largest rivers in the world, which in turn was named after the Amazons, the legendary nation of female warriors in Greek mythology.
Amazon has separate retail websites for United States, Canada, United Kingdom, France,Germany, India, Italy, Spain, Brazil, Japan, China, Mexico and Austria, with international shipping to certain other countries for some of its products. In 2011, it had professed an intention to launch its websites in Poland, Netherlands, and Sweden, as well.
Continually improving the customer experience, Amazon aims to deliver the widest selection of products at the lowest prices with minimal hassle. The e-commerce innovator differentiates itself from rivals with initiatives such as Amazon Appstore, providing a comprehensive mobile experience. Preinstalled on Kindle and compatible with Android devices, the Appstore makes recommendations based on past purchases and offers “coins” to US customers as digital currency. The brand also expanded into new businesses such as online advertising and original programming via Amazon Studios for its Emmy award-winning Prime Instant Video service. With customers buying an estimated 3.5 billion items last year, Amazon is targeting a wider audience, offering luxury goods, social game platforms, and digital music via Autorip. The strategic acquisition of Goodreads, a social book recommendation site, builds on Amazon’s well-established online book retailing expertise, fostering a community of bibliophiles. The brand has thus successfully built an intimate relationship with its customers without being perceived as intrusive. However, the issue of tax avoidance in the UK demonstrates that Amazon’s expansion plans must be checked with responsibility and prudence, or it faces risks to its brand reputation. Looking ahead, CEO Jeff Bezos (who raised eyebrows with his personal surprise purchase of the Washington Post) and his leadership team must be mindful of local needs to deliver a consistent Amazon brand experience to a global audience.
The company was founded in 1994, spurred by what 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. In 1994, Bezos left his employment as vice-president of D.E. Shaw, a Wall Street firm, and moved to Seattle. He began to work on a business plan for what would eventually become Amazon.com.
After reading a report about the future of the Internet which projected annual Web commerce growth at 2,300%, Bezos created a list of 20 products which 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 world-wide demand for literature, the low price points for books, along with the huge number of titles available in print. Amazon was originally founded in Bezos’ garage in Bellevue, Washington.
The company began as an online bookstore. 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. While the largest brick and mortar bookstores and mail order catalogs might offer 200,000 titles, an online bookstore could “carry" several times more, since they had an almost unlimited virtual (not actual) warehouse: those of the actual product makers/suppliers.
Bezos wanted a name for his company that began with “A" so that it would appear early in alphabetic order. He began looking through the dictionary and settled on “Amazon" because it was a place that was “exotic and different" just as he planned for his store to be, and he believed it was the biggest river in the world, and he planned to make his store the biggest in the world. Since 2000, Amazon’s logotype has featured a curved arrow leading from A to Z, representing that they carry every product from A to Z, with the arrow shaped like a smile.
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: Douglas Hofstadter‘s Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought. In October 1995, the company announced itself to the public. In 1996, it was reincorporated in Delaware. Amazon issued its initial public offering of stock on May 15, 1997, trading under the NASDAQ stock exchange symbol AMZN, at a price ofUS$18.00 per share ($1.50 after three stock splits in the late 1990s).
Amazon’s initial business plan was unusual; it did not expect to make a profit for four to five years. This “slow" growth caused stockholders to complain about the company not reaching profitability fast enough to justify investing in, or to even survive in the long-term. When the dot-com bubble burst at the start of the 21st Century, destroying many e-companies in the process, Amazon survived, and grew on past the bubble burst to become a huge player in online sales. It 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. In 1999, Time magazine named Bezos the Person of the Year, recognizing the company’s success in popularizing online shopping.
Barnes & Noble sued Amazon on May 12, 1997, alleging that Amazon’s claim to be “the world’s largest bookstore" was false. Barnes and Noble asserted, “[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." Walmart sued Amazon on October 16, 1998, alleging that Amazon had stolen their 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 re-assignment of the former Walmart executives.
Until June 30, 2006, typing ToysRUs.com into a browser would bring up Amazon.com’s “Toys & Games" tab; however, this relationship was terminated due to a lawsuit. Amazon also hosted and managed the website for Borders bookstores but this ceased in 2008.From 2001 until August 2011, Amazon hosted the retail website for Target. Benefit Cosmetics, another merchant partner of Amazon, has also launched a major E-Commerce platform of their own based on Hybris and arvato systems NA, in the US, EU and China.
Amazon.com operates retail websites for Sears Canada, bebe Stores, Marks & Spencer, Mothercare, and Lacoste. For a growing number of enterprise clients, currently including the UK merchants Marks & Spencer, Benefit Cosmetics’ UK entity, edeals.com, and Mothercare, Amazon provides a unified multichannel platform where a customer can interact with some people they call the retail website, standalone in-store terminals, or phone-based customer service agents. Amazon Web Services also powers AOL‘s Shop@AOL.
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. These titles are available for purchase exclusively through Amazon’s Kindle Fire tablet.
The company’s global headquarters are in 14 buildings in Seattle’s South Lake Unionneighborhood. The European headquarters are in Luxembourg’s capital, Luxembourg City. In Seattle, as of 2013, a 3-tower headquarters near Amazon’s existing buildings with a capacity of 12,000 employees was under construction.
While much of Amazon’s software development occurs in Seattle, the company employs software developers in centers across the globe. Some of these sites are run by an Amazon subsidiary called A2Z Development.
Fulfillment centers are located in the following cities, often near airports. These centers also provide warehousing and order-fulfillment for third-party sellers:
Warehouses are large and each has hundreds of employees. Employees are responsible for four basic tasks: unpacking and inspecting incoming goods; placing goods in storage and recording their location; picking goods from their computer recorded locations to make up an individual shipment; and shipping. A central computer which records the location of goods and maps out routes for pickers plays a central role; employees carry hand-held computers which communicate with the central computer and monitor their rate of progress. A picker with their cart may walk 10 or more miles a day. In the United Kingdom initial staffing was provided by Randstad Holding and other temporary employment agencies. Some workers are accepted as Amazon employees and granted pension and shares of stock; others are dismissed. “When we have permanent positions available, we look to the top performing temporary associates to fill them." Development of a high level of automation is anticipated in the future following Amazon’s 2012 acquisition of Kiva Systems, a warehouse automation company.
These US distribution centers have been closed: SDC Seattle Distribution Center, located in Georgetown, just south of downtown Seattle; Red Rock, Nevada; Chambersburg, Pennsylvania; Munster, Indiana; and McDonough, Georgia. From 2000 until February 2001, there was an Amazon customer service based in The Hague, Netherlands.
Amazon product lines include books, music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel,sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, clothing, industrial & scientific supplies, and groceries.
The company launched amazon.com Auctions, a web auctions service, in March 1999. However, it failed to chip away at the large market share of the industry pioneer, eBay. Later, the company launched a fixed-price marketplace business, zShops, in September 1999, and the now defunct partnership with Sotheby’s, called Sothebys.amazon.com, in November. Auctions and zShops evolved into Amazon Marketplace, a service launched in November 2000 that let customers sell used books, CDs, DVDs, and other products alongside new items. Today, Amazon Marketplace’s main rival is eBay’s Half.com service.
In August 2007, Amazon announced AmazonFresh, a grocery service offering perishable andnonperishable foods. Customers can have orders delivered to their homes at dawn or during a specified daytime window. Delivery was initially restricted to residents of Mercer Island, Washington, and was later expanded to several ZIP codes in Seattle proper. AmazonFresh also operated pick-up locations in the suburbs of Bellevue and Kirkland from summer 2007 through early 2008.
In 2012, Amazon announced the launch of Vine.com for buying green products, including groceries, household items and apparel. It is part of Quidsi, the company that Amazon bought in 2010 that also runs the sites Diapers.com (baby), Wag.com (pets) andYoYo.com (toys). Amazon also owns other e-commerce sites like Zappos.com, Shopbop.com and Woot.
Amazon’s Subscribe & Save program offers a discounted price on an item (usually sold in bulk), free shipping on every Subscribe & Save shipment, and automatic shipment of the item every one, two, three, or six months.
In 2013, Amazon launched its site in India, amazon.in. It has started with electronic goods. However, it plans to expand into fashion apparel, beauty, home essentials and health care categories by the end of 2013.
In November 2007, Amazon launched Amazon Kindle, an e-book reader which downloads content over “Whispernet“, via the Sprint Nextel EV-DO wireless network. The screen uses E Ink technology to reduce battery consumption and to provide a more legible display. As of March 2011, the stated library numbers over 850,000 titles. In October 2013, the sixth generation Kindle was released.
In September 2011, Amazon announced its entry into the tablet computer market by introducing the Kindle Fire, which runs a customized version of the operating system Android. The exceedingly low pricing of Fire ($199 USD) was widely perceived as a strategy backed by Amazon’s revenue from its content sales, to be stimulated by sales of the Fire.
In July 2010, Amazon announced that e-book sales for its Kindle reader outnumbered sales of hardcover books for the first time ever during the second quarter of 2010. Amazon claims that, during that period, 143 e-books were sold for every 100 hardcover books, including hardcovers for which there is no digital edition; and during late June and early July, sales rose to 180 digital books for every 100 hardcovers.
In January 2008, Amazon began rolling out its MP3 service to subsidiary websites worldwide. In December 2008, Amazon MP3 was made available in the UK.
Amazon’s Honor System was launched in 2001 to allow customers to make donations or buy digital content, with Amazon collecting a percentage of the payment plus a fee. The service was discontinued in 2008 and replaced by Amazon Payments.
In 2011, Amazon announced that it was releasing a Mac download store to offer dozens of games and hundreds of pieces of software for Apple computers.
On August 2012, Amazon announced it would be adding a gaming department to its company titled Amazon Game Studios. Amazon states that they will be bringing, “innovative, fun and well-crafted games."
In January 2013, Amazon launched AutoRip, a digital music service. The service allows customers to receive a free MP3 copy of select CDs purchased through Amazon. Amazon announced in September 2013 that they would launch Kindle MatchBook in October 2013, a similar service for books allowing customers who buy books from Amazon to acquire a e-book copy for free or at a discounted price of $3 or less.
In August 2013 Amazon launched Amazon Art as an online marketplace selling original and limited edition fine art from selected galleries. The initial 40000 items listed for sale included Norman Rockwell’s painting “Willie Gillis: Package from Home” priced at $4.85 million, “L’Enfant a la tasse" by Claude Monet for $1.45 million and Andy Warhol’s “Sachiko" for $45 000.
Amazon Prime is a service of free two-day shipping on all eligible purchases, for a flat annual fee, as well as discounted one-day shipping rates. Amazon launched the program in the contiguous United States in 2005, in Japan, the United Kingdom and Germany in 2007, in France (as “Amazon Premium") in 2008, in Italy in 2011 and in Canada in 2013.
Amazon Prime membership in the United States also provides Amazon Instant Video, the instant streaming of selected movies and TV shows at no additional cost, as of February 2011. In November 2011, it was announced that Prime members have access to the Kindle Owners’ Lending Library, which allows users to borrow certain popular titles for free reading on Kindle hardware, up to one book a month, with no due date.
In August 2005, Amazon began selling products under its own private label, “Pinzon"; the trademark applications indicated that the label would be used for textiles, kitchen utensils, and other household goods. In March 2007, the company applied to expand the trademark to cover a more diverse list of goods and to register a new design consisting of the “word PINZON in stylized letters with a notched letter “O" which appears at the “one o’clock" position". Coverage by the trademark grew to include items such as paints, carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and jewelry. In September 2008, Amazon filed to have the name registered. USPTO has finished its review of the application, but Amazon has yet to receive an official registration for the name.
AmazonBasics is a private-label consumer electronics product line. It sells AV cables, blank DVD media and other electronics products under the AmazonBasics product label. The line was launched in 2009.
An Amazon.com exclusive is a product, usually a DVD, that is available exclusively on Amazon.com. Some DVDs are produced by the owner of the film/product, while others are produced by Amazon.com itself. The DVDs produced by Amazon are made using their “CreateSpace" program, in which DVDs are created, upon ordering, using DVD-R technology. The DVDs are then shipped about two days later. Some DVDs (such as the Jersey Shore Season 1 or The Unusuals Season 1) first release their DVD on Amazon as an Amazon.com Exclusive for a limited time before being released elsewhere. On May 23, 2011, Amazon.com allowed customers to download Lady Gaga’s Born This Way album for $0.99, resulting in some downloads being delayed, due to an extremely high volume of downloads.
Amazon provides fast and inexpensive self publishing services through one of its companies, CreateSpace, a member of the Amazon group of companies, allowing authors to easily offer their content to millions of customers on Amazon.com and other methods.
Amazon launched Amazon Web Services (AWS) in 2002, which provides programmatic access to latent features on its website. Amazon Web Services (AWS) was first launched as a public beta of Amazon Elastic Compute Cloud running Microsoft Windows Server and Microsoft SQL Server. This was later expanded to several operating systems, including various flavors of Linux and OpenSolaris.
In March 2006, Amazon launched an online storage service called Amazon Simple Storage Service (Amazon S3). An unlimited number of data objects, from 1 byte to 5 terabytes in size, can be stored in S3 and distributed via HTTP or BitTorrent. The service charges monthly fees for data stored and transferred. In 2006, Amazon introduced Amazon Simple Queue Service (Amazon SQS), a distributed queue messaging service, and product wikis (later folded into Amapedia) and discussion forums for certain products using guidelines that follow standard message board conventions. Also in 2006, Amazon introduced 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. In 2008, Amazon improved the service by adding Elastic Block Store (EBS), offering persistent storage for Amazon EC2 instances andElastic IP addresses, and offering static IP addresses designed for dynamic cloud computing. Amazon introduced SimpleDB, a database system, allowing users of its other infrastructure to utilize a high-reliability, high-performance database system.
Amazon continues to refine and add services to AWS, adding such services as Scalable DNS service (Amazon Route 53), payment handling, and AWS specific APIs for their Mechanical Turk service.
In November 2012 at AWS’ web developer conference in Las Vegas it announced it was targeting large companies as cloud storage clients. It will further cut its S3 prices to customers with long-term contracts in its “Redshift" storage service launching in 2013.
In March 2013 Amazon announced its Mobile Ads API for developers. The new Ads API can be used on apps distributed on any Android platform as long as the app is also available on Amazon’s Appstore.
Amazon Publishing is Amazon’s publishing unit. It is composed of AmazonEncore, AmazonCrossing, Montlake Romance, Thomas & Mercer, 47 North, and Powered by Amazon. Additional imprints are planned.
Launched in 2005, Amazon Shorts offered exclusive short stories and non-fiction pieces from best-selling authors for immediate download. By June 2007, the program had over 1,700 pieces and was adding about 50 new pieces per week. The program was discontinued on June 1, 2010.
Amazon also created “channels" to benefit certain causes. In 2004, Amazon allowed customers to donate $5 to $200 to the campaigns of 2004 US presidential hopefuls, providing links that raised $300,000 for the candidates. Amazon has periodically reactivated a Red Cross donation channel after crises such as the September 11 attacks, Hurricane Katrina, and the 2004 earthquake and tsunami in the Indian Ocean. By January 2005, nearly 200,000 people had donated over $15.7 million in the US.
AmazonLocal is a daily deal service launched in June 2011 in Boise, Idaho. As of June 2012, AmazonLocal offers daily deals to over 100 regions in 29 US states. AmazonLocal acts primarily as a deal aggregator; some of the deals are actually offered throughLivingSocial, a firm in which Amazon has heavily invested.
Also in 2007, Amazon launched Amazon Vine, which allows reviewers free access to pre-release products from vendors in return for posting a review, as well as a payment service specifically targeted at developers, Amazon FPS.
IMDb and Amazon launched a Web site called SoundUnwound for browsing music metadata with wiki-like user contribution in September 2007; this data was also used for Amazon’s Artist Pages. Soundunwound ceased existence on June 18, 2012, and the site redirected to Amazon.
Amazon Connect enables authors to post remarks on their book pages to customers.
Amazon Webstore allows businesses to create custom e-commerce websites using Amazon technology. Sellers pay a commission of 1-2%, plus credit-card processing fees and fraud protection, and a subscription fee which ranges from $0 to $39.99 per month depending on the bundle option for an unlimited number of listings.
The domain amazon.com attracted at least 615 million visitors annually by 2008, twice the number of Walmart. Amazon attracts approximately 65 million customers to its US website per month. 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. In addition to amazon.com, there are different versions of Amazon for several different countries, each varying in assortment and prices. As of August 2013, in alphabetical order by region, these are:
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 or not they found it 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.
Amazon’s customer reviews are monitored for indecency, but do permit negative comments. 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".
Although reviews are attributed to the credit-card name of the reviewer, there have been cases of positive reviews being written and posted by a public relations company on behalf of its clients, and writers employing pseudonyms to leave negative reviews of their rivals’ work.
Following listing for sale of Untouchable: The Strange Life and Tragic Death of Michael Jackson a disparaging biography of Michael Jackson by Randall Sullivan his fans, organized via social media as “Michael Jackson’s Rapid Response Team to Media Attacks" bombarded Amazon with negative reviews and negative ratings of positive reviews.
“Search Inside the Book" is a feature which allows customers to search for keywords in the full text of many books in the catalog. The feature started with 120,000 titles (or 33 million pages of text) on October 23, 2003. There are currently about 300,000 books in the program. Amazon has cooperated with around 130 publishers to allow users to perform these searches.
To avoid copyright violations, amazon.com 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.
Amazon derives about 40% of its sales from affiliate marketing called “Amazon Associates" and third-party sellers who sell products on Amazon. Associates receive a commission for referring customers to Amazon by placing links on their websites to Amazon, if the referral results in a sale. Worldwide, Amazon has “over 900,000 members" in its affiliate programs. Amazon reported over 1.3 million sellers sold products through Amazon’s World Wide Web sites in 2007. Unlike eBay, Amazon sellers do not have to maintain separate payment accounts; all payments are handled by Amazon.
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.
A January 2010 survey of third-party sellers by Auctionbytes.com found that Amazon was 4th overall. Amazon.com placed second in “Profitability". Its lowest rating, but still above average, was in “Ease of Use". Sellers felt it had clearly defined rules, provided a steady stream of traffic to their listings, and put less emphasis on a community component. Amazon came in second in the Recommended Selling Venue category.
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. 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 their best sellers lists. 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," and this also provides additional exposure that may lead to an increase in sales. 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 theNielsen BookScan service to verified authors. 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. In addition, it states:
Please keep in mind that our sales rank figures are simply meant to be a guide of general interest for the customer and not definitive sales information for publishers – we assume you have this information regularly from your distribution sources—Amazon.com Help, 
Customer Relationship Management (CRM) and Information Management (IM) support Amazon’s business strategy. The core technology that keeps Amazon running is Linux-based. As of 2005, Amazon had the world’s three largest Linux databases, with capacities of 7.8 TB, 18.5 TB, and 24.7 TB. The central data warehouse of Amazon is made of 28 Hewlett Packard servers with four CPUs per node running Oracle database software. Amazon’s technology architecture handles millions of back-end operations every day, as well as queries from more than half a million third-party sellers. With hundreds of thousands of people sending their credit card numbers to Amazon’s servers everyday, security becomes a major concern. Amazon employs Netscape Secure Commerce Server using the Secure Socket Layer protocol which stores all credit card details in a separate database. The company also records data on customer buyer behavior which enables them to offer or recommend to an individual specific item, or bundles of items based upon preferences demonstrated through purchases or items visited.
On January 31, 2013 Amazon experienced an outage that lasted approximately 49 minutes, leaving its site inaccessible to some customers.
Amazon employs a multi-level e-commerce strategy. Amazon started off by focusing on Business-to-Consumer relationships between itself and its customers, and Business-to-Business relationships between itself and its suppliers but it then moved to incorporate Customer-to-Business transactions as it realized the value of customer reviews as part of the product descriptions. It now also facilitates customer to customer with the provision of the Amazon marketplace which act as an intermediary to facilitate consumer to consumer transactions. The company lets almost anyone sell almost anything using its platform. In addition to affiliate program that lets anybody post Amazon links and earn a commission on click through sales, there is now a program which let those affiliates build entire websites based on Amazon’s platform.
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. 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. The resulting damage to a supply and demand marketplace remains to be seen but advertising contracts with large search engines eliminating smaller websites from overall exposure these practices should have a negative effect on the industry on the whole.
Over the last decade,[when?] Amazon has developed a customer base of around 30 million people. Amazon.com is primarily a retail site with a sales revenue model. Amazon makes its money by taking a small percentage of the sale price of each item that is sold through its website. Amazon also allows companies to advertise their products by paying to be listed as featured products.
In Q1 2012, Amazon reported a loss due to its stake in Living Social.
Since its founding, the company has attracted criticism and controversy from multiple sources over its actions. These include: luring customers away from the site’s brick and mortar competitors, poor warehouse conditions for workers; anti-unionization efforts; Amazon Kindle remote content removal; taking public subsidies; its “1-Click patent" claims; anti-competitive actions; price discrimination; various decisions over whether to censor or publish content such as the WikiLeaks web site; LGBT book sales rank;, and works containing libel, facilitating dogfight, cockfight, or pedophile activities. In December 2011, Amazon faced 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. Companies like Groupon, eBay, and Taap.it countered Amazon’s promotion by offering $10 off from their products.
Amazon collects sales tax from just eight states in the US. Amazon is under increasing legal and political pressure from state governments, traditional retailers and other groups because of its refusal to collect sales tax in 40 of the 45 states with a statewide sales tax (as of May 2011). Those 40 states include at least 12 where Amazon has a clear physical presence, via distribution centers and wholly owned subsidiaries. Critics of Amazon argue that its refusal to collect sales taxes has given it an unfair advantage over traditional retailers. While customers are required to remit use tax directly to their state, few customers do so.
Amazon has said since at least 2006 that it would support a federal solution to the sales tax problem, as long as such legislation was fair and simple. The Main Street Fairness Act failed in committee in 2010, and several earlier versions of the bill failed to advance. Amazon lobbyists met four times with members of Congress or their aides in 2010 regarding the Main Street Fairness Act. The company spent $610,000 on lobbying in 2010, although these expenses also covered other bills discussed at the same time. Amazon has increased political contributions to federal lawmakers. Amazon’s political action committee spent $214,000 during the 2010 election cycle, double what it spent for the 2008 elections.
Small business advocates at the American Independent Business Alliance note that while proclaiming support for reform, Amazon has lobbied to apply sales tax collection duties to all businesses with $150,000 or more in annual sales. Since all major proposals include an exemption of at least $500,000 or $1 million, AMIBA says this impedes passage of tax reform.
In November 2012, the UK government announced plans to investigate Amazon.com, along with Starbucks and Google, for tax avoidance. As a result, Amazon has faced a backlash and boycott from the general public and other businesses in the UK.
The Chinese government is planning to increase regulation of Amazon (along with Apple Inc. and Taobao.com) in relation to internet piracy issues. Amazon has already had to shut down third party distributors due to pressure from the NCAC.
Amazon has faced scrutiny from numerous individual sellers who have claimed that Amazon unexpectedly closed their accounts, and subsequently withheld their funds for indefinite time frames. According to Section 5.k of the Amazon Seller’s Participation agreement, Amazon may earn interest on funds collected from buyers before they are disbursed to sellers, meaning Amazon can increase their earnings by delaying disbursement.
Amazon has attracted widespread criticism by both current and former employees, as well as the media and politicians for poor working conditions. In fall 2011 it was publicized that at the Allentown, Pennsylvania warehouse, workers had to carry out work in100 °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 as “managers were worried about theft". Amazon’s initial response was to pay for an ambulance to sit outside on call to cart away overheated employees.
Some workers, “pickers", who travel the building with a trolley and a handheld scanner “picking" customer orders can walk up to 15 miles a day back and forward, and if they fall behind on their targets, they can be reprimanded. The handheld scanners feed back to the employee real time information on how fast or slowly they are going, and 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.
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 Hesse. The report highlights the behavior of some of the security guards 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 centres.
On 2 August 2013 the Daily Mail ran an expose outing Amazon UK for employee gps ‘tagging’ and subjecting them to harsh working conditions, describing employees as ‘human robots’, the newspaper said that Amazon employed ‘controversial’ zero-hour contracts as a tool to reprimand staff. A Channel 4 documentary broadcast on the 1st August 2013 employed secret cameras within Amazon UK’s Rugeley warehouse documenting worker abuses and made similar claim to the Daily Mail calling the working practices ‘horrendous and exhausting’.
Amazon.com 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 US Congress, the Federal Communications Commission, and the Federal Reserve. Amazon.com spent $450,000 on lobbying in the second quarter of 2011, $630,000 in the first quarter of 2011, and $500,000 in the second quarter of 2010.
A number of companies have been started and founded by former Amazon employees.