Amazon: In Depth (Brief History)

The growth and ambition of Amazon are legendary. The company started off in 1994 as an online book store which held its early meetings in a Barnes and Noble, then turned into the largest global retailer and the second most valuable company in the world. (Watch out Apple, Amazon is now also a trillion-dollar valued company.)  Consider this: Amazon had its IPO in May of 1997 and was trading at $18 a share. If you bought 1,000 shares, those shares would now be worth over a million dollars.

So, why is Amazon such a growth monster of a company?

That is the trillion-dollar question. There are a few reasons to consider which can be insightful in an overall discussion about what makes Amazon so successful.

Convenience

Let’s be honest, the main motivator for people to shop on Amazon is the free shipping and the convenience of the experience. Think of the collective “Aha” moment experienced when people realized they don’t even have to leave their home to buy things. All they need to do is check their front door the next day and “voila,” the item is at their doorstep. This next-day delivery and free shipping really did feel like a magic trick the first time you ordered from Amazon. Maybe it wasn’t crazy that Jeff Bezos considered naming the company Cadabra in the beginning (as in Abracadabra).

The “one click” concept has taken convenience to another level with the ease of use, and the ability to conduct an entire transaction alone and on your own terms has only added to the growth of Amazon. You don’t have to talk to a salesperson to find the best price. You also don’t have to take the salesperson’s advice. You can read and research actual reviews from those who have purchased the item before you buy. You don’t have to head to a store to see if the item is available, and you certainly don’t have to carry the item to the checkout and wait in line. What’s more, you don’t even have to pull out your wallet or purse to make the purchase. All these factors lead to a very unique and simple user experience which is unlike any shopping experience we have seen before. The closest similarity would have to be pizza or Chinese food delivery, but even those transactions required calling a person and then paying in cash once it arrived at your door.

And the concept feeds on itself. The convenience and gratification of the arrival of a purchase can become addictive. There is a sense of joy and fulfillment seeing boxes at your door. “A package has arrived” rings through your ears and unleashes your endorphins while you unwrap the package and set eyes on a tangible item you now own, not just an image on the screen of your phone or computer screen.  People may even feel “let down” and a bit depressed when they start going days without a new package or two arriving at their door.

In essence, Amazon is not a shopping company or a store; it is a shipping operation with a massive emphasis on logistics and delivery anchored in convenience to maximize the user experience.

This is an operation that requires a significant investment. Amazon has more employees across the globe than Google, Facebook, and Alibaba combined with over 550,000 employees and more than 45,000 robots that work at their various distribution centers.  As Amazon looks forward to further improving their distribution, they have become a leader in developing new technology to increase efficiency and decrease costs throughout the supply chain.

Forward Thinking & Diversification

Jeff Bezos was not content to simply keep Amazon rolling as an online book store.

The company’s mission statement is: “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”

Adhering to the mission statement has led to the development of many different initiatives and departments, and even some very high-profile acquisitions. From Amazon Prime to Amazon Flow, and Amazon Smile to Amazon Go, AWS, Twitch, Kiva, and now Whole Foods, there is a lot to keep up with in the world of Amazon’s service development.

Amazon Prime

According to Amazon
Members receive benefits which include FREE fast shipping for eligible purchases, streaming of movies, TV shows and music, exclusive shopping deals and selection, unlimited reading, and more.

GroovyTek Take
The launch of Amazon Prime has been a resounding success with more than 60% of U.S. households being Prime Members. In addition to revenue from Prime membership fees, Prime has also helped with consumer loyalty and aided sales growth as Prime Members on average purchase more overall.

Flow Powered by Amazon

According to Amazon
Flow Powered by Amazon is an augmented reality app that lets you discover information about items around you.  With Flow you can identify tens of millions of products including books, DVDs, and packaged household items like a box of cereal or a box of tissues. You can also scan phone numbers, URLs, email addresses, and business cards and then quickly dial, open, or add the information to your contacts.

GroovyTek Take
Amazon is looking to make it convenient for you to develop a shopping list in real time and, of course, utilize Amazon for the fulfillment of that list. It works both to create demand and to control the process of the sale. Again, if it’s convenient and user friendly, it could end up paying big dividends as it develops.

Amazon Smile

According to Amazon
AmazonSmile is a website operated by Amazon with the same products, prices, and shopping features as Amazon.com. The difference is that when you shop on AmazonSmile, the AmazonSmile Foundation will donate 0.5% of the purchase price of eligible products to the charitable organization of your choice.

GroovyTek Take
Jeff Bezos recently surpassed Bill Gates as the richest man in the world. Like Gates, he appears committed to making philanthropy a core element of his brand. Smile is a practical and positive initiative which requires very little user effort to be involved. It also provides the ability to support local causes, such as a specific local school. (On a side note, it has been said that Amazon believes the creation of jobs and impacting the overall economy are also ways in which the company can be a powerful agent for positive social impact.)

Amazon Web Services

According to Amazon
In 2006, Amazon Web Services (AWS) began offering IT infrastructure services to businesses in the form of web services -- now commonly known as cloud computing. One of the key benefits of cloud computing is the opportunity to replace up-front capital infrastructure expenses with low-variable costs that scale with your business. With the Cloud, businesses no longer need to plan for and procure servers and other IT infrastructure weeks or months in advance. Instead, they can instantly spin up hundreds or thousands of servers in minutes and deliver results faster.

GroovyTek Take:
Think of Amazon Web Services, or AWS, as the key business-tobusiness offering from Amazon. To date, huge companies such as Unilever, Netflix, Kellogg’s, and GE Oil & Gas utilize Amazon Web Services, not to mention hundreds of government agencies across the world. AWS is a way for Amazon to leverage its scale and presence across the globe to generate revenues from a nontraditional consumer service offering.

Fun Fact:
The Amazon logo depicts a smile that goes from A to Z.