20 years of Amazon's expansive evolution
It's the 20th anniversary of Amazon (AMZN), a company that has come a long way. It started with Jeff Bezos' original basic plan to sell books more efficiently and quickly led to the recognition that by gaining information about its customers, his company could learn to sell them anything and everything. Amazon has now become a titan of retail that has branched out into many other areas as well.
You could call Amazon the best example of the high-tech conglomerate, touching a breadth of areas that are startling in scope. Books started the business because a) people wanted them, b) physical stores were limited in what they could carry, c) books were easy to pack and couldn't break, and d), Amazon was located strategically near a major book distributor, so it wouldn't have to warehouse inventory at first.
Here are some milestones of how the company (originally called Cadabra, for Abracadabra, except that the name sounded like cadaver) broadened its strategy over the years:
- 1996 -- Launched an affiliate program to expand its reach and increase attention, from people and search engines, and had a major IPO.
- 1997 -- Opened its first remote distribution center and added one-click ordering to speed check outs and lower the number of abandoned orders, a problem in e-commerce.
- 1998 -- Expanded beyond books to include music and DVD/video sales. Acquired Internet Movie Database, which provides important information on what titles are receiving public attention.
- 1999 -- Began sales of home-improvement products, software, video games and gift items.
- 2000 -- Opened its marketplace to enable third-party orders. Started selling photo and camera items. Began an alliance with Toys 'R' Us, and offered its first free shipping offer on orders greater than $100. Launched its first overseas operations, in Japan.
- 2001 -- Offered online previews of books.
- 2002 -- Leveraged its infrastructure investment by entering cloud computing with the launch of Amazon Web Services. Began selling office products and apparel and accessories.
- 2003 -- Added health and personal care, gourmet foods, sporting goods and outdoors sales. Launched an electronics store and started an R&D development subsidiary that would help enable complex legal strategies to reduce taxes by licensing intellectual property from the subsidiary to the main company. Added searching inside books.
- 2004 -- Added jewelry and a line of beauty products.
- 2005 -- Launched the Amazon Prime program (which would eventually include free shipping and music, video, and e-book perks). Added wedding products.
- 2006 -- Began selling toys and baby products, going into competition with previous business partners. Added its grocery store.
- 2007 -- Launched the Kindle e-reader.
- 2008 -- Acquired Audible.com, Fabric.com, and AbeBooks. Added motorcycle and ATV sales.
- 2009 -- Added the Kindle app for mobile devices, Xbox Live store, Android shopping app. Acquired Zappos.com and announced a textbook trade-in program.
- 2010 -- Introduced more Kindle hardware and software. Started Amazon Studios to develop original TV shows, movies and comics using, in part, a crowdsourcing strategy.
- 2011 -- Sold more e-books than paper. Added Amazon Local for local deals and a Kindle lending library for Prime members. First appearance of the Kindle Fire tablet.
- 2012 -- Acquired Avalon Books to add a publishing arm. Started textbook rentals.
- 2013 -- Began offering Amazon Art logic services to other websites. Opened its first Black Friday-deals store.
- 2014 -- Introduced Fire TV device to add streaming services to TVs, Prime Music, 3D printed products store and Fire Phone. Jeff Bezos bought the Washington Post.
- 2015 -- Hired Woody Allen to create his first TV series. Began producing movies for theaters. Introduced one-hour delivery from local stores in selected areas.
But expansion into so many areas has been costly. Even though sales have grown from $511,000 in 1995 to $22.7 billion in the first quarter of 2015, in that last reported quarter, Amazon lost $57 million. Although it has been profitable at times, over the long run, it has manufactured as much red ink as it has new business lines.
Unlike Mark Zuckerberg of Facebook (FB) or Larry Page, Sergey Brin and Eric Schmidt of Google (GOOG), Bezos didn't achieve one innovation: structuring the company's stock to allow him to retain absolute control. Still, right now he continues to drive in all directions. But how much longer investors will allow him do so remains a question.