Amazon is the world's largest online mail order company. Jeff Bezos started with books; Today the company sells, among other things, household appliances, electronic products and sports clothing. Customers can find almost every product they can imagine on Amazon. The enormous offer makes Amazon one of the most successful companies in the world and its founder one of the richest people.
While working on Wall Street, Bezos comes up with an idea for Amazon
Jeff Bezos was already successful before Amazon: in the 90s he worked on Wall Street in New York for the asset manager DE Shaw & Co. The company revolutionized the stock market through data analysis. In this way, asset managers found out which investments were most worthwhile for their clients.
Bezos looked for new areas of business and focused on the Internet. He noted that booksellers can only sell a certain selection of books. So Bezos wanted to create a company that would sell all the books in the world, because books are his passion.
Bezos founded Amazon in a Seattle garage
To realize his vision, he leaves Wall Street and moves to Seattle with his wife MacKenzie Scott. The couple founded the online bookstore together on July 5, 1994 in a small garage in the city of Pacifico. He receives an initial capital of $300,000 from his parents. The Bezos initially called their company Cadabra.
But according to Jeff Bezos, the name sounded too much like a corpse. He then changed the name of his online business to Amazon. About the company's mission, Bezos once said: “Our vision is to be the most customer-centric company in the world, where people can find everything they want to buy on the Internet.”
Amazon sells its first book in 1995
On July 16, 1995, Amazon sold the first book. Two months later, the online mail-order business was already achieving monthly sales of $20,000. The idea of selling books online worked wonders and Amazon soon sold not only books but other products as well. Bezos took Amazon public in 1997. That same year, the company already had a turnover of 150 million dollars.
Amazon offers its customers a service that competitors cannot afford. The mail order company exempts its customers from VAT and therefore does not make a profit for 20 years. The company fights for a monopoly position and uses data analysis to gain new customers.
The dotcom bubble demands new innovation from Amazon
The dotcom bubble hits Amazon hard. The Internet giant is in danger of going under. Bezos is forced to lay off 1,300 employees. But then he has a brilliant idea. He creates the Amazon marketplace and offers retailers to sell their products on Amazon for a fee. In this way, the Internet giant earns a 15 percent commission per article. Innovation means Bezos can save Amazon from extinction and is now the largest online mail order company in the world.
Bezos also had data analysis in mind with this idea. As he attracts retailers to his site, he also gains new customers and data that helps him generate even more sales.
Amazon Prime is becoming the most successful subscription model in the world
In 2005, the company introduced the Amazon Prime subscription model. Customers can now place orders with free shipping and expect delivery within two days. It will be the most successful subscription model in the world. To deliver on its Prime promise, Amazon opened numerous fulfillment centers, first in the United States and then around the world.
In addition to the Amazon marketplace, the online mail order company offers many other services. With Prime Video, Amazon has created a service that competes with market leader Netflix. Prime members can watch movies and series on the platform. Amazon has also been producing its own products for several years.
Prime recently added Freevee to its streaming offering. The company screens other series and films here. The highlight: As on television, the viewer is faced with commercial breaks that cannot be skipped. Amazon is guaranteed to make money through ads.
With Amazon Music and Audible, the company offers a wide range of music, podcasts and audiobooks in a subscription model. Amazon also has its own supermarket chain with Whole Foods in the US and is a global market leader as a cloud services provider. The company offers computer applications and network storage space. Amazon Web Services (AWS) is used by many well-known companies and competitors, such as Netflix.
Amazon criticized for poor working conditions
On the way to becoming the number one online mail order company, Amazon has also had to endure a lot of criticism, for example over working conditions at the company. Amazon also uses data analytics to monitor its employees. The allegation is that Amazon uses cameras and software to analyze its employees and uses the data obtained to monitor its own employees. Anyone who works too slowly will be informed by performance data and asked to go faster.
Additionally, errors in Amazon's human resources system have resulted in employees not receiving proper pay or even being fired. The company blamed automated processes. Amazon also faced harsh criticism for promising employees more pay if they did not take sick leave for a month.
Many publishers criticize Amazon's market power and accuse the company of destroying stationery retail. Almost no one goes shopping in the city anymore when everyone knows that Amazon has everything. Online shipping is a convenient alternative to retail.
Former US President Donald Trump, who is running again for the US presidency, also criticized Amazon. He blamed the company for the poor financial situation of the US Postal Service. It is doubtful that this is the only reason for his criticism of Amazon. After all, Bezos owns the Washington Post newspaper, which has reported critically on Trump in the past.
Germany's second largest market for Amazon
Amazon has more than 300 million customers around the world. The company is also represented in this country. Germany is now the second strongest team after the United States. 64,000 retailers sell products on Amazon to 44 million German customers. According to its own data, the company has invested more than 28 billion euros in infrastructure in Germany. Thanks to its 20,000 employees in this country, Amazon generated sales of $33 million in Germany alone in 2022.
However, the company refuses to pay its taxes in Germany. To avoid high taxes, Amazon has set up a headquarters in Luxembourg.
In 2023, the company generated sales of $574.79 billion worldwide. This resulted in record profits of $30.4 billion. Business is great for the world's largest online mail-order company. This is also the reason why Jeff Bezos was able to step down as CEO in 2021 and hand over the leadership of the company to Andy Jassy.