The Amazon Story: From Failure to Total Domination and Beyond
Love it or hate it, Amazon.com is slowly taking over the eCommerce world in many ways, starting with humble beginnings even before the company became notorious as an online book retailer. Most people know that Bezos came from a modest start in a literal garage, but you might not know that the company didn’t turn a profit until the turn of the 21st century (nearly five years after selling its first book) or that his parents invested a significant chunk to help keep the business going during the early years.
Keep reading to learn everything about the company that everyone loves to hate and the CEO that’s been under more fire in the past five years for his business decisions than any other business owner in the world. From the company’s storybook “modest” beginnings and curious name choices to its modern-day marketing choices that are earning the company the reputation of a schoolyard bully in the eCommerce world, there’s probably a lot that you don’t know about this company and how it got to where it is today. After all, to understand why retailers are trying to stop this giant from taking over the Internet marketplace completely, you need to understand how it got here
Humble Origins, Business Failures, and Early Lessons
According to most histories, Bezos’ journey with what is now Amazon.com began in 1994 when he quit his corporate job, moved to Seattle, and decided to capitalize on the Internet sales industry because he saw the potential in web commerce. Bezos began with a list of 20 different options for products that were marketable for online sales, then narrowing that list down to five hot items at the time:
• Computer Hardware
• Computer Software
Eventually, he settled on books because it offered a low unit price, a massive selection with millions of titles available, and a huge worldwide audience demanding print literature.
Bezos originally wanted to name his company something more eye-catching or statement-making. He considered names like Cadabra (as in “abracadabra”) and Relentless, eventually settling on Amazon because the name implied something different and exotic, which is what he wanted his online enterprise to become. Cadabra was the name that the company was incorporated under, but it was changed within a few months because the name was misheard as “cadaver”.
So, Amazon.com was born. In the garage of a rented home and with $10,000 of his own money and the assistance of another $250,000 from his parents, Bezos and his wife started selling books online. Within weeks, the orders were flowing in so quickly that the “sale bell” that rang every time a purchase was made had to be turned off.
How Amazon Gained Traction as an Online Bookseller
Although the company didn’t turn a profit for half a decade, they certainly sold plenty of books over the first few years. In the beginning, the company was less known to the general public, so word of mouth was a large part of the marketing game. What most people don’t know is that the Amazon business plan accounted for a lack of profit for the first four or five years. This made stockholders nervous at first but eventually proved to be the company’s saving grace.
So, with little to no knowledge of how to run a successful business online but plenty of dedication and passion for capitalizing on the success of eCommerce, Bezos turned an entire country into believers. The company’s ability to succeed the way that it did came down to the simple fact that Jeff Bezos made a wise decision at a critical time in the world of Internet commerce. Books are indeed a cheap inventory item, and they are something that people around the world spend millions of dollars on.
At the time when Amazon was founded, there were few online retailers selling books, let alone one with a structure like the now-giant marketplace retailer. They have always worked with distributors to sell books, which is actually what cost them a lawsuit for calling themselves a “bookstore” in the early days when they were just a distribution site, for the most part. While Bezos may have some interesting and perhaps even ingenious ideas about business, the fact that the company did so well was largely due in part to the fact that he chose the right product at the right time.
Surviving the Dotcom Bubble the Amazon Way
The decision to start with a slow-growth business plan could very well be what saved Amazon from the same fate of many retailers at the end of the 1990s. Like all new and good things, the Internet was quickly oversaturated with online retailers. Combined with a downturn in the economy, the dotcom bubble was ready to burst and it did, just as the 21st century was being ushered in. Thanks to its smart business plan and the strong reputation the brand had built as a book distributor and online retailer, Amazon not only survived the bubble bursting, but they began to thrive not long after.
As eCommerce retailers and brick-and-mortar bookstores alike were dying in the early 2000s, Amazon was thriving. The profit came in the fourth quarter of 2001, and from then on it just kept growing. Not only did the loss of so many e-tailers assist the brand in its growth, but the modest business plan left plenty of room for the company to “blow up”– and blow up it did. By reinvesting in the company for all those years and waiting to make money, Bezos saved his company from the ups and downs that notoriously come with new businesses and that were responsible for many of the companies that ended up going out of business.
From five or six years of no profits to becoming the single-biggest online retailer and commerce giant that it is today, Amazon has done well to roll with the punches over the years. Of course, when your parents make a quarter-million-dollar investment in your dream, it’s usually easier to turn it into reality.
Amazon the Bully: Coercing Retailers Changed its Image
For several years, people looked up to the Amazon brand, not only for everything that it offered but for everything that it had overcome. It had set the stage for online expansion and given many smaller retailers a place they could go to sell their products without having to set up their own shop entirely. It even started branching out into other areas, with Bezos seemingly willing to get his hands into anything that might be profitable and relatable to his eCommerce interests.
Then, the company started to shift its efforts and its attitude– or perhaps people were just seeing the true face of the brand for the first time. Either way, once Amazon started luring, and eventually all-but forcing, retailers to join the platform, the conversation changed. Suddenly, this once-admirable company that came in and set the stage for how you survive the uncertainty of the Internet was now leaving a bad taste in many people’s mouths.
PopSockets, the notorious phone accessory brand, actually spoke out against the brand in January 2020, advising that Amazon’s tactics were “bullying with a smile”, and explained how these tactics were used to force the brand to lower prices. Of course, this isn’t the first complaint against the company and it surely won’t be the last. To date, they’ve been sued by the likes of Walmart, Barnes and Noble, and others.
Considering a simple Google search for Amazon takeovers returns results like “What companies did Amazon put out of business?” and “43 Companies Amazon Could Destroy”, it’s not hard to see just how much this company has already taken over– not to mention the potential that they have to continue in the future. The only question is how far they will go to get what they want. To this point, they’ve been quite effective at pulling off pushy with poise, but word is quickly getting out and many people are starting to get a bad taste in their mouth about the global giant.
And yet, Amazon grows on.
Expansion: Amazon Logistics and Webservices
In addition to retail products, Amazon started offering a variety of web services and logistics solutions. The company’s expansion was never just about more retail sales. For Bezos, it was about finding the best way to profit from the Internet– and it still is. Amazon is on the fast-track to the future, thanks to its impressive scalability, adaptability, and unique growth model that truly proved that slow and steady does win the race.
The company had no profits before 2001. By 2010, revenue was up to more than $34,000, and by 2020, the company was raking in as much as $75.5 billion. This is not just because of retail sales, of course, but because of everything else that Amazon has done. Their involvement in logistics came from the realization that they could not only save money on third-party shipping solutions but that they could potentially offer their logistics solutions to other companies.
Some people are concerned that Amazon could soon take over or at least attempt to destroy logistics companies like FedEx, or at least some of the smaller shipping and courier services, but that remains to be seen. For now, FedEx has at least taken away their one-day air services from the offerings available to Amazon.com shoppers, but that doesn’t faze the brand in the least, as it continues to expand its own logistics and is now responsible for more than half of its own deliveries, making third-party services the minority and yet again using their massive size to flex the competition out of the market.
In addition to retail products, Amazon also offers a host of web services and logistics solutions, including Amazon Prime, Amazon Web Services, Fire TV, AmazonWireless, Amazon Drive, Amazon Studios, Kindle, and AmazonFresh. They even applied in 2019 to open a liquor store in San Francisco where they could ship beer and alcohol within city limits. There is nothing that Bezos won’t consider if it sounds profitable.
Acquisitions and Takeovers
Although the brand took a short break after the dotcom bust in the early 2000s, it continues to acquire, invest in, and take over companies of all kinds. The only question for Bezos is whether Amazon can profit from the venture, both financially and in diversification. If that’s on the radar, Amazon will find a way to get what it wants.
The Amazon brand currently owns more than 40 subsidiaries, including former independent brands like:
• Kiva Systems (Amazon Robotics)
• Whole Foods
Although the company appears to offer friendly mergers and acquisitions, some brands will tell you that behind the scenes, it doesn’t always look so nice. Like mentioned earlier, Amazon seems to have finessed its ability to take what it wants with a smile and it is only now that people are starting to notice. Unfortunately, now may be too late for even more companies that are on the radar of this commerce giant.
Is Amazon Unstoppable?
As is usually the case with most “success stories” that you hear about in commerce, this eCommerce giant didn’t come from much. It has done, in a mere two decades, what some companies couldn’t accomplish in a lifetime. No one may ever really know the true secrets behind Amazon’s success or what the motivations are beyond profit and market domination, but the fact of the matter is that the brand has done it– they have succeeded exactly as they set out to do.
Amazon always puts its interests first. Bezos knows the value of reinvesting in your brand, regardless of any other questionable practices. At the end of the day, that’s what has put this brand in such an untouchable position. Bezos started with one idea (selling books) but took advantage of every opportunity that came his way and turned a simple online book distributor into one of the most well-known brands in the world.
Unfortunately, the way he’s going about it doesn’t always seem like the best choice. Now that people are learning and seeing more about the “man behind the curtain” and all the brands that have had difficult interactions with the giant, everyone’s keeping an eye on this man and his seemingly unstoppable ways. No one can tell how far Amazon will grow, but it doesn’t look like it’s slowing down anytime soon.