The history of Amazon: How Amazon came to dominate retail

Intro the story of Amazon's empire is a perplexing one on the one hand its killed off scores of bookstores threatened almost every sector of small business retail gotten its hands into everything from logistics to music to cloud services and it's not stopping there on the other hand consumers have fallen in love with their low prices convenience along with the new standard of 2-day free shipping which is sometimes even same-day shipping and let's not forget they're putting out Emmy award-winning TV in oscar-winning movies as well so bad all this start The beginning back in 1994 a thirty year old former high school valedictorian named Jeff Bezos was working at de Shaw a prominent hedge fund one day well at the computer he found a site that said the internet was growing at 2,300 percent a year up to that point the internet was mostly used by the government and academics but Bezos saw a game-changing opportunity ecommerce he started with a list of 20 potential mail-order products and landed on books this is because the internet had a big advantage on mail-order catalogs that is it's actually possible to list all of the books on the internet without spending millions creating catalogs the size of a New York City phonebook with that in mind he founded amazon.com in Bellevue Washington in his garage giving the fledgling business just a 30% chance of success the company debuted officially in 1995 in the very first book sold was Douglas Hofstadter's fluid concepts and creative analogies : computer models of the fundamental mechanisms of thought the choice of book would illustrate Amazon's genius concept making everything even the most niche of books easy to find initial results were promising within just two months sales at Amazon had reached $20,000 per week in 977 on May 15th the company debuted on NASDAQ going public at $18 per share Amazon's early filings back then detailed a strategy that with markets next 14 years well the company believed that it will incur substantial operating losses for the foreseeable future in other words Bezos and his company were all in Amazons first profit Amazon survived the dot-com bust at the 90s which happened to kill off a lot of its competition by the end of 2001 it had made its very first profit 5 million dollars for one cent per share a proof of concept and paid off but Wall Street's irritation with the company's earnings would continue to be a recurring theme for Amazon in 2013 Amazon earned way less than it had 5 years before but it had tripled its sales the company's lack of interest in profits and singular focus on growth but one commentator to call it quote a charitable institution being run for the benefit of consumers Bezos took issue with that noting that he was taking a much longer view than irritated Wall Street analysts or other doubters investors however have seemed willing to stay the course and Bezos himself probably has a lot to do with that in fact Bezos is unique persona has driven the perception of Amazon's peculiar strategy especially in its early days part of that had to do with his image Bezos unique persona despite being a digital company he makes everyone on his senior team read a six page memo in silence on a topic before even discussing it in a meeting a far cry from the standard corporate PowerPoint another part of it has to do with how he approaches things for example one time Bezos had a breakfast with the CEO of a company he was going to buy when asked why he was interested in the company Bezos compared it to an octopus that was on the menu when I look at the menu he said you're the thing I don't understand the thing I've never had I must have the breakfast octopus the some question Bezos a strategy with Amazon others saw his quirkiness as a visionary who could think outside the box in retrospect it makes sense look how the company has innovated a lot of the stuff that you probably take for granted as standard practices for e-commerce actually started with Amazon it popularized product reviews and e-mail verification for orders and expanded offerings far past books one of the most important innovations besides being another bet on thin profit margins was the introduction of free Super Saver Shipping in other words Amazon was giving out free shipping for orders over $99 and consumers bought in in 2005 Amazon added a twist to its business model but had launched Amazon Prime the deal was simple free two-day shipping in the lower 48 states just $79 a year this is something that would prove pivotal to the company's strategy to get consumers to go all-in on its business model soon after the company launched fulfilled by Amazon which was something that blended third-party sales and Amazon's own sales by lending sellers the company's massive infrastructure this third-party selling is the key to Amazon's business model turning the company from an online store for all of these business model innovations Innovations more and more people became convinced that Jeff Bezos was playing a serious game for corporate chess and look what happened do you see any borders bookstores anymore any virgin megastores Tower Records circuit cities it's hard to say that Amazon killed them but there's no doubt that it was a factor in 2007 Amazon launched its first major hardware product the Amazon Kindle going back to his bookish roots just three years later eBook sales in the platform had eclipsed hardcover sales in the first time the mid 2000s were also an incredibly pivotal time for the company in many ways that people don't realize this was when a dramatically invested its b2b platform rolling out its web services simple storage service or s3 along with other services which eventually evolved into its cloud computing giant AWS or Amazon Web Services by the early 2010's Amazon had started to double down on its multimedia services releasing Amazon music and eventually Amazon Instant Video its service for prime at the same time it released the Kindle Fire inexpensive tablet and an easy way to get more people into a product ecosystem that hardware was mildly successful except for maybe the failed fire phone but nothing compared to the echo and Alexa which launched in 2014 was the very first voice assistant that was actually well received it also represented innovation in how people buy stuff which Amazon pioneered through - buttons one-click buying which Amazon actually has a patent for subscriptions and more this innovation also flows into other parts of the e-commerce experience through Amazon Walker's access points drone experimentation even going into people's homes Problems and for all of Amazon's reputation as an online giant the company made a huge bet in the real-life retail space by getting directly into the supermarket business and paying 13.7 billion dollars to buy a Whole Foods in 2017 at this point it seemed like the sky was the limit for Amazon but not everything was perfect the company's innovation has been tchard into some more peculiar realms with patents for wristbands that track worker moves in caged like enclosures the latter example is actually worker protection in warehouses and Amazon has said that even bad ideas get submitted for patents but the outrage over them stems from very real problems that Amazon has had flavor articles have cited no air conditioning in hundred degree weather without fresh air intense physical demands and difficult targets and non-compete clauses for workers bending them from getting jobs competing with Amazon which may be kind of everything even in the white collar non warehouse part of the company 2015 report had one employee saying quote nearly every person I worked with I saw cry at their desk to its credit and in response to years of criticism Amazon announced in 2018 that would be paying all US and UK employees a $15 per hour minimum wage although it eliminated stock awards and bonuses for many employees at the same time however Amazon did promise to lobby federally for $15 an hour minimum wage Second HQ labor hasn't been the only black guy the company has also been derided for swarming with fake reviews hosting counterfeit goods selling Holocaust denial books eavesdropping on people via echo devices not paying enough sales tax being accused of falsely but loudly by Donald Trump ruining the USPS and in 2018 Amazon announced plans to open a second headquarters HQ too which led countless mayors and governors to lay gifts of tax benefits and outrageous statements of enthusiasm at Jeff Bezos feet New York Governor Andrew Cuomo even said he would rename himself Amazon Cuomo if it helped the cause many cities got their hopes up but in the end New York in the DC metropolitan area won after securing big tax breaks that sparked even more controversy since Amazon is one of the most valuable and successful companies despite all of its growing pains the vision of Jeff Bezos has always been clear be obsessed with the customer whatever customers need Amazon wants to be the one to provide it which is why we are seeing Amazon throwing so much at the wall just to see what sticks in a sense this strategy means Amazon has a finger and pretty much everything putting pressure on almost every facet of consumer facing businesses and more throughout its almost 25 year run it's been hard to know exactly where the company is going but one thing has been clear from Bezos to strategy from the outset that provides a pretty good idea this is perhaps the most ambitious company in American history [Music]