The History Of Amazon.com – How Jeff Bezos Started Up The Company


Amazon – amazon.com – is a website that even a kid well knows today. Millions of customers, both returning and new visit this online marketplace to find everything they need to buy online. Their mission is to offer any product under the sun, to anyone, anywhere in the world… And they have been doing this really successfully for more than 20 years…

Amazon.com Inc. is undoubtedly a pioneer in online retailing. The company offers almost everything – from books, videos, CDs, DVDs, and toys to automotive parts, lab & scientific supplies, power transmission products, and so on. And here in this interesting article, you will be able to read the amazing startup story of the company and its founder. As with almost any other great business, this one was started really small (in a garage 🙂 ), by one person armed with only great ambitions and a bright idea – the main components of great success…



Jeff Bezos – The Amazing Start-Up Story Of An Amazing Entrepreneur

Jeff Bezos, The Founder Of Amazon (Wikimedia)

Jeff Bezos, The Founder Of Amazon (Wikimedia)

The Internet had just started to gain tremendous popularity in the 90-ties and it had started to affect people’s lifestyles and the way they do business. As the Internet was slowly penetrating into daily life, companies began perceiving the web as a new avenue for commerce. Selling products over the web offered a variety of opportunities, but it was not as easy, as it may seem today. One of the greatest entrepreneurs of that time was Jeff Bezos, the founder of Amazon.com.

In 1994, 30 years old Bezos was working as a vice president in the Wall Street firm D.E. Shaw. These were the times when the Internet was just starting to boom… One day he read a report, which outlined the projected annual web growth, and the figures there amazed him – more than 2000 % annually. Jeff realized that the potential of this new thing would be huge, so huge that he decided to leave his secure job and move to Seattle to start working on what would later become Amazon. Bezos made a list of 20 products that could be easily sold on the Internet. Next, he focused on the 5 most promising of them: books, compact discs, computer hardware, computer software, and videos. Bezos’ general business idea was to sell books online, taking advantage of the growing popularity of the World Wide Web, the big target audience, and the vast choice of books that were published. He believed that books can be sold at reasonable prices and he would be able to very easily ship them. And this was how the idea behind one of the first online bookstores was born!

Amazon.com

Amazon.com

Amazon Is Starting Up…

Already having the business idea, Now Bezos had to focus his attention on just one thing – to put things into action! He founded the company “Cadabra” on the 5th of July, 1994, but a year later he decided to change this name because it was misheard by a lawyer as “cadaver”. He chose “Amazon” because this was the name of the biggest river in the world (he wanted to make the new company this significant, too), it was quite exotic and it started with the letter “a” (it would be on the first places of any list).

Finding Money For Launching The Business

Now he needed money for starting the business. Most of the funds he collected were from his family members and friends. His parents invested most of their savings in the new company, even though Bezos had told them that the chance to lose them all was about 70%. He offered some friends 1% shares of the business for $50 000 each, other people got smaller shares for $30-50 000 and finally, the entrepreneur managed to collect $981 000 of seed capital after selling around 20% of Amazon.

An interesting fact is that the early investors in the company realized huge gains from their initial money. $50 000 put into a share of the company is worth around 5 billion dollars today.

Amazon.com – A New Online Bookstore Is Going Live

This is how Amazon.com site looked in year 1994 :)

This is how the Amazon.com site looked in the year 1994 🙂 … Picture from: qz.com

Now remained the creation of a user-friendly, multi-purpose website. This turned out to be an easy part, the domain name Amazon.com was registered on the 1st of November, 1994. Then the first site of the bookstore was built and immediately launched in 1995. Very soon the site became the number one book-related online store on the Web. It was simply a place, where people could choose among thousands of titles without even leaving their homes. It included ‘recommendations’ list, a refined search system, easy access to a huge database, and an option to pay easily with a credit card and you could get your book shipped in a few days.

It’s interesting that Amazon.com carried only about 2,000 titles in stock in its Seattle warehouse, and most of the orders, processed through the website, were placed directly through wholesalers and publishers. Initially, Amazon operated in Bezos’ garage and once it had become clear that it will be a success, it was moved to a Seattle office. It is interesting how the use of the Internet changed the habits of clients and respectively a challenging venture could become a project with customers from not only all US states but also many other countries around the globe.

Amazon shaped the face of online commerce and as a leader, it had established the main web business standards. Bezos worked on making the website as user-friendly as possible and relating the site to all types of clients. Soon the books database was expanded to more than 1 000 000 titles. Many of them could be purchased at sweet discounts starting at 10% and reaching 40%.

Besides user-friendliness and the choice of different options on the website, Bezos also implemented all those little things like: suggested titles, top products, and reviews, that instantly increase customer’s experience and convert the visitor into a returning customer, happy with the products and services there. Amazon turned out to be the place where readers share information about books, comment, and help each other.

The IPO of Amazon

This fast expansion had to be fueled with nice amounts of cash. To finance the growth, Bezos decided to launch an initial public offering (IPO) and sell some shares for the needed capital. This happened in May 1997, when 3 000 000 shares were offered to the public. After the opening bell, Amazon’s stock prices skyrocketed, ending the day with a 30% increase. The company was valued at $438 million dollars and it managed to collect $54 million from the IPO.

In order to make the distribution easier, Bezos opened an East Coast distribution center in New Castle, Delaware in 1997. That would help for faster and more reliable shipping and would reduce the tension in the current center.

In 1997, Amazon was already a big success. It had sales of more than $147 million dollars and customers from almost every country in the world.

Amazon Associates Launch

Amazon Associates

Amazon Associates

Amazon Associates was established in 1996 and targeted individuals with their own websites who were able to choose books of interest and place ads for them on their own sites, allowing visitors to purchase those books. Initially, the commissions were below 10%, but the program turned out to be a great success. By February 1998, the number of its members reached more than 30,000, who now earned up to 15 percent for recommending and selling books from their websites. After just a few months, this number more than doubled.

The customer database of Amazon continued to grow, now the site had more than 2 million clients from around the globe. More cash was needed for this beast to be fed. Amazon took a $75 million credit in late 1997, which was used for further expansion. The company continued to improve and reshape its services in 1998. Besides its catalog of over 2.5 million titles, the company added Amazon.com Advantage, a program to help the sales of independent authors and publishers, and Amazon.com Kids, a service providing over 100,000 titles for youngsters – children and teenagers.

Acquisitions in Europe

Amazon.com also expanded its business by acquiring three other enterprises in early 1998. Two of them – Telebook ( a big online bookshop in Germany ) and Book pages (a large bookseller in England) were acquired to further expand Amazon.com’s business in Europe. The new companies not only gave Amazon.com access to new markets in Europe, but they also provided the existing Amazon.com customers with access to more books from around the globe. The third acquired company was The Internet Movie Database (IMD), which was used to support plans for moving into the online video sales business.

Amazon Enters In the Online Music Business

In 1998 Amazon decided to enter the online music business. Bezos intended to make the website a great source of all kinds of products, so he asked them for help. Bookstore customers and members of the music profession were the ones who would help with the design of the new music site. And it was opened in June 1998 with more than 125,000 music titles there. The site had many of the great features the bookstore had and everybody could hear a sound clip, before placing his order.

What Goes Around Comes Around

The expansion continued… By the end of 1998, Amazon had 3 million registered customers. The products offered on the site had become so much, that it was divided into several separate sections – one for every man product group. In 1999, it launched an online auction service entitled Amazon Auctions. The holiday season in 1999 was a success for Amazon and its founder, who then really harvested the fruits of his efforts. The sales of the online stores reached $1,6 billion dollars in this year and Bezos was chosen for the “Person of the Year”, by The Times magazine.

Sales were on the rise, and many new products had been added constantly. The main business strategy of the company was to gain market share, not profits. Thus, the company continued to register net losses. The Dot-com boom and burst hit Amazon too. Although shares plummeted, and the sales decreased, the situation there was far from desperation. The management focused on reducing expenses, and this is how many employees lost their jobs and some departments were closed. The lower costs helped Amazon.com to return back to growth. In 2001 there was an increase of 13% in sales which grew to $3.12 billion. In the fourth quarter of this year, Amazon.com even made a net profit of $5 million. However, the result for the year was a loss of $149 million.

Only one year later, Amazon opened its apparel store which included clothing from famous retail brands. Amazon was focused on becoming the greatest online store on Earth that ensures profits from a long-term perspective. The strategy of gaining market share instead of profits helped a lot in the fast growth over the years. Bezos and his team were sure that the company does what it was supposed to do in order to achieve success.

Amazon Today

When it comes to eCommerce, Amazon.com is king. Boasting a global market share of over 37%, the juggernaut known as Amazon continues to be the one to beat in the world of online retail. Founded in 1994, Amazon started as an online bookstore, with founder Jeff Bezos having the vision to launch the world’s “biggest bookstore,” with no brick-and-mortar stores.

Today Amazon is the biggest online retailer in the world. The company is publicly traded and is valued at more than $900 billion (Jan 2023). The company reached more than $48 billion in sales in 2011 and $ 0.63 billion in profits. In 2022, these figures have grown to $127B in sales and $2.87B in profits. The company hasn’t stopped its growth, even after the financial crisis of 2007 (still raging today) hit the world. It is one of the fastest-growing web companies in the world today.

The company’s delivery system, whether it is Amazon Prime, Same-Day Delivery, or just regular delivery, makes buying on the Amazon platform that much easier. Most items are quickly delivered to customers’ doorsteps and returns are painless, ensuring a hassle-free shopping experience.

The Kindle Mania

The Kindle interface is extremely user-friendly and provides access to a wide range of digital content. Whether you’re looking for a new book to read, a new game to play, or some other form of entertainment, the Kindle offers it all. It’s perfect for finding new books and magazines that you wouldn’t find in a traditional store. Plus, the Kindle also offers access to popular streaming services such as Netflix, Hulu, and YouTube. You can even access audiobooks and podcasts.

In 2018, one of the hottest products on the site was Kindle – a nice and relatively cheap book reader. You can purchase it at prices starting at $75 and in addition to some devices, you get lifetime free internet access, provided by Amazon. This way you will have access to more than 1 000 000 e-books in the Amazon Kindle Store.

Amazon Prime

Amazon Prime is a membership program that provides customers with benefits including access to Amazon’s vast library of streaming media, free two-day shipping on all eligible orders, and discounts on a variety of other items.

Amazon Prime has several advantages that make it the choice for those looking for an easy and convenient shopping experience. First, Amazon Prime grants members access to Amazon’s streaming library of movies, television shows, and music, which can be accessed on any device with an internet connection. This makes it easy to stay entertained while also giving shoppers access to a large selection of movies, TV shows, and songs. Furthermore, Prime members get free two-day shipping on eligible products, which is great for those who are in a hurry to receive their orders. Prime also comes with discounts on regularly-priced items, including certain books, electronics, and clothing items.

In addition to the subscription services, Amazon Prime offers members the benefit of loyalty rewards. By signing up for the program, members can receive discounts and other benefits by collecting loyalty points on their purchases.

As Amazon continues to grow, so does its focus on customer service which is always available to help customers with their concerns, and the company offers a generous return policy. With a vast selection of products, competitive prices, and excellent customer service, it’s no wonder why Amazon continues to dominate the eCommerce industry. With no signs of slowing down, Amazon will remain a leader in the eCommerce realm for years to come.