Amazon (AMZN) investor relations material

From Books to The Everything Store

Amazon is one of the largest enterprises in the world and sells almost everything you can think of, both direct to customers (1P) and as a middleman between other retailers and end-customers (3P). The company is mostly known for its cheap prices, vast selection, incredibly fast delivery times, and large scale. With the enormous selection as a basis, Amazon is now often referred to as the everything store.

Amazon has some sort of presence in almost every industry through its enormous ecosystem. Besides being one of the largest retailers and ecommerce companies in the word, Amazon is also the world's largest provider of cloud infrastructure services through its subsidiary Amazon Web Services (AWS). Moreover, the company owns companies such as the grocery store chain Whole Foods, the gaming streaming platform Twitch, and world-leading books and entertainment rating platforms like Goodreads and IMDb. Also worth mentioning is that Amazon is a part of the prominent FAANG cohort along with Facebook (Meta), Apple, Netflix, and Google (Alphabet).

The dream of the internet

In the early 90s, while being employed as the Vice President at the Wall Street hedge fund D.E. Shaw & Co, Jeff Bezos read a research report which projected the internet to grow at 2,300% annually in the coming years, which made him leave his high-paying job and start from zero as an entrepreneur to chase the dream of the internet.

While still operating out of Jeff’s garage in Washington, Amazon was first incorporated as Cadabra Inc, which was later changed because it sounded too much like “cadaver”. Bezos also purchased domains for names like Relentless.com, Awake.com, and Browse.com, which were also scratched later on. These three domains are still owned by Amazon, and if you type in any of these names in your browser you will be directed to Amazon.com. Bezos motivated the final name change to Amazon by saying, “It’s not only the largest river in the world, it’s many times larger than the next biggest river. It blows all other rivers away."

Subscription via Amazon Prime

The rationale behind starting with selling books was that they could be successfully sold online given the low unit price and the huge number of titles available in print, which would make it hard for physical bookstores to compete with selection. Only two months after launch, Amazon was selling books to the whole U.S. and more than 45 countries in total. This rapid and wide ramp up of sales would of course not have been possible before the internet.

The next category after books were adjacent categories like CDs, movies, games, and software, which all shared many of the characteristics of books. Today, Amazon is almost literally selling everything except huge items like cars, pets, and legally complex product categories like weapons, lottery tickets, tobacco, alcohol, and pharmaceuticals.

One of Amazon’s many astonishing inventions is the customer loyalty subscription service, Amazon Prime (inspired by Costco's business model), which during 2021 surpassed 200 million members. Amazon Prime has several offerings and benefits included in the same subscription. Prime subscribers get free one- or two-day shipping (depending on where you live), access to the subscription video on demand service Prime Video and the music streaming service Prime Music, exclusive Prime Day deals, and much more.

Cloud services with AWS

AWS is the global leader in cloud infrastructure services, used both by startups and some of the largest companies in the world. The value proposition is attributable to enabling large scale computing capacity quicker and cheaper than by setting up own physical server stations. Amazon betted on the adoption of cloud very early, which has been a key factor for the unmatched market share they possess today. AWS was founded in 2006, and was first headed by Amazon’s current Group CEO Andy Jassy, who envisioned building the operating system of the internet. Other famous early employees of AWS are the founder of Twilio, Jeff Lawson, and founder of Tableau, Adam Selipsky, which is now a wholly-owned subsidiary of Salesforce.

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