12 - Amazon.com1 AMAZON CAN BE ONE OF THE MOST SUCCESSFUL COMPANIES ALL OVER THE WORLD RISKS ARE BIG BUT PROFITABILITY CAN BE ALSO BIG Morgan Stanley

12 - Amazon.com1 AMAZON CAN BE ONE OF THE MOST SUCCESSFUL...

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Amazon.com 1 “A MAZON CAN BE ONE OF THE MOST SUCCESSFUL COMPANIES ALL OVER THE WORLD . R ISKS ARE BIG , BUT PROFITABILITY CAN BE ALSO BIG Morgan Stanley Dean Witter I NTRODUCTION Amazon.Com is a leading online retailer company, offering for sale different items such as books, music, DVDs, videos, toys, electronics, software, video games and home improvement products serving almost 22.5 million customers over 150 different countries. This company was founded in July 1995 by Jeff Bezos in the state of Washington USA. Jeff Bezos now 37 years old, received his BS in Electrical Engineering and Computer Science from Princeton University. His professional career started at Bankers Trust Company in 1988, where he became Vice President in February 1990. At the end of the same year he moved to D.E. Shaw & Co. a Wall Street investment firm, becoming Senior Vice President in 1992. In those early years for the Internet retail business, Mr. Bezos noticed an important opportunity on the online commerce. He made a list of possible products that could be sold on line, including books, magazines, music, among others and finally he decided to start selling books. The main reasons of his choice were because there are more books to sell than music titles and also because the book publishing industry is more accessible than the music industry, mainly controlled by half a dozen of big record companies. With a dream in hand he quitted his job in June 1994 and moved to the West, choosing Seattle as starting point because its proximity to a major book distributor, Ingram’s Warehouse in Oregon. This is how the company that took its name from the river with the biggest water flow of the world started in a garage downtown Seattle with four employees, to be the biggest flow of e-commerce book retail. P RODUCTS AND S ERVICES Amazon.com business is in some sense simpler than the usual book retailer firm. No investment in costly point of sales, small inventories, better client support, no long cues to pay or return books,… These are some of the advantages with respect to the “real world” commerce activities. In addition to this, customers can search at home a database of millions books, CD’s, DVDs, videos, software, video games, lawn products and even a pan for your kitchen. If you find the item you want, just add it to the shopping cart and then is needed to fill out an online form to specify the type of payment, shipment characteristics and even if it’s a gift, the type and color of wrapping paper. Also today it is possible to access used and collectible items through 1 This case study has been written by Raul González, with the collaboration of Oriol Amat, Department of Economics and Business, Universitat Pompeu Fabra (Barcelona). 1
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their zShops and Amazon Commerce Network (ACN) 2 or going to Amazon Auctions or sothebys.amazon.com.
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