Amazon’s evolution: from bookstore to global department store
Amazon was founded in 1995 and initially focused on book sales. This choice was not due to founder Bezos’ love for books, but because books are a standardized product for which consumers have natural recognition and brand awareness, making them suitable for online sales. When it first started, Amazon had about 1 million books and its slogan was “Earth’s largest bookstore.” With a unified ISBN international standard book number, consumers only face differences in newness and price, which makes books an ideal product for online sales. One week after the website went online, Amazon’s sales exceeded $20,000. This rapid growth promoted its listing on the Nasdaq in 1997, with the closing price on the first day being $1.96.
In 1998, Amazon began to comprehensively expand its product categories, adding new categories such as film and television, music, electronic products, software, and toys, and actively explored the international market, launching British and German websites. In the same year, Amazon launched a new item recommendation algorithm to make personalized recommendations based on users’ browsing behavior and product similarity. This innovative move not only attracted a large number of users, but also drove its stock price to rise sharply before the Internet bubble burst in 1999.
In 2000, Amazon transformed into a third-party market, marking its development strategy from self-operation to platform development. This change allows more sellers to sell products on Amazon. Amazon also requires sellers to sell the same products under existing links, forming a “follow-up” rule. Through this strategy, high-quality sellers can be included in Amazon’s supply chain system and obtain higher market authority, such as VC (Amazon core supplier) and VE (Amazon official cooperative supplier) accounts.
In 2002, Amazon established partnerships with a number of clothing companies and added more than 400 new clothing brands, further enriching its product categories. In the same year, Amazon launched AWS (Amazon Web Services), officially starting the transformation of the technology company. According to the 2019 financial report, AWS has accounted for 12.49% of Amazon’s total revenue, and this service is still growing steadily.
In 2004, Amazon launched the A9 search algorithm to help users find the products they need more efficiently. In 2005, Amazon also launched the Prime membership program, providing members with free two-day shipping. By now, the A9 algorithm has become quite mature, and the Prime membership service has attracted more than 100 million users worldwide, which is regarded as one of the company’s most valuable assets. This series of strategies makes Amazon stand out in the US market where shipping costs are relatively high.