WhatIs.

com
DEFINITION
Amazon
Amazon (Amazon.com) is the world's largest online retailer and a prominent cloud services
provider.
Kinza Yasar, Technical WriterIvy Wigmore
08 Jun 2022

What is Amazon?
Amazon (Amazon.com) is the world's largest online retailer and a prominent cloud service
provider.

Originally started as an online bookselling company, Amazon has morphed into an internet-based
business enterprise that is largely focused on providing e-commerce, cloud computing, digital
streaming and artificial intelligence (AI) services.

Following an Amazon-to-buyer sales approach, the company offers a monumental product range
and inventory, enabling consumers to buy just about anything, including clothing, beauty supplies,
gourmet food, jewelry, books, movies, electronics, pet supplies, furniture, toys, garden supplies
and household goods.

Headquartered in Seattle, Amazon has individual websites, software development centers,

customer service centers, data centers and fulfillment centers around the world.

History and timeline of Amazon

Amazon has come a long way since it was founded by Jeff Bezos in his garage in Bellevue, Wash.,
on July 5, 1994.

The following is a brief history and timeline of events that have evolved Amazon from its humble
beginnings to a multinational business empire.

The 1990s
Amazon officially opened for business as an online bookseller on July 16, 1995. Originally, Bezos
had incorporated the company as Cadabra but later changed the name to Amazon. Bezos is said to
have browsed a dictionary for a word beginning with A for the value of alphabetic placement. He
selected the name Amazon because it was exotic and different and as a reference to his plan for the
company's size to reflect that of the Amazon River, one of the largest rivers in the world. Since its
inception, the company's motto has always been "get big fast."

The 2000s
In 2005, Amazon Prime This membership-based service for Amazon customers offers free two-
day shipping within the contiguous U.S., as well as streaming, shopping and reading benefits.
According to Amazon's website, current Amazon Prime membership rates are $14.99 a month or
$139 per year.

Amazon Web Services

This comprehensive and evolving cloud computing platform was also born in the 2000s. The first
Amazon Web Services (AWS) offerings were launched in 2006 to provide online services for
websites and client-side applications. Amazon Elastic Compute Cloud (EC2) and Simple Storage
Service (S3) are the backbones of the company's growing collection of web services. The same
year, Amazon also launched a cloud computing and video-on-demand service known at the time as
Unbox.

By changing the way people bought books, Amazon also shaped how they read them with the
launch of its first Kindle e-reader in 2007. This device helps users browse, buy and read e-books,
magazines and newspapers from the Kindle Store.

From the 2010s to present

Amazon debuted its first tablet computer, the Kindle Fire, in 2011 and the Amazon Fire TV Stick,
which is part of Amazon's extensive line of streaming media devices, in 2014.

Amazon also started an online Amazon Art marketplace for fine arts in 2013, which has featured
original works by famous artists such as Claude Monet and Norman Rockwell.

The popular in-home virtual assistant Amazon Alexa was rolled out to consumers in 2015 and was
followed by the Alexa-equipped Echo Dot in 2016.

Amazon acquired the organic grocery store Whole Foods in 2017 and launched Amazon Go, a
chain of cashierless grocery stores in 2018.

The rise of in-home shopping during the COVID-19 pandemic made consumers rely on Amazon
even more, and the trend is likely to keep growing.

A look at Amazon's history and the evolution of its notable products and services
Notable Amazon products and services
Amazon offers an ever-expanding portfolio of services and products. Following is a list of its
noteworthy offerings.

Retail
Amazon Marketplace. Amazon's e-commerce platform enables third-party retailers to showcase
and sell their products alongside Amazon items.
Amazon Fresh. Amazon's grocery pickup and delivery service is currently available in nearly two
dozen U.S. cities and a few international locations. A grocery order can be placed through the
Amazon Fresh website or the Amazon mobile app. Customers can either get their groceries
delivered or visit the store for pickup.
Amazon Vine. Launched in 2007, Amazon Vine helps manufacturers and publishers get reviews
for their products to help shoppers make informed purchases.
Woot. Acquired by Amazon in 2010, Woot offers limited time offers and special deals that rotate
daily. This shop features refurbished items, as well as new items that are low in stock. Prime
members get free shipping.
Zappos. Amazon bought Zappos in 2009. This online retailer of shoes and clothing carries a wide
range of brands, including Nike, Sperry, Adidas and Uggs.
Merch by Amazon. This on-demand T-shirt printing service enables sellers to create and upload
their T-shirt designs for free and earn royalties on each sale. Amazon does the rest -- from printing
the T-shirts to delivering them to customers.
Amazon Handmade. This platform enables artisans to sell handcrafted products to customers
around the world.
Consumer technology
Amazon Kindle. Amazon's first e-reader, Kindle, enables users to browse, buy and read e-books,
magazines and newspapers from the Kindle Store.
Amazon Fire tablet. Previously known as Kindle Fire, Amazon's popular and high-profile Fire
tablet competes with Apple's iPad.
Amazon Fire TV. This line of Amazon's streaming media players and digital devices delivers
streamed video content over the internet to a paired high-definition television.
Amazon Alexa. This cloud-based, AI-powered, voice-controlled personal assistant is designed to
answer queries, interact with users, and perform other tasks and commands.
Amazon Echo. This is one of Amazon's smart home devices that comes equipped with a speaker
and connects to Alexa. Amazon Echo can perform several functions, including talking about the
weather, creating shopping lists and controlling other smart products, such as lights, switches and
televisions.
Amazon Echo Dot. A smaller, puck-shaped version of the original Amazon Echo, an Echo Dot can
be placed in any room and can answer questions, play music, and read news and other stories.
Amazon Echo Show. As part of the Amazon Echo line of speakers, the Amazon Echo Show works
similarly through Alexa but also offers a 7-inch touchscreen display to play videos and music and
conduct video calls with other Echo users.
Amazon Astro. This is Amazon's first home monitoring robot that works with Alexa. It is designed
to help with various household tasks, such as home monitoring, caring for the elderly through
notifications and alerts, and following owners from room to room to play TV shows, music or
podcasts.
Subscription services
Amazon Prime. This subscription service provides members access to exclusive shopping and
entertainment services, discounts and more. As an example, all Amazon Prime members enjoy free
one-day or two-day shipping on qualifying orders.
Amazon Prime Video. This is Amazon's on-demand video streaming service that offers a selection
of about 24,000 movies and over 2,100 TV shows. This service is included with an Amazon Prime
membership.
Amazon Drive. Previously known as Amazon Cloud Drive, Amazon Drive is a cloud storage app
that offers 5 gigabytes (GB) of free and secure online storage for photos, videos and files for
Amazon customers. Amazon Prime members get free, unlimited, full-resolution photo storage,
along with 5 GB of video storage.
Twitch Prime. A monthly subscription service, Twitch Prime is a subsidiary of Amazon Prime. It
gives members premium access to Twitch -- a video streaming platform that offers a fun and social
way to watch people play games.
Amazon Music Prime. This is Amazon's music streaming service that is free for Prime members.
Digital content
Amazon Pay. An online transaction processing platform, Amazon Pay enables Amazon account
holders to use their Amazon accounts to pay external online merchants.
Amazon Music Unlimited. Amazon's premium music service costs $8.99 a month for Prime
members and $9.99 for non-Prime members.
Kindle Store. Part of Amazon's retail website, the Kindle Store can be accessed from any Kindle
device to purchase e-books.
Amazon Appstore for Android. Amazon's app store for the Android operating system enables users
to download games and mobile apps to supported devices.
AWS
S3. This is Amazon's scalable, cloud-based object storage. Files are referred to as objects in S3
and are stored in containers called buckets.
Amazon Simple Queue Service (SQS). SQS is a pay-per-use web service that is designed to
provide access to a waiting message queue where messages can reside until a computer processes
them.
Amazon EC2. This web service interface provides scalability with resizable compute capacity in
the AWS cloud. Users can run virtual servers or instances, commonly known as EC2 instances,
that can be scaled up or down, depending on the network requirements.
Amazon S3 Glacier. Amazon S3 Glacier is a low-cost cloud storage service for data that might be
associated with longer retrieval times. It also offers data archiving and backup of cold data.
AWS Identity and Access Management (IAM). IAM provides secure and controlled access to
resources.
Amazon Redshift. This data warehouse in the cloud enables users to query petabytes of both
structured and semistructured data using standard Structured Query Language queries. For
example, to address the expanding volume of transactions, Nasdaq moved from a legacy on-
premises data center to the AWS cloud, which is powered through the Amazon Redshift cluster.
Amazon AI services
Amazon SageMaker. A fully managed cloud machine learning platform, Amazon SageMaker
enables developers and data scientists to build, train and deploy machine learning models for
predictive analytics applications.
Amazon Lex. This service for building conversational interfaces into any application using voice
and text is powered by the same technology as Alexa.
Amazon Polly. A text-to-speech service, Amazon Polly uses deep learning technology to convert
text into spoken audio. It includes 60 voices across 29 languages.
Amazon Rekognition. This software-as-a-service facial recognition and analysis platform uses a
deep learning algorithm to process images and extract information from them.
AWS DeepLens. This programmable video camera enables developers to easily experiment
withmachine learning, AI and the internet of things.
Alexa Voice Service. This programming interface provides developers with a set of C++ libraries
to add Amazon Alexa's speech and other capabilities into their applications and devices.
Amazon Transcribe. This service converts speech to text quickly and accurately by using a deep
learning process called automatic speech recognition.
Amazon Translate. Amazon Translate is a cloud service that can convert large amounts of text
written in one language to another language.
Alexa Skills Kit. This software development kit enables developers to build skills or
conversational applications on Amazon Alexa.
Amazon privately owned brands
AmazonBasics. This is Amazon's privately labeled, low-budget brand that mainly sells kitchen,
tech and household products.
Amazon Elements. This line of domestic products includes health and personal care items, as well
as nutritional supplements.
Mama Bear. This private label of Amazon sells baby wipes, newborn through size 6 diapers, baby
food, diaper pail refills and baby laundry detergent.
Presto!. This brand started as a laundry detergent in 2016 but has added household paper towels
and toilet paper to its product line.
Amazon Essentials. A Prime-exclusive program, this clothing line offers basic wear for men,
women, babies and kids, with additional options for family, big and tall, and athletic activity.
Happy Belly. This private label of Amazon was introduced in 2016 and sells snack food items. In
February 2019, the brand also began offering milk delivery services.
Goodthreads. This menswear apparel line is available exclusively to Amazon Prime members. The
label offers both casual and professional pieces and is deemed a bit higher quality and more stylish
than the Amazon Essentials brand.
From online shopping to subscription services to publishing, Amazon offers products and services
in a multitude of industries.
Notable Amazon subsidiaries and acquisitions
From healthcare to entertainment, Amazon has acquired multiple companies by tapping into a
variety of sectors over time.

Following is a list of Amazon's notable acquisitions and subsidiary companies:

IMDb. The world's most popular database for movies, TV, celebrity, video games and streaming
online content was acquired by Amazon in 1998.
Audible. Audible, a book and spoken audio content provider, was acquired by Amazon in 2008 for
$300 million.
Zappos. Amazon acquired this online shoe and clothing retailer in an all-stock deal worth $1.2
billion in 2009.
Twitch. A social media and video game streaming platform, Twitch was purchased by Amazon for
$970 million in 2014.
Whole Foods. Food, beverage and organic grocery store chain Whole Foods was acquired by
Amazon for $13.7 billion in 2017.
Ring. Amazon took ownership of this home security and smart home company in 2018 for $1
billion.
Zoox. An autonomous vehicles, robotics and transportation company was acquired as a wholly
owned subsidiary by Amazon for $1.2 billion in 2020.
Metro-Goldwyn-Mayer. Amazon acquired this film and TV studio for $8.5 billion in March 2022.
Amazon controversies and criticisms
Amazon has suffered a massive backlash over the years from multiple sources. The tech giant is
also being held responsible for creating the Amazon effect -- the evolution and disruption of the
retail market due to the company exhibiting monopolistic behaviors.

Following are a few concerns and allegations that Amazon has faced over time:

Monopolistic and anticompetitive behavior. Due to Amazon's size and economies of scale, it has
been outpricing local and small shopkeepers and is accused of displacing an open market with a
privately controlled one. This is leading to the slow death of the brick-and-mortar store model
built by companies such as Sears and J.C. Penney.
Unfair treatment of workers. Amazon is frequently under the microscope for providing unfair
work conditions in its warehouses, including treating workers as robots, providing low wages and
creating unsafe work conditions.
Huge carbon footprint. Over the past two decades, Amazon has been accused by environmental
activists of having a staggering carbon footprint. Transport of any merchandise relies on oil, and
since Amazon delivers anything everywhere, it leaves a long-lasting carbon footprint that
automatically falls on its shoulders.
E-waste. A recent investigation conducted by British television network ITV uncovered how
Amazon is contributing to the world's e-waste crisis by destroying millions of unused or returned
products. This also includes millions of electronics, such as phones, computers and TVs that are
toxic to soil, water, air and wildlife.
Counterfeit product listings. Amazon has been under scrutiny by brands, shoppers and lawmakers
as counterfeiters have been listing and selling fake products on Amazon through its third-party
marketplace. To crack down on counterfeit products on its site, Amazon destroyed 2 million
counterfeit products sent to its warehouses and blocked 10 billion fake listings in 2021.
Avoiding taxation. Edging fast toward a monopoly status, Amazon has been criticized for often
avoiding tax payments despite making huge profits. According to a report by the Institute on
Taxation and Economic Policy, the company avoided around $5.2 billion in corporate federal
income taxes in 2021.
Amazon finances
According to a news release posted on Amazon's investor relations website, Amazon experienced
a significant increase in net sales but a decrease in operating income in the first quarter of 2022.

Following are some notable statistics from the release:

Net sales increased 7% to $116.4 billion in the first quarter, compared with $108.5 billion in the
first quarter of 2021. Excluding the $1.8 billion unfavorable impacts from year-over-year changes
in foreign exchange rates throughout the quarter, net sales increased 9% compared with the first
quarter of 2021.
Operating income decreased to $3.7 billion in the first quarter, compared with $8.9 billion in the
first quarter of 2021.
Net loss was $3.8 billion in the first quarter compared with net income of $8.1 billion in the first
quarter of 2021.
Besides being recognized as a company with business interests in e-commerce, cloud computing
and AI services, Amazon also offers an extensive list of subscription services. Learn about these
services and the perks they offer.

Continue Reading About Amazon

Break down the components of Amazon's retail business
MSP business trends, from e-waste to virtual warehouse
Amazon's impact on publishing transforms the book industry
New Amazon grocery stores run on computer vision, apps
Twitch confirms data breach following massive leak
Related Terms
default password
filter (computing)
on-screen display (OSD)
About Us Editorial Ethics Policy Contact Us Privacy Policy Do Not Sell My Personal Info
All Rights Reserved,
Copyright 1999 - 2022, TechTarget
Search
Money
Business
Business Profiles
How Amazon Works
By: Julia Layton | Updated: Apr 14, 2021
A young business woman packing boxes at home.
Online shopping is a form of e-commerce. MORSA IMAGES / GETTY IMAGES
In 1995, Amazon.com sold its first book, which shipped from Jeff Bezos' garage in Seattle. In
2006, Amazon.com sells a lot more than books and has sites serving seven countries, with 21
fulfillment centers around the globe totaling more than 9 million square feet of warehouse space.

The story is an e-commerce dream, and Jeff Bezos was Time magazine's Person of the Year in
1999. The innovation and business savvy that sustains Amazon.com is legendary and, at times,
controversial: The company owns dozens of patents on e-commerce processes that some argue
should remain in the public domain. In this article, we'll find out what Amazon does, what makes
it different from other e-commerce Web sites and how its technology infrastructure supports its
multi-pronged approach to online sales.

Advertisement

Amazon.com Basics
Amazon.com sells lots and lots of stuff. The direct Amazon-to-buyer sales approach is really no
different from what happens at most other large, online retailers except for its range of products.
You can find beauty supplies, clothing, jewelry, gourmet food, sporting goods, pet supplies, books,
CDs, DVDs, computers, furniture, toys, garden supplies, bedding and almost anything else you
might want to buy. What makes Amazon a giant is in the details. Besides its tremendous product
range, Amazon makes every possible attempt to customize the buyer experience.

When you arrive at the homepage, you'll find not only special offers and featured products, but if
you've been to Amazon.com before, you'll also find some recommendations just for you. Amazon
knows you by name and tries to be your personal shopper.

COURTESY AMAZON.COM
The embedded marketing techniques that Amazon employs to personalize your experience are
probably the best example of the company's overall approach to sales: Know your customer very,
very well. Customer tracking is an Amazon stronghold. If you let the Web site stick a cookie on
your hard drive, you'll find yourself on the receiving end of all sorts of useful features that make
your shopping experience pretty cool, like recommendations based on past purchases and lists of
reviews and guides written by users who purchased the products you're looking at.

The other main feature that puts Amazon.com on another level is the multi-leveled e-commerce
strategy it employs. Amazon.com lets almost anyone sell almost anything using its platform. You
can find straight sales of merchandise sold directly by Amazon, like the books it sold back in the
mid-'90s out of Jeff Bezos' garage -- only now they're shipped from a very big warehouse. Since
2000, you can also find goods listed by third-party sellers -- individuals, small companies and
retailers like Target and Toys 'R Us. You can find used goods, refurbished goods and auctions. You
could say that Amazon is simply the ultimate hub for selling merchandise on the Web, except that
the company has recently added a more extroverted angle to its strategy.

In addition to the affiliate program that lets anybody post Amazon links earn a commission on
click-through sales, there's now a program that lets those affiliates (Amazon calls them
"associates") build entire Web sites based on Amazon's platform. They can literally create mini
Amazon Web sites if they want to, building on Amazon's huge database of products and
applications for their own purposes. As long as any purchases go through Amazon, you can build a
site called Amazonish.com, pull products directly from Amazon's servers, write your own guides
and recommendations and earn a cut of any sales. Amazon has become a software developer's
playground.

Before we dig deeper into Amazon's e-commerce methods, let's take a quick look at the
technology infrastructure that makes the whole thing possible.

Amazon's Progress
Amazon has four software development centers worldwide. These units are constantly creating
new features for Amazon.com and developing the technology to support them.

Advertisement
Contents
Amazon Technology
Amazon E-commerce
Amazon Tools, Marketing and Community
Amazon Technology

The massive technology core that keeps Amazon running is entirely Linux-based. As of 2005,
Amazon has the world's three largest Linux databases, with a total capacity of 7.8 terabytes (TB),
18.5 TB and 24.7 TB respectively [ref]. The central Amazon data warehouse is made up of 28
Hewlett Packard servers, with four CPUs per node, running Oracle 9i database software.

The data warehouse is roughly divided into three functions: query, historical data and ETL
(extract, transform, and load -- a primary database function that pulls data from one source and
integrates it into another). The query servers (24.7 TB capacity) contain 15 TB of raw data in
2005; the click history servers (18.5 TB capacity) hold 14 TB of raw data; and the ETL cluster
(7.8 TB capacity) contains 5 TB of raw data. Amazon's technology architecture handles millions
of back-end operations every day as well as queries from more than half a million third-party
sellers. According to a report released by Oracle after it helped migrate Amazon's data warehouse
to Linux in 2003 and 2004, the central task process looks something like this:

Advertisement

In the 2003 holiday season, Amazon processed a top-end 1 million shipments and 20 million
inventory updates in one day. Amazon's sales volume means that hundreds of thousands of people
send their credit card numbers to Amazon's servers every day, and security is a major concern. In
addition to automatically encrypting credit card numbers during the checkout process, Amazon
lets users choose to encrypt every piece of information they enter, like their name, address and
gender.

Amazon employs the Netscape Secure Commerce Server using the SSL (secure socket layer)
protocol (see How Encryption Works to learn about SSL). It stores all credit card numbers in a
separate database that's not Internet-accessible, cutting off that possible entry point for hackers.
Customers who are particularly cautious can choose to enter only a partial credit card number over
the Internet and then provide the rest by phone once the online order is submitted. Aside from the
usual security concerns regarding online credit-card purchases, Amazon suffers from the same
phishing problem that has plagued eBay and PayPal, so watch out for fake e-mails asking for your
Amazon.com account information. Check out Anti-Phishing Working Group: Amazon.com for
details on how to recognize a fake.

Now let's get back to the business of selling stuff. Amazon's approach to e-commerce is one that
leaves no stone unturned.

Amazon Patents
Amazon has tried to patent nearly every aspect of its e-commerce architecture, drawing more than
a little controversy for the affiliate program patent it won back in 2000. Reportedly, other e-
commerce sites were already using affiliate programs that looked a lot like the one Amazon
developed and patented. Here are just a few of Amazon's dozens of patents:

Internet-based customer referral system, U.S. Patent 6,029,141, February 22, 2000
Content personalization based on actions performed during a current browsing session, U.S.
Patent 6,853,982, February 8, 2005
Method and system for integrating transaction mechanisms over multiple internet sites, U.S.
Patent 6,882,981, April 19, 2005
Use of product viewing histories of users to identify related products, U.S. Patent 6,912,505, June
28, 2005
READ MORE
Advertisement

Amazon E-commerce
Target's Amazon.com-based store
Target's Amazon.com-based store
COURTESY AMAZON.COM
Amazon.com has always sold goods out of its own warehouses. It started as a bookseller, pure and
simple, and over the last decade has branched out into additional product areas and the third-party
sales that now represent a good chunk of its revenue (some estimates put it at 25 percent).

Both retailers and individual sellers utilize the Amazon.com platform to sell goods. Large retailers
like Nordstrom, Land's End, and Target use Amazon.com to sell their products in addition to
selling them through their own Web sites. The sales go through Amazon.com and end up at
Nordstrom.com, Land's End.com or Target.com for processing and order fulfillment. Amazon
essentially leases space to these retailers, who use Amazon.com as a supplemental outlet for their
online sales.

Advertisement

Small sellers of used and new goods go to Amazon Marketplace, Amazon zShops or Amazon
Auctions. At Marketplace, sellers offer goods at a fixed price, and at Auctions they sell their stuff
to the highest bidder. Amazon zShops features only used goods at fixed prices. If an item listed on
zShops, Marketplace or Auctions is also sold on the main Amazon.com, it appears in a box beside
the Amazon.com item so buyers can see if someone else is selling the product for less in one of the
other sales channels.

COURTESY AMAZON.COM
The level of integration that occurs on Amazon is a programming feat that few (if any) online
sales sites can match.
Another sales channel called Amazon Advantage is a place where people can sell new books,
music and movies directly from the Amazon warehouse instead of from their home or store.
Sellers ship a number of units to Amazon, and Amazon handles the entire sales transaction from
start to finish. In all of these programs, Amazon gets a cut of each sale (usually about 10 percent to
15 percent) and sometimes charges additional listing or subscription fees; in the case of Amazon
Advantage, the company takes a 55 percent commission on each sale. The Advantage channel is
something like a consignment setup, a sales avenue for people who create their own music CDs or
have self-published a book and are simply looking for a way to get it out there.

One of the latest additions to Amazon's repertoire is a subsidiary company called Amazon
Services. Through Amazon Services, Amazon sells its sales platform, providing complete Amazon
e-commerce packages to companies looking to establish or revamp their e-commerce business.
Amazon sets up complete Web sites and technology backbones for other e-commerce companies
using Amazon software and technology. Target, for instance, in addition to having a store on
Amazon.com, also uses Amazon Services to build and manage its own e-commerce site,
Target.com.

Target.com homepage
Target.com homepage
But selling goods isn't the only way to make money with Amazon.com. The Web site's affiliate
program is one of the most famous on the Web. Through Amazon's Associate Program, anyone
with a Web site can post a link to Amazon.com and earn some money. The link can display a
single product chosen by the associate, or it can list several "best seller" products in a particular
genre, in which case Amazon updates the list automatically at preset intervals. The associate gets a
cut of any sale made directly through that link. The cut ranges from 4 percent to 7.5 percent
depending on which fee structure the associate signs up for (see Amazon Associates for complete
program details). The associate can also take advantage of Amazon Web Services, which is the
program that lets people use Amazon's utilities for their own purposes. The Amazon Web Services
API (application programming interface) lets developers access the Amazon technology
infrastructure to build their own applications for their own Web sites. All product sales generated
by those Web sites have to go through Amazon.com, and the associate gets a small commission on
each sale.

Check out Amazon Web Services to learn more about what you can do with Amazon's e-
commerce platform.

In the next section, we'll take a look at how all of these programs and channels come together to
create a sales and marketing powerhouse.

Amazon on Paper
Amazon.com delivers print catalogs to a limited number of Amazon customers during the holiday
season.

Advertisement
Amazon Tools, Marketing and Community
Alan Taylor does not work for Amazon.com. He joined the Associate Program, signed up for
Amazon Web Services, downloaded the API and built Amazon Light.
Alan Taylor does not work for Amazon.com. He joined the Associate Program, signed up for
Amazon Web Services, downloaded the API and built Amazon Light.
The goal is pretty straightforward: "To be Earth's most customer-centric company where people
can find and discover anything they want to buy online." The implementation is complex, massive
and dynamic. Amazon's marketing structure is a lesson in cost-efficiency and brilliant self-
promotion. Amazon's associates link to Amazon products in order to add value to their own Web
sites, sending people to Amazon to make their purchases. It costs Amazon practically nothing.
Some associates create mini-Amazons -- satellite sites that do new things with Amazon data and
send people to the mothership when they're ready to buy. Amazon Light, built and maintained by
software developer Alan Taylor, is one of those satellite sites.

The level of customer tracking at Amazon.com is another best-of-breed system. Using the data it
collects on every registered user during every visit to the Web site, Amazon points users to
products they might actually be glad to discover -- and buy. Amazon recommends products that
are:

Advertisement

similar to what you're currently searching for (on-the-fly recommendations that use up tons of
processing power)
related to what you've searched for or clicked on at any time in the past
purchased by other people who've searched for what you're searching for or have bought what
you've bought
You can even customize the recommendations by giving Amazon more information about yourself
and your interests and rating the products you've already purchased.

A recent development in customer tracking actually collects information on people who may have
never visited Amazon.com. Amazon's gift-giving recommendations collect data on the stuff you
buy for other people. For instance, if you buy a toy train set in December and ship it to your
nephew, Amazon knows you give gifts to a boy aged four to 10 who lives in Ohio and likes trains.
Might your nephew enjoy the latest addition to that train series? Might he also have an interest in
RC cars? Amazon will give you all sorts of ideas about what to get your nephew when the next
holiday season rolls around.

This type of information gathering has generated a fair amount of controversy. Some say Amazon
gathers too much information for comfort, and the Electronic Privacy Information Center reports
that in 2000, Amazon started sharing its customer data with its partners and subsidiaries. The
concern has increased with the tracking of "gift-giving habits," because the gift-giving information
Amazon collects could be about minors, which is against the law, and because the gift receivers
don't even know that their name, age, gender, location and interests may be stored in Amazon's
database of customer information.

Despite concerns about Big Brother Amazon, tons of people love the personalized experience
Amazon offers. It's not just sales offers -- there's a community on Amazon.com that's based on
people providing even more information about themselves to other Amazon users. People write
their own reviews, recommendations, "So You'd Like To..." guides and "Listmania" lists based on
Amazon's product offerings and share them with all of Amazon.com. One Listmania list, "The Top
25 Weirdest Items You Can Purchase Through Amazon!" by Sheila Chilcote-Collins of Van Wert,
Ohio, includes a jar of S.E.P. (Stop Eating Poop) that should make your dog stop eating its own
feces; bird feed in the form of live caterpillars shipped to your doorstep; and a book entitled "Owl
Puke" that comes complete with a genuine pellet of regurgitated owl meal. You can make any sort
of list you want, and any Amazon member can view it and rate it. (Click here to view the Top 100
Listmania lists.)

Beyond e-commerce and its trappings, some of the more recent Amazon endeavors have the
company branching out into new realms. Amazon's Mechanical Turk project seeks to combine
community, technology and compensation. Using the Mechanical Turk system, software and Web
developers can post tasks they need help with, usually tasks related to things computers can't do
but humans can, like quickly caption a set of photos. Anyone can post a task, and the person who
completes it gets a small amount of money in return. Amazon gets a commission on each
completed transaction. In a much more visible trek into the unknown, Amazon has funded the A9
search engine. It has full search capabilities, mapping functions, a toolbar with pop-up blocking
and an easily accessible personal search history. A9 also provides a "Diary" where you can makes
notes to yourself about specific Web pages and lists of recommended links for you to check out
based on your previous searches. In keeping with Amazon's omnipresent marketing techniques,
you can sign up to get an Amazon.com discount for using A9 on a regular basis, and when you
type in a search term, you'll see a display of Amazon book results related to that term.

From a "Where's Amazon going?" point of view, perhaps the most notable project is the
previously mentioned Amazon Services subsidiary. Amazon Services is building complete e-
commerce solutions for companies that are potential Amazon competitors, leaving open the
possibility that Amazon will ultimately head in the direction of technology service over retail
sales.

The Gold Box and Timeline: A Few Highlights

There's probably a little "Gold Box" icon at the top of the Amazon.com homepage every time you
visit. This box holds special treats for you: Time-sensitive discounts. Once you click on the Gold
Box and view an offer, you have to complete the transaction (if you want it) in a specified time
period. After that time period, the offer disappears.

1994: Amazon.com is incorporated.

1995: It sells its first book.
1996: It launches its affiliate program ("Associates Program").
1997: It goes public.
1998: It buys the Internet Movie Database (IMDb) and opens two new Amazon stores: Music and
DVD/Video.
1999: It launches Amazon Auctions and zShops and opens six new stores: Consumer Electronics,
Toys & Games, Home Improvement, Software, Video Games and Gift Ideas.
2000: It launches Amazon France, Amazon Japan and Amazon Marketplace and opens two new
stores: Kitchen and Camera & Photo.
2001: It introduces the "Look Inside the Book" function and teams up with Target stores.
2002: It launches Amazon Canada and Amazon Web Services and opens two new stores: Office
Products and Apparel & Accessories.
2003: It launches Amazon Services and A9.com subsidiaries and opens three news stores: Sports
& Outdoor, Gourmet Food and Health & Personal Care.
2004: It buys Joyo.com (which becomes Amazon China) and opens one new store: Beauty.
2005: It buys BookSurge LLC.
For a complete Amazon timeline, see Amazon.com: Timeline and History.

READ MORE
Advertisement

Originally Published: Jan 25, 2006

Amazon FAQ
How does selling on Amazon work?
Amazon uses a multi-level e-commerce strategy to allow professionals and individual sellers to
sell products through their platform. It lets almost anyone sell almost anything directly through
Amazon. All a seller has to do is set up a seller's account, provide the necessary details, list their
products and start selling through the Seller Central portal.
How much of a cut does Amazon take?
Amazon charges a referral fee to the sellers for each item that is sold through the Amazon
platform. This amount varies slightly depending on the product category but generally, referral
fees fall between 8 and 15 percent.
How does Amazon get its products?
Businesses, individual sellers and manufacturers sell their inventory to Amazon at wholesale rates.
Amazon Vendor Central then gives Amazon ownership of the seller's inventory, which is then
marketed and sold to shoppers on their website. Once an order has been placed, the product is
shipped from Amazon's warehouse.
What is the Amazon FBA program?
Fulfillment By Amazon or FBA is a program offered by Amazon to sellers that provides services
like storage, packaging and shipping assistance. Sellers ship their inventory to an Amazon
fulfillment center where items are stored in big warehouses until an order has been placed.
Amazon then ships the product to the buyer directly.
Is it profitable to sell on Amazon?
It can be profitable to sell on Amazon, but you need to maintain a gross margin of 50 percent or
higher because Amazon generally takes between 25 and 30 percent of the seller's revenues as fees.
Lots More Information
Related HowStuffWorks Articles
How eBay Works
How E-commerce Works
How Encryption Works
How Patents Work
How PayPal Works
How Phishing Works
More Great Links
Amazon.com: Amazon Web Services
ISP Glossary: Database Management System
CNET News: How Amazon puts Linux to the test
Technology Review: Amazon: Giving Away the Store
Sources
Citation
Featured
Special Offer on Antivirus Software From HowStuffWorks and TotalAV Security
Try Our Crossword Puzzles!
Can You Solve This Riddle?
Advertisement

Loading...
an error occurred.0