Amazon Turns 25
A look back on the company that changed retail
In 1994 in America, pop culture was at its peak. Pulp Fiction, Forrest Gump and the Shawshank Redemption were box office hits.
The upbeat TV sitcom Friends gave us a glimpse of the aspirations of twentysomethings. America was glued to TV coverage of the OJ Simpson trial. Michael Jackson and Lisa Marie Presley got hitched. The first Playstation was launched. But probably the most revolutionary change in 1994? The internet, which was still in its infancy, was becoming commercialized, including a new online bookseller called Amazon.
Launched on July 5, 1994, Amazon sold books to customers who got to its website through a dial-up modem. The company would go on to permanently reshape retail.
Amazon and Marketplace sellers represent more than 353 million products, ranging from clothing and jewelry to tools, home goods, books, music and much more. It is now one of the most valuable companies in the world, with a market capitalization of around $1 trillion.
Here is a timeline of how Amazon went from a handful of employees selling books from a garage, to the world’s largest online retailer.
Jeff Bezos and wife MacKenzie open an online bookstore in Seattle. Bezos invests $10,000 of his own funds. He and a small staff take online orders, and working out of his garage, pack books and take them to the post office.
Amazon goes public, with an opening price of $18 per share and a valuation of $300 million. After three stock splits on opening day, the price at close of trading that day was $1.96. If you had bought 100 shares of Amazon stock soon after the initial public offering, the stocks would be worth about $200,000 today.
The same year, Amazon opens another warehouse in Delaware to serve East Coast customers. The facility marks the beginning of a nationwide distribution network.
Amazon expands into music, selling CDs and DVDs. Customers are able to listen to clips and browse titles based on mood
In this pivotal year, Amazon patents one-click purchases. The technology encourages quick purchase decisions, and also allows Amazon to collect customer data.
The company also brings third-party sellers into the fold. In the first four months, 250,000 customers use the service. What started as a way to sell used books and music evolved into the current day Marketplace, dramatically increasing the volume of transactions.
Jeff Bezos is named Time Magazine’s Man of the Year.
Amazon would survive the dot.com collapse, but not before a huge stock slide. Amazon lays off 15 percent of their workforce before it recovers.
Amazon partners with major clothing lines, offering 400 apparel brands online.
Amazon starts a web hosting service, licensing its platform to other e-commerce sites like Borders.com and Target.com. Amazon Web Services, now cloud based, continues to be a major revenue stream for the company.
Amazon enters the market in China, buying Joyo, the largest online seller of books and electronics- for $75 million. However, Amazon struggles to capture market share. China-based Alibaba is the Asian leader, garnering 53.3 percent of market share as of January, 2019 according to eMarketer. Amazon China is not even in the top 10 of e-retailers in China today.
Amazon Prime is launched, a $79 a year loyalty program (now $119) that includes free two-day shipping. With more than 100 million members, Prime is now considered one of the company’s most valuable assets.
Kindle goes on sale, starting the e-reader craze.
Also in 2007, Amazon opens a consolidated business center in Seattle, in a 1.6 million square foot building. The city raised construction height limits to accommodate the construction. The company’s headquarters would eventually expand to more than 8 million square feet.
Amazon acquires audiobooks company Audible.
Amazon acquires shoe shopping site Zappos.
Amazon acquires automation company Kiva Systems, allowing Amazon to further automate its fulfillment centers, delivering products faster with less human staff.
Amazon starts Sunday delivery in select cities through a confidential deal with the U.S. Postal service. The service would later expand nationwide.
Amazon unveils its first and last smartphone. The Fire phone fails to catch on, with production stopped the following year.
In a smarter move, Amazon acquires social video game streaming site Twitch, bolstering Amazon’s own game production division and driving cloud activity.
After being blamed for the decline of independent bookstores across the country, Amazon opens its own physical retail location in Seattle. The store’s opening is meant to market Amazon’s growing list of electronic devices as much as it is to sell books. Amazon now has 15 bookstores in cities across the United States.
After unveiling its first smart speaker in 2014 to select customers, Amazon puts the Echo in 3,000 stores nationwide just in time for the holiday season. The Echo is the platform for Alexa, Amazon’s virtual personal assistant, and therefore the key to a wealth of consumer data and purchasing decisions.
After struggling for years in the intensely competitive grocery delivery business, Amazon ups its game and purchases Whole Foods’ 471 stores for $13.7 billion. The company has since started to integrate the two companies’ distribution networks and offer discounts to Prime members.
Reaching the limits of growth in Seattle, Amazon sets off a race between scores of cities across the United States and Canada, all vying to be home to its second headquarters. Bids include lucrative tax incentives and prime real estate for the campus, among other perks.
Amazon reaches $1 trillion market cap valuation.
Amazon raises the minimum wage of its workers to $15 per hour, under extreme pressure from unions and progressive government leaders.
More than a year after it first announced its competition for its second headquarters, Amazon finally chooses New York’s Long Island City and Arlington, Virginia to split the duties as its HQ2. Both locations will receive a $2.5 billion investment from Amazon, and each will employ more than 25,000 workers over time. The company also announced a new hub in Nashville that will employ 5,000 people. The development projects promise to bring each city a giant infusion of high-paying jobs and tax revenue, but will also impact area infrastructure and property values.
Amazon ditches plans to build a new headquarters in New York after facing backlash from local politicians and community members. In a statement, Amazon said “a number of state and local politicians have made it clear that they oppose our presence” in Long Island City. The company’s decision was met with both cheers by some and jeers from politicians frustrated by the company’s decision to bail. Amazon said it did not intend to reopen the search for a new HQ2 location. Plans in Northern Virginia and Nashville, Tenn., continue development.
Hiring begins for the Nashville and Arlington locations.
In the pre-Amazon days, shoppers had to travel to stores to discover and buy things. Shopping took a lot of time- browsing aisles, visiting multiple stores and waiting in long checkout lines. Today, search words help us go right to our desired product, at any time of day, on multiple devices. After Amazon Prime started delivering with free shipping, consumers began to expect that from other vendors.
Those wanting a brick and mortar experience can try Amazon’s cashierless “Go” store in Seattle. But for the most part, Amazon’s dominance in online shopping has also meant the downfall of traditional brick-and-mortar stores across the country. As many as 12,000 stores from big names like Pier One, CVS and Gap are predicted to close by the end of the year. Investment bank UBS predicts that number could grow to 75,000 by 2026. It’s something analysts are calling a “retail apocalypse.”
What’s next for Amazon?
According to Bezos, Amazon’s efforts focus on preventing it from dying. He wryly notes that “Amazon is not too big to fail.” But that does not prevent the company from forging ahead in new territory.
Amazon is creating a portfolio of high-tech financial services, aimed at developing markets such as India, which has a huge population that does not use banks.
Amazon may become a disruptor in two totally different, regulated industries: pharmaceuticals and health insurance. The company spent $1 billion acquiring online drugstore PillPack to enter the $500 billion prescription drug market, and has developed a joint health insurance venture with Berkshire Hathaway and JP Morgan Chase.
As the world’s largest tech employer and largest online retailer, artificial intelligence and the acquisition of consumer goods are linked on the Amazon horizon. The company is working on anticipating and shipping products it thinks you might need or want before you decide to order them, with the opportunity to return the items you don’t like for free.
If you ask Amazon’s virtual assistant Alexa “Are we in the Matrix?” You’ll get an answer like “You take the blue pill, the story ends. You wake up in your bed believing whatever you want to believe.”
I believe we have not even conceived yet where Amazon is going to take us in the future.