Amazon, leading player in e-book market

The new series in the Sunday Observer Business pages bring you facts, including offbeat and unusual ones, about world famous global and local companies.

We start with Amazon, which has everything from A to Z.

Amazon is the world's biggest online retailer with operations in USA, Canada, UK, Germany, Austria, France, Belgium, Spain, Italy, China and Japan apart from e-book only operations in Australia, Netherlands, Brazil and Mexico. (These are likely to get physical goods soon).

Amazon began in 1994 under the leadership of CEO Jeff Bezos as an online bookseller from his garage. The first book ever sold to a member of the public by Amazon was Fluid Concepts and Creative Analogies in 1995 and the first customer was John Wainwright, himself a famous computer engineer at a joint collaboration between Apple and IBM.

Biggest bookseller

He still has the order in his order history. In return, Amazon has named one of its buildings in the founding city of Seattle as the Wainwright building. Amazon now ships millions of books every year around the world. It is now the biggest bookseller in the world, physical and digital.

Amazon was named after the Amazon River, partly because of the size of the river and partly because of the fact that in the early pre-Google and Search Engine Optimisation (SEO) days, an alphabetical listing helped you to come out on top in search results.

Amazon opened its first physical bookstore in Seattle last year and a second one is due to be opened soon in San Diego, USA. They have only a fraction (5,000-6,000) of the online site's nearly 30 million books.

Losses

Amazon earned a record revenue of US$ 107 billion last year, but third party sellers using the Amazon marketplace platform earned even more - US$ 132 billion. Amazon made a profit of nearly US$ 500 million last year after a string of losses for many years. Its stock market value is around US$ 270 billion which trails Apple's US$ 700 billion.

Although Amazon is the largest online retailer, e-commerce only accounts for around seven percent of all sales worldwide. Retail is still king. Amazon has nearly 50 percent of e-commerce sales worldwide.

Alibaba and Apple give a close run to Amazon in the online sphere. Wal-mart is still the world's biggest physical retailer with annual revenues that hover around US$ 500 billion, but Amazon has surpassed Wal-mart in terms of market value. Wal-mart's online revenues are only around US$ 14 billion.

One of Amazon's biggest revenue earners is Amazon Web Services (AWS) which hosts most of the internet and made revenues of US$ 2.4 billion in 4Q last year. Even some of Amazon's biggest competitors such as Apple and Netflix are almost entirely dependent on AWS. Microsoft is the second biggest player in the cloud computing space with its Azure platform, with Google, IBM and VMware trailing behind.

It is also an electronics maker, with its Kindle e-reader line, Fire tablets, Fire TV Set Top Box, Amazon Basics cables and plugs. Amazon is the leading player in the e-book market, having unveiled the first Kindle e-reader in November 2007.

Tap and Dot

Today, Amazon also has video and music services, in addition to a movie studio producing original content. Its latest product is the Echo, a Bluetooth speaker that can respond to voice commands and speak back. It will order a taxi or a pizza for you and tell you about the weather, among over 300 tasks. It has now been joined by two smaller siblings - Tap and Dot.

One of Amazon's biggest aces is the Prime program, which promises free one or two-day shipping to members. The US alone has more than 54 million Prime members and worldwide, Amazon has around 250 million accounts.

With Amazon.com alone shipping more than 550 million packages a year, shipping costs that exceed US$ 5 billion a year are a big worry for Amazon which has 89 fulfillment centres around the world.

To rein in shipping costs, Amazon has just inked a deal with an airline partner to lease 20 Boeing 767s. Amazon also hopes to deliver packages by drone (Amazon Prime Air) in half an hour. It already has a free two-hour delivery service in some locations.

Amazon.com alone has over 415 million product pages for more than 50 million products. On a busy day such as Black Friday, Amazon.com alone gets about 400 orders per second. If you buy one of every product available on Amazon even at the usually discounted prices it would cost you nearly US$ 13 billion.

Amazon also owns e-tailers Woot, Book Depository, Zappos, East Dane, MyHabit, Wag, YoYo, Vine, Casa, Junglee, 6 PM, Audible, Diapers.com, Look, Beauty Bar, Shopbop, Soap.com and Goodreads among other companies.

Amazon Founder Jeff Bezos, the world's fifth richest person according to Forbes, personally (not through Amazon) owns the Washington Post and Blue Origin, a space company that aims to take tourists to space by 2018. Amazon is one of the biggest employers in the world with more than 240,000 employees, double the number of Apple employees and four times as many as Google, though Amazon has been criticised for some of its workplace practices.

Amazon is part of the FANG Big Four companies - Facebook, Amazon, Netflix and Google (Alphabet).

Next Week: Facebook