Amazon.Com Case

Amazon.com

NOTE: Georgetown MBA candidates Sarah Knight, Harry Kobrak, and Paul Lewis prepared this case study under the direction of Professor Michael R. Czinkota; © Michael R. Czinkota. In addition to interviews with Amazon.com personnel, use was made of company reports and media coverage of Amazon.com.

Amazon.com opened its virtual doors in July 1995 with a mission “to use the Internet to offer products that educate, inform, and inspire.” In early 1999, Amazon.com was the largest Internet-based seller of books and music and operated one of the most frequently used web sites on the Internet, offering over 4.7 million discounted books as well as CDs, DVDs, computer games, audio books, and videotapes. The company had an 85 percent share of online book sales, with over 6 million customers in more than 160 countries.

Customers use Amazon.com’s interactive web site both to select and to purchase products. Specifically, customers are able to use the site to search for titles, browse selections, read and post reviews, register for personalized services, make a credit card purchase, and check order status. Most orders are shipped to customers directly from Amazon.com’s warehouses, usually within 24 to 72 hours. If a customer needs to return a product, complimentary return postage is provided to the customer.

Amazon.com communicates with its customers electronically throughout the order process. A confirmation e-mail is sent to the customer when the order is received, and another when the order has been processed. Customers can then track the delivery status of orders online by using a key code number. Customers who prefer not to use a credit card on the Internet may fax or telephone in the credit card number using Amazon.com’s toll-free numbers.

Amazon.com’s headquarters are located in Seattle, Washington, with distribution facilities in Seattle, Delaware, Nevada, the United Kingdom, and Germany. In 1999, the firm had over 2,100 employees and was expanding rapidly. Since May 1997, Amazon.com has been publicly owned, with common stock shares traded on the NASDAQ National Market exchange in the United States. Despite persistent operating losses, Amazon.com’s stock was trading at $209 a share, or 23 times its initial public offering price of $9 in December of 1998.

Major Events and Players

in Its Development

Culture Defined

The most significant player in Amazon.com’s short history is its founder and chief executive officer, Jeff Bezos. With a background in computer science and finance, including fund management at Bankers Trust, Bezos decided in 1994 that the Internet could provide customers with services unavailable through traditional retailers, including discounted prices, wider selection, and greater product information.

In a November