Amazon.com (US)

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Internet retailer Amazon claims to offer "Earth's Biggest Selection", a mammoth range of products which now goes far beyond books and music to include anything from automobile parts to gourmet food and from clothing to household furniture. The business is firmly established as the #1 internet retailer in each of its global markets, which include the key territories in Europe and Asia as well as North America. No other company has done so much to establish the reliability and functionality of e-commerce. But Amazon has also traditionally suffered from low profit margins and an over-rated share-price, and rival companies have tended to outpace it in profit growth. That laggard performance appeared to change in 2007, helped along by the launch of the Kindle electronic reader. Subsequent investment in infrastructure and technology prompted another slump in profitability in the 2010s. However, the evolution of Kindle has seen the emergence of a new role for Amazon as an entertainment broadcaster, and the group has made a renewed commitment to increasing its profit, not just its revenues.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 30th Mar 2017: Amazon is widening its global footprint. There are currently eleven local sites around the world selling a full range of products. However, eight new markets could join that collection this year alone. The company agreed terms this week for the acquisition of Dubai-based Souq.com for an estimated $650m. This is the leading online retailer in the Middle East, delivering to the six main Arabian Gulf states as well as Egypt. There are also plans to upgrade Amazon Australia to a fully stocked store later this year. Currently, like a handful of other territories, the local storefront sells only Kindle and related digital content.

Adbrands Weekly Update 2nd Mar 2017: It may have been Moonlight and La La Land's night (indie distributors A24 and Lionsgate respectively), but last Sunday's Oscars also represented a triumph for Amazon and Netflix. They won four Oscars between them, the first for any streaming service. Amazon did best with no less than three trophies. Manchester By The Sea collected the prize for Best Adapted Screenplay and Best Actor (for Casey Affleck), while Iranian drama The Salesman was Best Foreign Language Film. Netflix collected Best Documentary Short for The White Helmets. Amazon appears to play the Oscars game more successfully, backing traditional movies as well as the long-form TV series favoured by Netflix, and allowing their releases to enjoy a standard initial release in cinemas before being offered to streaming customers. As mainstream studios focus their attention increasingly on big budget spectaculars (that rarely win anything other than technical awards), the hold of Amazon and Netflix on the independent movie market is only likely to tighten.

Adbrands Weekly Update 9th February 2017: In an unusual reversal of the status quo, Amazon's topline growth in Q4 disappointed investors, though profits were well above forecast. It's traditionally the other way around at Amazon. Net income for 4Q jumped 55% on revenues up 22%. For the full year, revenues rose 27% to a new high of $136bn, while net income quadrupled to an extraordinary (for Amazon) $2.4bn. That sum is more than all Amazon's previous 20 years' annual profits combined. A key contributor was the company's cloud computing division where revenues soared by 50% (compared to 25% from its retail operations) and profits more than doubled. However, the biggest single growth category in percentage terms was "North America other" revenues, up 60% to $1.3bn. This is understood to represent marketing income, including online advertising, sponsored product placements and revenues from co-branded credit cards. As a further illustration of Amazon's dominance, e-commerce researcher Slice Intelligence released figures this week which showed that, including 3rd-party sellers, the online giant accounted for 43% of all online sales in the US last year. No other retailer had over 3% over the crucial holiday period, with Best Buy, Walmart, Apple, Target, Nordstrom and Macy's all somewhere between 2.2% and 2.9%. And Amazon's dominance will remain unchallenged for the foreseeable future, since it accounted for an astonishing 53% of all online sales growth during the year.

Adbrands Weekly Update 26th Jan 2017: Netflix and Amazon have already made an impact on the TV awards circuit. Now Amazon becomes the first streaming service to receive a nomination for a Best Picture Oscar. Following a big push into the movie business, it handles US distribution for independent movie Manchester By The Sea, widely expected to pick up at least one win at the world's most prestigious cinema awards contest, most likely for lead actor Casey Affleck. Writer director Kenneth Lonergan is also nominated. Amazon is also the US distributor of Iranian drama The Salesman, one of the favourites for Best Foreign Language Film. Netflix is also nominated in this year's event but in the Best Documentary category, where it has featured before but never won. However it is Lionsgate which is expected to dominate the Oscars, just as it did the recent Golden Globes, with La La Land, nominated for 14 awards, equalling the record set by Titanic and All About Eve.

Adbrands Weekly Update 8th Dec 2016: Amazon is planning to overturn traditional bricks and mortar retail with the launch of a new shopping app, Amazon Go, which will allow customers to purchase items from Amazon-branded grocery outlets without needing to visit the checkout. Just pick up and walk out, is the concept. Shoppers activate the app on their phones to enter the store; the system then uses NFC technology on scanners at the exit to identify any products shoppers have picked up in the store when they leave and automatically debits their account. A trial store is already operating in Seattle for Amazon employees, selling own-label food items and meal kits. It will be opened to ordinary customers early in the New Year.

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Background

Free for all users | see full profile for current activities: In the early 1990s, investment banker Jeff Bezos saw the possibilities of selling products to a mass market via the new and expanding internet, which seemed to offer a sales channel unfettered by the physical logistics involved in operating a retail outlet and managing inventory. He selected books as his commodity because they were comparatively fashion-free and offered a high profit margin per copy. He moved from New York to Seattle in 1994 to be near a big wholesale supplier, and launched Amazon.com the following July. 

Even in those dark days of the internet, the site took off quite quickly, and by the end of the year, Amazon was selling more than 100 books a day. Embracing the communal nature of the web, the site encouraged buyers to submit reviews of the books they had purchased. While this surprised and angered some suppliers, it greatly enhanced Amazon's relationship with its customers. By the end of 1996, sales had risen to almost $16m, before rocketing to more than $140m a year later, encouraging the company to adopt the tag "Earth's Biggest Bookstore". The company floated in 1997, and in 1998 broadened its range with the addition of CDs and videos. Also that year, responding to plans by German group Bertelsmann to establish a rival book service in Europe, Amazon acquired two smaller rivals - Bookpages in the UK and ABC Bucherdienst in Germany - which rebranded as local versions of Amazon. 

In 1999, toys, electronics, software, video games and home improvement joined the mix. That year sales raced through the billion-dollar barrier to hit $1.6bn, and Time magazine selected Bezos as its Person of the Year. The company also established outposts in France and Japan for the first time. But within just a year, Amazon was already beginning to attract detractors, who warned that the business was spreading itself too thinly. Investments in other online services such as pharmacy drugstore.com, delivery service kozmo.com and pet supplies outlet pets.com all proved write-offs. As if to cement Amazon's tarnished reputation, the group reported a massive $1.4bn loss for 2000. 

Bezos launched a major restructuring in 2001, laying off 15% of its work force. The company also muscled into the territory of rival eBay, introducing person to person transactions via its ZShops third-party stores and auction services, as well as taking over the online operations of other companies struggling with their own e-commerce service, such as Target and Toys "R" Us. Those moves soon began to deliver results, and the group delivered its first modest quarterly profit at the end of 2001, and again in 2002. A year later the company reported its first two consecutive quarters of profit at the end of the year. In 2004, it established its seventh online portal with the acquisition of China's leading internet retailer, Joyo.com.

In early 2006 it began developing a music download service to compete directly with Apple's iTunes. According to press reports, the company was considering a subscription plan model broadly similar to that offered by mobile phone operators: users would subscribe to a dedicated Amazon download service and receive a custom-made music player as part of the offer, pre-loaded with a selection of promoted tracks which can then be swapped or updated online. By mid-year it became apparent that Amazon had abandoned the music service in face of the continuing dominance of Apple, but was instead preparing to launch a video download service. This arrived in September under the name Unbox. See full profile for current activities


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