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 groceries and from clothing to household furniture. The business is firmly established as the #1 internet retailer worldwide (though it faces increasingly strong competition from Chinese rivals operating mainly in Asia). No other company has done so much to establish the reliability and functionality of e-commerce. But Amazon also historically suffered from low profit margins, and rival companies tended to outpace it in earnings growth. That laggard performance appeared to change in 2007, helped along by the launch of the Kindle electronic reader. Huge subsequent investment in infrastructure and technology prompted another slump in profitability in the 2010s. However, the evolution of the Kindle device and its various offshoots, and the rapid evolution of the Prime membership club has seen the emergence of a new role for Amazon as an entertainment broadcaster and creator. At the same time, the group has made a renewed commitment to increasing its profit, not just its revenues, and the result has been a stellar increase in its stock valuation. It has also diversified aggressively, not least through a deal in 2017 to acquire bricks and mortar organic grocery retailer Whole Foods Market for almost $14bn.
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Adbrands Weekly Update 8th Mar 2018: Not one but three different Amazon stories this week. The latest target for the ecommerce giant's unstoppable expansion may be financial services. The group is reported to have invited banks including JPMorgan Chase and Capital One to submit ideas for some form of checking account it can offer to younger customers or those without an existing bank account. Such a move could allow Amazon to reduce the fees it currently pays to banks and payment processors and also give it valuable additional information about customer spending patterns. It's unclear how wide the range of services included in any such service might be. Amazon already partners with JPMorgan Chase for the Amazon Rewards Visa card in the US, which gives cardholders cash back on purchases at Amazon and WholeFoods. Perhaps, Amazon founder & CEO Jeff Bezos just wants a new bank account of his own. According to Forbes' 2018 Billionaires ranking, published this week, he not only officially takes 1st place for the first time, but is also the first individual to accumulate wealth in excess of $100bn; or rather $112bn to be precise as of 6th March, though it's already gone higher still as a result of Amazon's soaring stock price. Bill Gates was in 2nd place, followed by Warren Buffett and then LVMH's Bernard Arnault. None of this offers any comfort to Amazon customers suffering from a bizarre fault affecting their Echo home speakers, which have taken to issuing a creepy cackling laugh at random moments. (It sounds like this). According to an Amazon spokesperson this is because "In rare circumstances, Alexa can mistakenly hear the phrase 'Alexa, laugh.'" The company has promised a fix.
Adbrands Weekly Update 1st Mar 2018: Everyone already knows Amazon is expanding its coverage into a variety of different market sectors. However, few observers will have expected one of them to be home security. The ecommerce giant this week announced the acquisition of Ring Inc, a maker of video home entry systems. Price was not disclosed, but is thought to be well in excess of $1bn. That makes it the second biggest deal in Amazon's history after Wholefoods Market last year. Ring's entry systems allow homeowners to answer their doorbell from any location via their smartphone or PC, and some devices already connect to Amazon's Alexa devices. The deal will help Amazon address one of its biggest ongoing problems: how to deliver packages to customers when they're not at home.
Adbrands Weekly Update 15th Feb 2018: Amazon named top NBC executive Jennifer Salke as head of its Amazon Studios movie and TV division. She replaces Roy Price, who resigned late last year over allegations of sexual harassment. Salke has been president of NBC Entertainment, the network's main prime-time programming business, since 2011.
Adbrands Weekly Update 8th Feb 2018: Amazon shareholders are by now used to wild variances in quarterly profit, as gains in one quarter are reinvested into infrastructure the next. However, the company has shown a growing awareness of the need to reward investors with a big blow-out from time-to-time. For 4Q 2017, a one-off tax gain of $789m helped net income to more than double, topping $1bn for the first time at $1.9bn. Revenues for 4Q surged by 38% to over $60bn, well above expectations, lifting the full year total to $177.9bn, a year-on-year increase of 31%. That 4Q profit jump lifted the annual figure to $3.0bn, up 28%. As has become usual, the group's AWS cloud computing business was the fastest growing business, with revenues up 43% to $17.5bn.
Adbrands Weekly Update 1st Feb 2018: Ads of the Week "Alexa Has Lost Her Voice". Here's the full Amazon Alexa ad from Lucky Generals, and it's just as good as the teaser spot had indicated. When Alexa loses her voice, the only solution - given that this is a Super Bowl ad after all - is to rope in a few celebrities to help out. Needless to say, they don't do quite as good a job as hoped... Unlike British agency Lucky Generals, who bring, we'd argue, a higher level of wit and imagination than was apparent in Alexa's previous Super Bowl spots with Alec Baldwin. It may prove to be a bit too clever for a Big Game audience (given the average quality of a few of the other ads scheduled to run), but we love it. And how great is it that a plucky little UK agency gets to do one of the Super Bowl's biggest ads?
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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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