Trinity of Innovations: Amazon.Com

Trinity of Innovations: Amazon.com

Successful businesses are important to study in order to gather information on how to be successful. From a retrospective study of a business that has made it through the trial period and developed a reputable reputation, one may glean some insight on what methods make a successful business. Amazon.com is one such successful business. Founded in 1994, by Jeff Bezos, Amazon.com was one of the first major companies to start selling goods over the internet. Its founders had a vision that an internet bookseller, as opposed to a brick-and-mortar store, could sell many times the number of titles.

Amazon's original business plan was quite unique. The company did not plan to turn a profit right away, in fact, not for five or so years. This was an important strategy in the dotcom era, when internet businesses were growing by leaps and bounds. Amazon.com grew at a steady pace, while other companies grew at lightning rates. And while these fast growing dotcoms were all crashing in 2000, Amazon was still growing steadily. Though the slow growth of the company and the lack of profit being turned caused some stockholders to complain, Amazon persevered and turned its first-ever profit in 2004. While it was a relatively small profit ($5 million for approx. $5 billion in revenue), it was an important step. Now Amazon.com is raking in about $35 million in profits for $5.65 billion in revenue. (http://en.wikipedia.org/wiki/Amazon.com)

I believe that Amazon may contribute its success to several factors. These factors include strategic alliances with numerous other online businesses as well as technological innovation and business strategy.

Shortly after the company was founded and established as an internet bookseller, Amazon began expanding and developing partnerships. In the archived news releases on the Amazon.com website, many of these partnerships are announced publicly. Partnerships with Netscape Marketplace, Geocities, Drugstore.com, Dell and Exchange.com are only a few of these. The Amazon.com Associates Program was developed wherein website owners could receive referral fees of up to 15 percent when they recommended the purchase of books and referred customers to the Amazon website. In June of 1998, Amazon.com reported the Associates program to contain 60,000 members, doubling the size from four months before. These partnerships enabled Amazon's revenues to expand dramatically.

Another successful tactic taken by the company was expanding its product line to more than just books. Amazon's bookstore quickly began expanding, branching off into retail sales of music CDs, videos and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, and more. The company even let its customers choose what they wanted for these other online selections. When first developing their music store in 1998, Amazon invited music enthusiasts everywhere to help build their online music store.

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