This Day in Tech History

On This Day . . .

A River Runs Through It

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July 16, 1995:  Amazon Goes Online

Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought, by Douglas Hofstadter .  That was the first book Amazon sold on July 16th, 1995.  The company ran from their garage in Bellevue, Washington.  3 SPARC machines was all they had and a cool little mechanism that rang a bell every time a book was sold.  The business model was set to make profit in 5 years.  It was a good thing, because that may have helped it survive the dot com bubble.

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Jeff Bezos

Jeff Bezos

In 1994, Amazon founder, Jeff Bezos, left his employment as vice-president of D.E. Shaw, a Wall Street firm, and moved to Seattle. He began to work on a business plan for what would eventually become Amazon.com.  After reading a report about the future of the internet which projected annual Web commerce growth at 2,300%, Bezos created a list of 20 products which could be marketed online.

He narrowed the list to what he felt were the five most promising products which included: compact discs, computer hardware, computer software, videos, and books.  Bezos finally decided that his new business would sell books online, due to the large world-wide demand for literature, the low price points for books, along with the huge number of titles available in print.

In the first two months of business, Amazon sold to all 50 states and over 45 countries.  Within two months, Amazon’s sales were up to $20,000/week.  While the largest brick and mortar bookstores and mail order catalogs might offer 200,000 titles, an online bookstore could “carry” several times more, since they had an almost unlimited virtual warehouse: those of the actual product makers/suppliers.

Amazon's garage in Bellevue WA

Amazon’s garage in Bellevue WA

Bezos wanted a name for his company that began with “A” so that it would appear early in alphabetic order.  He began looking through the dictionary and settled on “Amazon” because it was a place that was “exotic and different” and it was one of the biggest rivers in the world, as he hoped his company would be.  Since 2000, Amazon’s logotype has been an arrow leading from A to Z, representing that they carry every product from A to Z.

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Amazon’s initial business plan was unusual; it did not expect to make a profit for four to five years.  This “slow” growth caused stockholders to complain about the company not reaching profitability fast enough to justify investing, or to even survive in the long-term.  When the dot-com bubble burst at the start of the 21st Century, destroying many e-companies in the process, Amazon survived, and grew on past the bubble burst to become a huge player in online sales.

It finally turned its first profit in the fourth quarter of 2001: $5 million (i.e., 1¢ per share), on revenues of more than $1 billion.  This profit margin, though extremely modest, proved to skeptics that Bezos’ unconventional business model could succeed.  In 1999, Time magazine named Bezos the Person of the Year, recognizing the company’s success in popularizing online shopping.

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18 years later, Amazon is going strong.  With purchases of companies like WOOT! and Zappos!, along with the introduction of Kindle e-reader and Amazon Prime, the company is one of the largest resellers of product on the web.

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