Remember when Amazon only sold books? – Los Angeles Times

 In Technology

When Jeff Bezos launched Amazon.com in 1994, he gave himself a 30% chance of success — slightly better than the 1 in 10 odds for Internet start-ups.

“That’s actually a very liberating expectation, expecting to fail,” he said to Time magazine when it named him Person of the Year in 2000.

By then, sales had ticked past $1 billion, but the company had yet to turn a profit. Some analysts remained skeptical that Bezos could deliver on his plan to sell everything and anything. (“Anything with a capital A,” he told Time.)

But two decades after its launch, Amazon has conquered online retail, racking up $136 billion in sales in 2016. It’s also taken on cloud computing, tech gadgets and the entertainment world. With its blockbuster announcement Friday that it is buying upscale grocery chain Whole Foods, Amazon now plans to upend yet another industry: grocery stores.

As consumers increasing rely on the Seattle-based e-commerce giant, it’s hard to remember a time when Amazon sold only one product: books.

“There’s virtually nothing left that they haven’t touched,” said Kelly O’Keefe, professor at the Virginia Commonwealth University Brandcenter.

Books

Amazon.com launched its online bookselling site at a time when bookstore chains such as Barnes & Noble, Waldenbooks and Crown Books were familiar storefronts in American shopping malls.

Promoting itself as “Earth’s Biggest Bookstore,” Amazon opened for business in July 1995, using major book distributors and wholesalers to rapidly fill its orders. “The idea of selling books online was a foreign one, it took a while to take off,” O’Keefe said.

But not long. Not beholden to the physical constraints of a brick-and-mortar shop, Amazon was carrying more than 2.5 million titles by 1997, and its sales totaled $148 million that year. The company had 1.5 million customers in more than 150 countries.

The company went public on May 15, 1997 with its stock priced at $18 a share and a market capitalization of roughly $438 million.

The stock closed Friday at $987.71, giving Amazon a total market value of $475 billion.


The Everything Store

Amazon’s success with books allowed the e-commerce behemoth to expand far beyond its origins.

Selling electronics helped the company grow rapidly and put traditional electronics stores like Circuit City out of business. It’s also possible that consumers learned new ways to price-shop; they “unintentionally were able to leverage brick-and-mortar stores as showrooms for their own products,” O’Keefe said.

From computers and home goods to sex toys and shoes, there’s not much that Amazon doesn’t offer shoppers these days.

Amazon Web services

In the early 2000s, Amazon realized it had been sitting on a technology gold mine. The computer systems that powered its online shop were so robust that Amazon figured it could expand its network and be the backbone of many more online stores.

The idea of a company trusting a third party to store its proprietary data didn’t take off overnight. But Amazon can thank Apple’s iPhone for unleashing a tsunami of small companies trying to build apps for the device. Many of those apps, including dating service Tinder and the “Candy Crush” games, tapped Amazon’s systems because they were simple and affordable. As the iPhone became ubiquitous by 2010, so had Amazon Web Services.

Alibaba, Google, Microsoft and IBM have offered stiff competition. But Amazon has established itself as a leader in cloud computing, and this year it could generate $15 billion in sales.

The company is setting itself up to be a major foundation — though with unproven financial returns — for the next generation of technology by allowing software developers to build upon Alexa and machine learning, or automated computing, tools.

The computing infrastructure also has helped Amazon quickly launch an advertising technology business that helps other shops identify potential customers based on their interests. With just over $1 billion in ad sales, Amazon isn’t making a big dent in the businesses of industry leaders Google and Facebook. But advertising experts say Amazon has the data and software expertise to catch up fast.

Amazon CEO Jeff Bezos unveils the Kindle Fire HD in 2012.
Amazon CEO Jeff Bezos unveils the Kindle Fire HD in 2012. (Al Seib / Los Angeles Times)

Hardware

The company gave the world a glimpse of its enormous ambition when it starting making its own tech devices.

It launched the popular Kindle e-reader in 2007, a product that has gone on to be a category leader. Morgan Stanley estimates that the company sold $5 billion in Kindle devices in 2014.

It also got in on the tablet market with the Amazon Fire HD in 2012, and the video and audio streaming marketing in 2014 with the Amazon Fire TV — both with moderate success.

Its 2014 Fire Phone — meant to compete with the iPhone and Android phones — was a total flop, though, and the company took a $170-million hit. It discontinued the phone a year later.

Instead of being burned by its smartphone venture, the company launched its digital home assistant device, the Amazon Echo, in 2015. The company was the first to release such a device, which doubled as a home speaker and came packaged with Alexa, the voice-commanded artificial intelligence that can answer questions, make orders on Amazon and play music.

While the Echo was initially slow to gain traction, the launch of similar devices from Google and Apple introduced more customers to the relatively new product category.

Analysts describe voice-enabled assistants as the next frontier, and the Echo as the front-runner. Patrick Moorhead, a principal analyst at Moor Insights and Strategy, once described the Echo as a “Trojan horse.”

“You bought it to do a few simple things and be a speaker, then they get you comfortable and send you weekly updates to let you know what you can do with it and ultimately once you go out and get those smart lights or smart door locks, you will be comfortable telling it to do things,” Moorhead said.

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