To borrow a popular word from the news cycle of the day – it’s huge. This company, at only 20 years old, is so ubiquitous and its rapid rise so legendary, it really is a source of awe and wonder. And sometimes, pointed debate and discussion. “Is it too big? Can a powerhouse like this continue as it has on its headlong tear in the business world? Is it a good investment? What’s its broader influence on logistics and warehousing?”
Let’s take a quick look at some statistics. In 2015, Amazon ended the year with $107 Billion in net sales. It is home to roughly 230,800 employees worldwide. And it generated $1.54 Billion in outbound shipping costs. Its Top Ten brand value, calculated by Millward Brown at $45 Billion, comes in just ahead of McDonald’s and IBM. There are more stats, including income figures that have yet to catch up to the size and scale of the company, but we’ll get to that.
How did Amazon get here in such a short time? Do you remember the Internet brand “Cadabra”? No? Around 1994? Still not ringing any bells? That was Jeff Bezos’ original name for the company. He envisioned a sense of ‘magic’ in this company. He had left his stable job, seduced by the annual growth figures he had seen on the web retail (annual growth of 2300%), and was convinced an online bookseller could thrive. In the first weeks, at the company that would be named Amazon, a bell would ring when a sale was made and the small group of employees would gather around the computer to see if they knew the purchaser personally. In just two whirlwind years, Amazon had become the Internet’s first retailer to log its 1 millionth customer.
In the years that followed, Amazon continued its breakneck pace of growth, making headlines and becoming a staple of daily life in America and increasingly, abroad. In 1999, Bezos was named Time magazine’s “Person of the Year”. Amazon had revenues of $1.9 Billion. At roughly the same time, the dotcom bubble was bursting and people were questioning if Amazon could continue its revenue trend and make a profit. At that point, Amazon had not made a profit. It wasn’t until 2001, after more than $1 Billion in losses that Amazon showed a quarterly profit of $5 Million.
In Bezos’ mind, the quarterly profit may have come too early. By the early and mid 2000s, Amazon had expanded its product lines across a wide spectrum of industries and was active in making strategic acquisitions, funding partnerships with the likes of Target and Borders, and generally disrupting the traditional ways of doing retail. They were constantly pouring investment back into the business with a “in it to win it” mindset. With something in the neighborhood of 90 warehouse centers, Amazon is physically close to much of the world – the US in particular – where same-day delivery has become an option.
What’s next? While nobody was looking, Amazon leveraged its knowledge in web development and technology to develop Amazon Web Services, which is a multi-billion dollar business in its own right. And, Amazon Prime of course. And Logistics, with a foray into home delivery in 2014. Internationally, ships, trains and trucks move more than $19 Trillion of goods across borders each year. Amazon, with its network of distribution centers and ability to find efficiencies with technology and scale to reduce costs is expected to impact the industry as it expands into this arena in the same fashion as it has in other industries. Amazon Logistics Services would likely take internal competencies and expand them to third parties. It’s a potential industry disruption to watch, for sure.
And so it goes. Its dozens of separate businesses + millions of third-party seller accounts make Amazon not only a force to be reckoned with, but also a bit of a mystery to decode. One thing analysts seem to agree upon – it’s endlessly interesting to watch and it seems to have taken on a life of its own different from any other company before it. Remember that name, “Cadabra”? One of Bezos’ associates thought it sounded too much like “Cadaver” and advised against it. Amazon seems more appropriate, doesn’t it? The biggest river in the world. Flowing. Changing shape. Fascinating. Definitely, alive and kicking.