Preview

Amazon on the Brink of bankruptcy

Good Essays
Open Document
Open Document
924 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Amazon on the Brink of bankruptcy
Introduction
Amazon is a Fortune 500 American e-commerce company created by Jeff Bezos. CEO Jeff Bezos was an investment banker with no previous experience in the book publishing or retail industries. Amazon began in 1994 as an online bookstore, which gave it the advantage of having more titles than the traditional brick-and-mortar stores. From its book selling roots, Amazon has branched into clothing, gourmet food, watches, jewelry, baby products and apparel, beauty products, sporting goods, music CD’s, DVD’s, video tapes, home appliances and electronics and so much more.
By September 1995, the company was selling over $20,000 per week out of Bezos’s garage. During this rapid growth period, Amazon.com focus on enhancing its product and service offerings and capabilities with increasingly sophisticated browsing and focused search capabilities, personalized store layout and recommendations, shopping carts, 1-click shopping (which was later patented), wish lists and greeting cards. By 1997, Amazon.com revenues for just the first quarter had increased to $16 million, which was the same amount as the entire previous year. The company went public on May 15, 1997.
Near Death
Like most internet businesses, Amazon.com had yet to achieve profitability. Despite the company’s popularity, in January 2001, Bezos, was under tremendous pressure to generate profits. Bezos believed that the key challenge to the company in late 2000 was to achieve profitability by year-end 2001. Some analysts begun to question whether Amazon.com executives would be able to achieve profitability before money ran out. While its books, music and video stores were breaking even, its toy, home and garden, electronics, and international stores continued to burn cash. The dot-com stock market crash exacerbated the company’s problems and, by mid-2000, many of its online retail partners had declared bankruptcy.
Business Model Change
One of the biggest pros to Amazon's diversifications strategy is

You May Also Find These Documents Helpful

  • Better Essays

    Amazon.com is a publicly traded worldwide online retail company founded by Jeff Bezos on July 5, 1995 in Seattle, Washington. The company originally began as an online bookstore as Bezos felt there was a high demand for literature, and books had a low price point and a huge selection of titles available in print. Technological innovation drives the growth of Amazon.com to offer customers more types of products, more conveniently and at lower prices. Since 1995, Amazon has significantly expanded its product selection, international retail websites, and worldwide network of fulfillment and customer service centers. Today, Amazon retail websites offer everything from toys and video games to MP3 downloads and collectible items (amazon.com, 2014). Amazons business model is fairly simple; to sell various products and goods online at an affordable cost to consumers. Amazon has managed to not only achieve this business model but they have also managed to consistently expand and become the largest online retailer to date. To keep up with global demand, Amazon had to expand its products and services offered while continuing to forecast consumer’s needs. “In 2000, Amazon.com began to offer its best-of-breed e-commerce platform to other retailers and to individual sellers. Today, hundreds of thousands of world-class retail brands and individual sellers increase their sales and reach new customers by leveraging the power of the Amazon.com e-commerce platform. Partners work with Amazon Services to power their e-commerce offerings from end-to-end, including technology services, merchandising, customer service, and order fulfillment. Other branded merchants leverage Amazon.com as an incremental sales channel for their new merchandise. Over 2 million third-party sellers participate in Amazon where they offer new, used, and…

    • 891 Words
    • 3 Pages
    Better Essays
  • Powerful Essays

    Task 2

    • 2058 Words
    • 11 Pages

    Amazon.com was one of the first major companies to sell goods over the Internet and has become a worldwide established name. Amazon.com is an American e-commerce company that is based in Washington. It was founded by Jeff Bezos in 1994 and began as an online bookstore but due to its success, Amazon has diversified into other product lines and services such as groceries, electronics and Merchant Program with stock price which fluctuated from $105 in 1999 to $5 in 2001(Lauden and Traver, 2000), but responding positively to economic stimuli, Amazon.com stock presently stands at $384.8.(www.Nasdaq.com, 26/02/15) Amazon.com has developed separate websites for Canada, UK,Germany, France, China and Japan with a vision to become. Amazon’s U.S. sales came to $44 billion last year, placing it in the top 10 US retailers. See appendix 1…

    • 2058 Words
    • 11 Pages
    Powerful Essays
  • Powerful Essays

    Capstone Project Bus599

    • 2781 Words
    • 12 Pages

    References: Amazon.com builds on themes of Growth, Leadership, and Profitability: (2009), Online Article, Retrieved 09Dec12, from http://www.techrepublic.com…

    • 2781 Words
    • 12 Pages
    Powerful Essays
  • Better Essays

    Nonetheless, Amazon was incorporated in 1995. It offers online retailing services to customers across the world. Amazon focuses on convenience, selection, and price. In addition to the direct retailing services, the company allows other small and medium sized businesses to sell their products through the company’s websites. The customers and business are able to complete their orders and transactions in Amazon’s websites. Other individuals such as authors, musicians, and filmmakers are also able to sell their products using the same platform. Millions of products are offered through the website. The website may be accessed through PCs, and even mobile applications. The core segments of the company include the…

    • 1627 Words
    • 5 Pages
    Better Essays
  • Good Essays

    Amazon's initial business proposal was different they 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 in, or to even survive in the long-term. When the dot-com era grew the start of the…

    • 720 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    In 1994, Jeff Bezos was a 30-year-old hedge fund analyst with a degree in computer science and electrical engineering from Princeton University. It was at this time Bezos decided to put his business plan in play. Jeff pulled up a file that had the business model he intended to use, which had been write in early that year in the passenger seat of a 1988 Chevy Blazer (A Retail Revolution Turns 10, 2005). Amazon.com opened its virtual doors on the World Wide Web in July 1995 and offers Earth’s Biggest Selection. The company seeks to be Earth’s most customer-centric company. Amazon.com is now a digital strip mall branching beyond books into music, DVDs, electronics and toys (Penenberg, 2000). Many people wonder how Amazon became on of the few dot-com companies to survive the dot-com bubble burst that took effect during 1997-2000. One of the best ways to evaluate Amazon’s performance is to complete a thorough review of its financial statement, pro forma financial statements, ratio analysis, return on equity, its calculated economic value added projects, and its financial policies.…

    • 2357 Words
    • 10 Pages
    Powerful Essays
  • Good Essays

    Amazon Long Tail

    • 730 Words
    • 3 Pages

    Amazon.com is a Fortune 500 e-commerce company based in Seattle, WA. Amazon was one of the first big companies to sell goods over the Internet. The company was founded by Jeff Bezos in 1994, and launched in 1995. They started out as an online bookstore and then quickly diversified by adding other items, such as VHS tapes and DVDs, music CDs, software, video games, electronics, MP3s, clothing, furniture, toys and even food items.”…

    • 730 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    The Dot Com Bubble – a remarkable failure that claimed the hopes and dreams of countless internet pioneers as they programmed their way to fame and fortune. It has been more than a decade since the crash but from its ashes remains a select few companies who managed to hold on to their vision of internet domination. Today there is a clear winner: the undeniable champion of the internet and the world’s largest online retailer Amazon.com, Inc. Today, many have forgotten Amazon’s tumultuous beginnings and the problems it faced. Many of the company’s online partners went bust and some analysts questioned whether Amazon’s leaders could drive the company to achieve profitability before the venture capital ran out. Even as the company’s brand value rose, the stock price fell dramatically from its high of $113 on December 9, 1999, to around $15 just one year later. But Amazon rebounded from the brink of bankruptcy with a partnership with Toys “R” Us and the expansion of its service offerings to include hosting both physical and online customers and offering logistics services within its global distribution infrastructure.…

    • 2781 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    Regarding Amazon.com’s chart, we can see that there is a huge exponential growth. On the first years of operations, Amazon suffered of a big growth in sales, having almost 3000% more sales from 1995 to 1996. Now it is important to notice how the rate lowered throughout the years to reach a 31.50% from 2000 to 2001. We can see a huge growth in the first years because Amazon.com was something new to people as online bookselling wasn’t that famous. As people settled to the idea and competitors like Barnes & Noble adjusted to this change, sales growth went down to a normal growth rate, which in average was still…

    • 990 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Amazon

    • 2005 Words
    • 6 Pages

    The company was founded in 1994, after Bezos left his employment at a Wall Street firm, and moved to Seattle. It was founded in Bezos garage, which has grown to be a Fortune 100 company. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs, video and MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food, toys and jewelry. In 2002 Amazon launched a new business model for web services platform, identifying a new area of potential growth and new customer, which grew into the seventh largest in the world within five years. In late 2007, it set up Lab125, whose first product the Kindle e-book reader disrupted the entire publishing industry. Since then, the company also produces consumer electronics – notably, Amazon Kindle e-book readers, Kindle Fire tablets, Fire TV and Fire Phone – along with being a major provider of cloud computing services. 1…

    • 2005 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    Founder and CEO Jeff Bezos opened the virtual doors of Amazon.com's online store in July 1995. The company was incorporated in 1994 in the state of Washington and reincorporated in 1996 in Delaware. The Company's principal corporate offices are located in Seattle, Washington. Amazon.com completed its initial public offering in May 1997, and its common stock is listed on the NASDAQ National Market under the ticker symbol AMZN. Amazon.com's fiscal year is based on the calendar year, and the last day of the fiscal year is December 31. The closing stock selling price for February 1, 2006 was $43.98. Amazon has never declared or paid cash dividends on its common stock.…

    • 2039 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    Amazon is an online based selling business. Amazon.com sells thousands of items ranging from clothing, beauty products, books, electronic, plus so much more (“Essortment”, 2011). Amazon was founded by Jeff Bezos in 1994, focusing on the selling of books (“Essortment”, 2011). Following the creation of Amazon investors took interest, putting money into website design and expanding the range of items sold (“Essortment”, 2011). The decision to sell a variety of items brought success but in 2001 revenue had dropped and employees were being laid off (“Essortment”, 2011). Bezos, the original founder, came up with the idea of recruiting companies to sell their products through the Amazon website, this move generated the needed sales to get Amazon back on its feet and generate profits for all companies involved (“Essortment”, 2011).…

    • 517 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Amazon.com: The Brink of Bankruptcy Jeffrey Bezos, formerly a senior vice president for D. E. Shaw & Company, founded Amazon.com in 1994. D. E. Shaw is a Wall Street-based investment bank, and Mr. Bezoswas assigned to find good Internet companies in which to invest. During the summer of 1994, he stumbled across a Web site that showed the number of Internet users was growing by 2,300 percent per month. He quickly realized the vast potential of the Internet, and began putting together a list of possible products that he could sell on the World Wide Web. He eventually narrowed his list to music products and books. Although music products and books both had enormous potential, he eventually selected books because he believed that he could compete more evenly in the book segment due to the lack of a very dominant player. In contrast, the music industry had only six major record companies. These companies controlled the distribution of records and CDs and, therefore, had the potential to lock out a new business threatening the traditional record-store format. To begin his new venture, Mr. Bezosleft New York and moved to Seattle. He decided to move to Seattle for two reasons: 1) Ingram Book Group's warehouse is located near Seattle; and 2) Because of the Seattle area's reputation for computer expertise. In 1995, Amazon began selling books entirely online, operating out of a rented facility and using doors laid across sawhorses for desks. He soon was able to generate several million dollars from venture capitalists, and sales were astounding. Sales for 1995, 1996, 1997, 1998 and 1999 were $0.5, $16, $147, $610 and $1,640 million respectively. Amazon's customer base has increased dramatically from 180,000 in 100 countries in 1996 to 12 million in 160 countries by mid-1999. In 1998, Amazon began to expand into other product categories. The companybegan to sell music products and videos, and within two months of these additions, Amazon became the number-one seller of…

    • 2500 Words
    • 10 Pages
    Good Essays
  • Better Essays

    Value Chain Analysis

    • 2679 Words
    • 8 Pages

    The company was founded in 1994 by Jeffery P. Bezos. In the early years of Amazon they were mostly known for selling books. The idea behind it was that traditional brick-and-mortar stores could not hold more than a few hundred thousand books, whereas Amazon being an online store could hold an infinite amount of books (“History of amazon.com,”). Since its early days of being an online book store Amazon as grown to become a fortune 500 company with a global reach. Amazon operates in over 10 countries worldwide with over 88,000 employees (“Inside amazon,”). Amazon is one of the most visited sites in the world, with over 500,000,000 monthly visitors, and over 100 million active members (“Top 15 most popular websites”, 2014).…

    • 2679 Words
    • 8 Pages
    Better Essays
  • Good Essays

    Jeff Bezos

    • 1291 Words
    • 4 Pages

    The greatest challenge for the company came in 1995, when Bezos needed money to launch his company. He needed $1 million to keep the company running for at least 2 years. It was very challenging because he needed the whole $1 million at once. According to him, this was a time when the company could have collapsed even before it got started. It was difficult for investors to fund his idea because they were skeptical about the potential of the internet. Ultimately, he managed to raise the whole amount from about 20 angel investors. Another challenge was convincing people to buy products via the internet when they could make a special order from retailers and get the product at their door step. In addition, every retailer streamed online (Drexler, 2007). Because of the competition, the company's market capital dropped from $32.1 billion to $8.9 billion in six years. Some people even called it "Amazon.org" because it seemed like a non-profit company.…

    • 1291 Words
    • 4 Pages
    Good Essays