Amazon’s Huge Retail Footprint

Twinsterphoto / Shutterstock.com

Twinsterphoto / Shutterstock.com

Twenty years ago, it would have seemed impossible to imagine that an Internet-based business, known as “Amazon Books” would grow to become one of America’s top-ten retailers. The company, now known as Amazon.com, or simply “Amazon,” expanded to sales of CDs, DVDs, software, video games, toys, televisions, computers and a myriad of other electronic gadgets.

Most notably, Amazon’s Kindle reader for e-books revolutionized the reading experience for many people, as the software was developed to allow non-Kindle products (such as “pad” computers) to read e-books published for the Kindle. Amazon’s Fire line of “tablet” devices evolved from the Kindle concept, with price tags as low as fifty dollars. The company also offers television set-top boxes featuring the Fire trademark.

Amazon began actively selling books online in July of 1995, following incorporation the previous year. As the company continued to grow, its list of corporate acquisitions included Brilliance Audio in 2007 and Audible.com in 2008. The enormous size of Amazon’s retail footprint was epitomized with its acquisition of the online shoe merchant Zappos in July of 2009 at a cost above $925 million. The Zappos trademark is a footprint.

Most recently, the company introduced Amazon Dash on March 31, 2015. Amazon Dash ties in with the company’s Amazon Prime Fresh grocery delivery service by the use of a small, Wi-Fi device, which takes the shape of a small activation button. For example, an Amazon Dash button with the Tide logo sticks directly onto the control panel on one’s washing machine.

When the customer runs out of detergent, he or she can simply press the Tide button to order more. This button could prove especially profitable as customers accidently make contact with the button while doing their laundry. The company allows customers a brief period to cancel the order, confirmed via telephone, but there remains the possibility that some customers will not cancel such accidental orders within the allotted time.

Amazon Studios was recently in the spotlight when Jeffrey Tambor won the Emmy Award for Outstanding Lead Actor in a Comedy Series for his contribution to the company’s first season of Transparent. Amazon Studios will continue to expand its original series offerings, available on Amazon Video, with Sneaky Pete, produced by Bryan Cranston of Breaking Bad. Sony Pictures Television will co-produce the series, although the ten episodes, scheduled for 2016, will be available exclusively through Amazon Video. Woody Allen is producing another series, currently in development for a 2016 debut.

Amazon Studios is getting involved in making movies, too. Its first release results from a licensing agreement with Spike Lee for the film Chi-Raq, scheduled to premiere in theaters on December 4. The plan is for Amazon Studios to release its original movies to theaters for a brief run, the period is unspecified, after which point they will become available exclusively for Amazon Prime members. Eventually, these original films will be available to all Amazon Video customers.

Establishing merchant partnerships allows Amazon to provide online sales for Bebe Stores, Lacoste, and several other enterprises. Amazon Marketplace allows customers to sell used books, DVDs and CDs, listed on the same pages where Amazon sells corresponding new versions of the same product.

Amazon’s common stock trades on the Nasdaq Stock Market, under the ticker symbol, AMZN. The initial public offering (IPO) of Amazon stock took place on May 15, 1997, at a price of $18.00 per share. As Amazon’s share price continued to soar, the company saw fit to implement stock splits on three separate occasions during the late 1990s to facilitate liquidity and make the shares available to less affluent investors. Because of those splits, the $18 IPO price now translates to approximately $1.50.

Investors who have retained their Amazon shares since the 1997 IPO were obviously feeling quite comfortable, despite the stock’s 3.49 percent price drop on November 13. After all, at the closing bell, Amazon ended the trading session at $642.35 per share – after hitting a record-high closing price of $673.25 on Wednesday, November 11. Nevertheless, Amazon is the most expensive stocks of the S&P 500 components, with a trailing twelve-month price/earnings multiple of 920. The company’s top status among cloud-computing service providers, through its Amazon Web Service (AWS) business line, is responsible for a significant degree of investor excitement.

Amazon’s $311 billion market capitalization dwarfs that of Wal-Mart. Although Wal-Mart had been America’s largest retail enterprise, when measured by market capitalization, its $180.9 billion market cap is currently nowhere near that of Amazon.

The National Retail Federation (NRF) currently ranks Amazon as the ninth-largest retailer, headquartered in the United States. According to NRF data, Amazon’s $49.353 billion in retail sales during 2014 accounted for 59.2 percent of the company’s worldwide sales for that year, which reached $83.391 billion. When compared to the previous year, Amazon’s domestic sales growth expanded by 22.6 percent during 2014.

By 2013, Amazon’s online sales created such a heavy flow of shipping that a partnership between the company and the United States Postal service had to be established, by which Sunday deliveries would be in New York and Los Angeles. Sunday delivery service expanded to New Orleans, Houston, Dallas, and Phoenix during the following year.

The company has established 65 order fulfillment centers throughout the United States. Amazon has also established order fulfillment centers throughout Europe, Canada, China, Japan, and India. These centers serve as warehouses and shipping points to provide faster delivery than what had been previously experienced from the company’s warehouse in Seattle. The company recently gained a good deal of publicity for its plans to use aerial drones for making deliveries to homes.

Amazon’s most expensive items are on Amazon Art. In August of 2013, Amazon Art sold Claude Monet’s L’Enfant de la Tasse for $1.45 million. When Norman Rockwell’s Willie Gillis: Message from Home was offered for $4.85 million, many commentators described the move as a publicity stunt, to counteract initial criticism that Amazon Art would be an unloading point by which art dealers would dispose of their unwanted inventory.

Throughout last summer, many articles described harsh working conditions, which extended from Amazon’s order fulfillment centers to its home office in Seattle. CEO Jeff Bezos received criticism for being an ambitious overachiever with unreasonable expectations about employee performance.

On the other hand, many current and former Amazon employees have defended the company’s corporate culture. From the bystander’s perspective, it is easy to understand that there must be a very significant force driving Amazon to achieve such impressive results.