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When Amazon.com opened its virtual doors in 1995, it was already an order of magnitude bigger than the average bookstore, carrying more than 1 million titles. It was not like "brick-and-mortar" bookstores in other ways as well, and these differences all stemmed from the fact that Amazon was an e-business, delivering the message and products via the Web.
Being an e-store meant that Amazon could change the world (at least, the business world). For example, it meant that Amazon could sell books created by small, independent writers and publishers since it did not bear the costs of publishing. It meant that it could change the ways in which people bought books, with online user reviews, synopses, personal recommendation services, e-mail notifications of new books by a user's favorite author, and so forth. It also meant that Amazon could keep its prices low since it avoided most of the costs of traditional retail operations by outsourcing the majority of its operations.
A shopper at Amazon.com receives customized, personalized service such as suggestions for books similar to those the customer has browsed or purchased. Amazon can do this only because of its enormous IT infrastructure and data-mining ability.
Rather than a simple purchaser and reseller of books, Amazon is a "middle-man" and an information broker. It has succeeded in creating a loyal and ever-growing community of sellers and buyers, not just of books. Amazon is a hub, collecting a percentage of every sale made and receiving commissions on referrals to other Web sites.
Ultimately Amazon's IT infrastructure has little to do with books. Amazon realized this early on and was able to transform itself into a retailer of toys, cell phones, drugs, cameras, software, car parts, pet supplies-virtually anything that could be sold to the public and shipped around the world. None of this would have been possible without the Web's infrastructure.
Today, Amazon.com claims to be the world's largest online store serving customers in more than 220 countries. It has five international Web sites and approximately 20 million registered customers (almost the population of Canada!). Repeat business is 70%, which is unheard of in retailing. At the time of this writing, Amazon hasn't made an annual profit, but it expects to be profitable in 2003 and beyond.
Although it is far from the only one, Amazon is perhaps the most dramatic example of how the Web has changed the world (at least the world of retailing).
- RK
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