Amazon.com, Inc. Profile

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Company Overview

410 Terry Ave. North

Seattle, WA 98109 United States Phone : 206-266-1000

http://www.amazon.com

What began as Earth's biggest bookstore has become Earth's biggest everything store. Expansion has propelled Amazon.com in innumerable directions. While the website still offers millions of books, movies, games, and music, electronics and other general merchandise categories, including apparel and accessories, auto parts, home furnishings, health and beauty aids, toys, and groceries ring up about 60% of sales. Shoppers can also download e-books, games, MP3s, and films to their computers or handheld devices, including Amazon's own portable e-reader, the Kindle. Amazon also offers products and services, such as self-publishing, online advertising, e-commerce platform, hosting, and a co-branded credit card.

Key Information

DUNS Number 884745530

Location Type Headquarters

Subsidiary Status No

Manufacturer No

Company Type Public

Plant/Facility Size (sq. ft.) 2,351.00

Owns/Rents Rents

Foreign Trade Imports / Exports

Accountant Ernst & Young LLP

Total Employees 56,200

1-Year Employee Growth 66.77%

Employees At This Location 1,000

Year of Founding or Change in Control 1994

Primary Industry 1547:Internet & Mail-Order Retail

Primary SIC Code 59610000:Catalog and mail-order houses Primary NAICS Code 454111:Electronic Shopping

Tradestyle Amazon.Com

Latitude/Longitude 47.622212 / -122.337087

Key Financials

Fiscal Year-End December

Sales ($ M) $48,077.00M

1-Year Sales Growth 40.56%

Net Income $631.00M

1-Year Net Income Growth (45.23%)

Total Assets $25,278.00M

Market Value $96,344.99M

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Company Description

During the past five years, the online giant's sales have more than quadrupled from about $10.7 billion in 2006 to more than $48 billion in 2011. Indeed, sales rose 41% in 2011 vs. 2010, fueled by increases in fast-growing categories, such as electronics and other general merchandise, and price cuts and free-shipping promotions. Historically, Amazon's vast scale and efficient operating model have allowed it to prosper despite downward pressure on prices. Offering its customers low prices is key to Amazon's business strategy. However, four consecutive years of profit growth came to an end in 2011 when net income declined more than 45% vs. 2010. Drags on profitability include razor-thin margins on the sale of the new Kindle Fire tablet computer launched in November 2011. Amazon is apparently willing to take a short-term hit to profits to achieve its larger goal of increasing merchandise sales at its online store down the line.

The Kindle Fire is the latest in Amazon's line of Kindle e-readers (launched in 2007). Digital books have emerged as the fast-growing segment of the book market. In 2011 Amazon announced that it now sells more Kindle e-books than print books. The Kindle, Kindle 3G, and new Kindle with Special Offers (which sells for less but displays ads and sponsored screen savers) comprise Amazon's book offering. Rival Barnes & Noble, which launched its own e-reader Nook in 2009, has emerged as a formidable competitor to Kindle, especially since the release of Nook Color in 2010.

Amazon stepped up its physical and e-book publishing activities in 2011. Signaling an increased interest in content production, Amazon has become a book publisher with five imprints, including AmazonEncore and Montlake (a publisher of romance novels). In late 2010 it purchased the publication rights of about 120 fiction and translated titles published by The Toby Press. Under the terms of the deal, the company's AmazonEncore and AmazonCrossing publishing imprints will release The Toby Press titles in print and Kindle editions for sale on Amazon's websites and at bookstores in the US, the UK, and Germany. Previous purchases made to strengthen its Kindle business include TouchCo, a manufacturer of touch screens (in early 2010), and the digital audiobooks publisher Audible for about $300 million in 2008.

To grow its customer base and sales channels, Amazon spent a total of $771 million on acquisitions at home and abroad in 2011. It purchased UK-based online bookseller The Book Depository in the fall. The Book Depository was founded by Andrew Crawford, a former Amazon.co.uk employee, and acquiring it strengthened Amazon's market share in the UK and bolstered its position in the e-book market. Raising its entertainment stakes in Europe, Amazon in 2011 acquired the remaining shares it did not already own in LOVEFiLM International, which streams video and rents DVDs by mail to customers in the UK, Germany, Denmark, Norway, and Sweden (like Netflix in the US). Amazon previously held a 42% stake in LOVEFiLM. The deal was announced amid rumblings from Hollywood studios that Amazon will roll out an Internet movie subscription operation to rival Netflix, so Amazon could make use of LOVEFiLM's technology in that pursuit. Amazon could also use its Hollywood connections to expand LOVEFiLM's video offerings and grow its market share in Europe.

At home in the US, the company purchased Woot Inc., an early entrant into the social shopping e-commerce niche in 2010. Dallas-based Woot operates as an independent subsidiary of its parent. It also acquired Quidsi, the owner of online shopping sites Diapers.com and Soap.com for $500 million in cash and $45 million in debt. Diapers.com sells baby care products and Soap.com sells everyday essentials. Both companies operate as independent units and retain their current executive leadership teams.

Looking to continue to improve its automation fulfillment centers, Amazon announced in early 2012 it will acquire Massachusetts-based Kiva Systems for around $775 million in cash. There is speculation that Amazon may proprietize Kiva's material handling technology, which makes use of robotic technology.

2011 also saw Amazon bend to increasing pressure from state legislatures and its brick-and-mortar rivals to begin collecting sales tax on its online sales. After pitched battles in several states, including Texas and California, the company agreed to begin collecting taxes in The Golden State in 2012.

To boost membership in its Prime shipping and customer loyalty program (launched in 2005), Amazon has struck a deal with Discovery Communications. Discovery has agreed to sell the online-streaming rights to some of its older programming, including episodes of the popular shows "Dirty Jobs" and "Whale Wars," to Amazon's

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online-Company History

Jeff Bezos was researching the Internet in the early 1990s for hedge fund D.E. Shaw. He realized that book sales would be a perfect fit with e-commerce because book distributors already kept meticulous electronic lists. Bezos, who as a teen had dreamed of entrepreneurship in outer space, took the idea to Shaw. The company passed on the idea, but Bezos ran with it, trekking cross country to Seattle (close to a facility owned by major book distributor Ingram) and typing up a business plan along the way.

Bezos founded Amazon.com in 1994. After months of preparation, he launched a website in July 1995 (Douglas Hofstadter's Fluid Concepts and Creative Analogies was its first sale); it had sales of $20,000 a week by

September. Bezos and his team kept working with the site, pioneering features that now seem mundane, such as one-click shopping, customer reviews, and e-mail order verification.

Amazon went public in 1997. Moves to cement the Amazon.com brand included becoming the sole book retailer on AOL's website and Netscape's commercial channel.

In 1998 the company launched its online music and video stores, and it began to sell toys and electronics. Amazon also expanded its European reach with the purchases of online booksellers in the UK and Germany, and it acquired the Internet Movie Database. Bezos also expanded the company's base of online services, buying Junglee

(comparison shopping) and PlanetAll (address book, calendar, reminders).

By midyear Amazon.com had attracted so much attention that its market capitalization equaled the combined values of profitable bricks-and-mortar rivals Barnes & Noble and Borders Group, even though their combined sales were far greater than the upstart's. Late that year Amazon formed a promotional link with Hoover's, publisher of this profile.

After raising $1.25 billion in a bond offering early in 1999, Amazon.com began a spending spree with deals to buy all or part of several dot-coms. However, some have since been sold (HomeGrocer.com) and others have gone out of business or bankrupt -- Pets.com, living.com (furniture). It also bought the catalog businesses of Back to Basics and Tool Crib of the North.

Amazon.com began conducting online auctions in early 1999 and partnered with venerable auction house Sotheby's. Also that year Amazon added distribution facilities, including one each in England and Germany.

In 2000 the company inked a 10-year deal with Toysrus.com to set up a co-branded toy and video game store. (The partnership came to a bitter end in 2006 after Toys "R" Us sued Amazon.com when it began selling toys from other companies.) Also that year Amazon.com added foreign-language sites for France and Japan.

In 2001 Amazon cut 15% of its workforce as part of a restructuring plan that also forced a $150 million charge. That year the company also made a deal with Borders to provide inventory, fulfillment, content, and customer service for borders.com. As part of a deal to expand their marketing partnership, AOL invested $100 million in Amazon.com in 2001. Later that year, Amazon purchased some assets from Egghead.com (which filed for Chapter 11 in August) and relaunched the site.

In 2002 the firm introduced clothing sales, featuring hundreds of retailers including names such as The Gap,

Nordstrom, and Lands' End. Amazon.com received accreditation from ICANN (the Internet Corporation for Assigned Names and Numbers) as an Internet domain name registrar, becoming one of about 160 entities permitted to register Internet addresses.

The company launched its Search Inside the Book feature in 2003. The tool allows customers to search the text inside books for more relevant search returns. At launch, the search feature covered more than 120,000 books from over 190 publishers. Amazon expanded into China in 2004 with the purchase of Joyo.com. (It renamed the unit Joyo Amazon in 2007.)

In 2005 Amazon launched Amazon Prime, a two-day shipping service for an annual fee of $79.

Amazon.com began testing the online dry grocery waters in 2006. It launched the Amazon Fresh delivery service for the Seattle area a year later to include perishables.

The company acquired shopping site Shopbop.com in 2006, boosting its apparel offerings. Also that year, IBM filed a pair of patent infringement lawsuits, alleging that Amazon.com has been violating at least five of its patents --including technologies that govern how the online retailer handles product recommendations and displays

advertising -- for about four years. In 2007 the two companies settled the litigation and signed a long-term patent cross-license agreement.

The Internet bookseller in November 2007 introduced the Kindle, an electronic portable book reader. The launch, Amazon's first foray into the tech hardware market, is aimed at kindling demand for electronic books.

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rental services to Internet movie-rental company LOVEFiLM International in exchange for stock. The deal gave Amazon about a 40% stake in LOVEFiLM.

Shopping was also at the top of Amazon's list in 2008. In May the company invested in The Talk Market, a user-generated TV Shopping Channel. In June Amazon launched an online office supplies store and sewed up the acquisition of the online fabrics retailer Fabrics.com.

In June 2009 Amazon agreed to pay Toys "R" Us $51 million to settle a dispute dating back to 2004. The settlement was related to a partnership that gave the toy seller exclusive rights to supply some of the toys on Amazon's site. In November Amazon completed its $888 million acquisition of shoe e-tailer Zappos.com -- the #1 online shoe and apparel retailer. (Besides footwear and clothing, Zappos also sells handbags, housewares, and beauty products.) The purchase allowed Amazon to boost its sales and expand its products portfolio by leveraging Zappos' widely

recognized customer service expertise.

In mid-2010 Amazon acquired Woot, Inc., a pioneer in the deal-of-the-day genre of online retailing. While neither Amazon or Woot would disclose the selling price, reports valued the deal at about $110 million in cash.

In January 2011 Amazon completed its move to a new corporate headquarters in Seattle's South Lake Union neighborhood. Also in early 2011 the company acquired the remaining shares it didn't already own in LOVEFiLM International.

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Company Financials

Auditor $48,077.00M $631.00M Public Company Type

1-Year Sales Growth

Prescreen Score

(45.23%) 1-Year Net Income Growth

40.56%

Low Risk

Ernst & Young LLP

Financial Summary