AMAZON’S E-BUSINESS MODEL

For the quarter ending March 31, 1996, Amazon.com reported sales of $875,000.1 Fast forward 20
years—for the quarter ending March 31, 2016, Amazon.com reported net sales of more than $29 billion!.
Amazon.com has become the most remarkable success story in the history of E-Business. One amazing
part of the story is that in 1996, very little retail business was taking place on the Internet.
Amazon.com began business with only a few workstations and no physical (i.e., no “brick-and-mortar”)
sales locations. Because Amazon.com began early in the era of business-to-consumer (B2C) E-business,
many customers were skeptical of providing credit card information online. To provide comfort to these
customers, Amazon.com processed credit card orders by receiving orders on one computer, writing the
information to a floppy disk, and physically walking the order to a separate computer. Amazon.com could
not have grown to nearly $29 billion in annual sales on such primitive systems. Instead, Amazon.com
grew by developing and implementing secure transaction software, online shopping carts, and
sophisticated data-analysis programs.
Amazon.com’s E-business model would not be possible without this software. The model is based on
Amazon.com’s “almost-in-time” inventory concept, which supports the interface that you see as a
customer (B2C), and with the innovative business to-business (B2B) application for quick acquisition and
shipment of non-stocked items. That is, if the item that you order is not in stock, the company quickly
gets it from its supplier for you, the customer. It is interesting that over time, the use of technology has
allowed Amazon.com to grow well beyond a company known as a “bookseller.”
Today, Amazon’s vision is “to be Earth’s most customer-centric company for four primary customer
sets: consumers, sellers, enterprises, and content creators.” 3 Through the development of technology,
Amazon.com has been able to develop its E-business model as well as use its technology to provide
similar services to a wide variety of companies, including some which traditionally would have been its
competitors.
Additionally, Amazon.com is promoting Web Services, which will allow access to many of the
company’s internal functions and methods, as well as becoming a leading provider of cloud computing
services. Amazon.com’s future includes marketing its B2C and B2B technology capabilities rather than
simply its capability to sell books, CDs, DVDs, and other products.

From Amazon.com’s Form S-1, filed with the SEC on March 24, 1997, available at www.amazon.com (accessed April 24, 2016).

From Amazon.com’s Form 10-Q, filed with the SEC on April 29, 2016, available at www.amazon.com (accessed May 17, 2016).