Information Technology Reference
In-Depth Information
Amazon's business plan called for slow growth, and indeed the company lost
money from its inception through the fourth quarter of 2001. However, Amazon's
stable sales volumes and low operating costs kept it in business through the dot-
com bubble burst of 2000.
Amazon later expanded from books to other kinds of products. Amazon now
brings to mind the older Sears Roebucks catalogs from the 1950s when Sears sold
a huge variety of products. Today, Amazon sells computers, cameras, all forms of
electronics, DVDs, perfume and, of course, books and e-books. The diversity and
marketing success of Amazon caused
Time Magazine
to name Jeff Bezos person
of the year in its 1999 special edition.
In recent years, Amazon was a pioneer in e-book publishing and also brought
out a line of e-book readers called Kindles, which compete with Apple and other
tablet vendors.
One of the useful features of Amazon is a ranking system where customers can
rank products and also the suppliers of the products. The rankings use a star sys-
tem, with five stars being the top rank. This is such a useful feature for purchasing
items such as books and DVDs that it is surprising that traditional brick-and-mor-
tar stores do not do the same thing. However, the rankings are sometimes suspect
and can become skewed and raised by favorable ratings placed by friends or em-
ployees or even by made-up reviews.
Amazon is also a web host for a number of other companies because its server
farm is so large.
Amazon is currently facing numerous challenges from state governments be-
cause, in many states, no sales taxes are collected on goods sold online. The reason
for this is that Amazon does not have a physical presence and hence is immune
from taxation. This issue is not going away because many states foolishly gave
huge pensions and unsustainable benefits to unionized workers, which is now driv-
ing states toward bankruptcy. Needless to say, the states are looking at taxation of
internet sales as a method of providing new revenues.
When the state of Rhode Island attempted to tax Amazon sales, the response
from Amazon was to sever business ties with local companies that had been part-
ners. Individual consumers could still purchase from Amazon. So far, attempts by
state governments to tax Amazon and other web businesses have not been fully
successful and seem to have caused more harm to local companies than good.
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