A quarter of a century ago, on July 5, 1994, a company, which shared a name with the world’s largest river, was incorporated. It sold books to customers who got to its website through a dial-up modem. It wasn’t the first bookstore to sell online. (Books.com launched in 1992.) But it behaved like a local store, whose shopkeeper knew customers by name – a bell even rang in the company’s Seattle headquarters every time an order was placed. Amazon’s founder, Jeff Bezos, set his sights on making it an “everything store.” The company would go on to become not just an everything store, but an “everything company.” Today, 25 years later, Amazon has reshaped retailing permanently. It is one of the top three most valuable companies in the world, with a market capitalization hovering around US$1 trillion, greater than the GDP of nearly 200 countries. If you had bought $100 worth of its IPO shares in 1997, it would be worth about $120,000 today.
Redefining retail
Amazon continually took shopping convenience to newer levels. Before 1994, shoppers had to travel to stores to discover and buy things. Shopping used to be hard work – wandering down multiple aisles in search of a desired item, dealing with crying and nagging kids, and waiting in long checkout lines. Today, stores try to reach out to shoppers anywhere, anytime and through multiple channels and devices. After first experiencing two-day free shipping from Amazon’s Prime membership program, shoppers started expecting no less from every online retailer. About 100 million shoppers worldwide have Amazon Prime. The company made shopping more convenient through features like one-click ordering; personalized recommendations; package pickup at Amazon hubs and lockers; ordering products with the single touch of a Dash button; and in-home delivery with Amazon Key. Shoppers can also search for and order items through a simple voice command to an Echo or by clicking an Instagram or a Pinterest image. Amazon now even has a cashierless “Go” store in Seattle. Amazon has been a factor in the rising closures of brick-and-mortar stores that can’t keep pace with the changes in retail. In the first 15 weeks of 2019 alone, there were about 6,000 store closures in the U.S. overall, higher than the number of closures in all of 2018. Analysts fear a coming “retail apocalypse.”
The Amazon Echo Plus.ClassyPictures/shutterstock.com Bezos has said that Amazon’s efforts focus on preventing it from dying. As he noted at a 2018 all-hands meeting, “Amazon is not too big to fail.” As a professor of marketing, having conducted research on online retailing and analyzed hundreds of cases, I believe that Amazon’s future, like shoppers’ and the society’s future, is inextricably linked to the rise of artificial intelligence. Starting with Alexa, the company’s virtual assistant, Amazon is betting on AI. In fact, Amazon is testing anticipatory shipping, a practice in which it anticipates what shoppers need and mails them the items without shoppers ordering them. Shoppers could keep the items they like and return those they don’t want at no charge.
A quarter of a century ago, on July 5, 1994, a company, which shared a name with the world’s largest river, was incorporated. It sold books to customers who got to its website through a dial-up modem.
