A long time ago Amazon started as an online retailer of books, and today it is one of the most successful companies of all time. How did this happen? Let’s find out.
Grade I gave myself for this assignment: 90/100 (It’s short but I learned a decent amount)
Before beginning, I wanted to share Amazon’s mission statement because I think it has had a big hand in the company’s success:
“Our vision is to be the Earth’s most customer-centric company; to build a place where people can
“Amazon.com, Inc.” -Noe & Weber
come to find and discover anything they might want to buy online.”
For the first few years of existence, Amazon grew through acquisitions, memberships with consumer-focused perks, and expansions into new retail categories. Then, in 2006, the company began offering what they coined “cloud services.” One common theory for the origins of Amazon’s cloud business (Amazon Web Services, or AWS) is that they had extra capacity on their internal computer network and decided to start renting it out (Noe & Weber). The other theory I read about argued that it was more intentional — in response to difficulties building out their retail web services at scale, Amazon leaders realized they could build a layer of infrastructure services that they could leverage within the company as well as sell to other companies facing similar problems (Colvin).
This new set of services would allow Amazon and other companies significantly more flexibility and scalability. Looking back, Amazon leaders believe that the fact that they were primarily an online book retailer reduced their credibility in the web services industry enough that it prevented other companies from trying to compete with them (Colvin). This allowed them a large head start that they credit at least in part to AWS’ success (Colvin).
Amazon went public in May of 1997, and in the first 20 years of being public there had been around a 64,000% return on stocks (Noe & Weber). However, even as profits soared and continue to soar, the net income of the company hasn’t increased as much proportionally because of Amazon’s strategy to re-invest profits into research and development in an attempt to prioritize creating long-term value (Noe & Weber). Another interesting bit of information from their financial records is that in 2022, AWS had $62.20B in revenue to Amazon retail’s $469.82B, but it accounted for $18.53B in operating profits before taxes (vs. Amazon retail contributing only $24.88B) (Colvin).
The original offering of AWS was S3 (Simple Storage Solution) that offers flexible, scalable storage services for rent. The other early offering of AWS was EC2 (Elastic Compute Cloud), which provides flexible, scalable computing services. Today, AWS is one of the most fundamental services working behind the scenes to power business across the United States and beyond.
Thanks for reading.
Works Cited
Noe, Christopher and Weber, Joseph. “Amazon.com, Inc.” 17-183. 19 February 2019. MIT Sloane.
Colvin, Geoff. “How Amazon grew an awkward side project into AWS, a behemoth that’s now 4 times bigger than its original shopping business.” Fortune. 20 November 2022. https://fortune.com/longform/amazon-web-services-ceo-adam-selipsky-cloud-computing/.
BYOMSPM 
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