angle-left From selling books to flying drones, the road to the world's most valuable brand
TUNGSTENO

From selling books to flying drones, the road to the world's most valuable brand

From a garage in Seattle, Jeff Bezos dreamed of making Amazon the world's largest online book store. Today, it sets the rules of electronic commerce and is a reference for innovation with an increasingly diversified activity.

Amazon has several innovation projects underway such as Amazon Scout, an autonomous delivery device designed to safely get packages to customers. Credit: Amazon.

 

ISABEL RUBIO ARROYO | Tungsteno

Amazon has become in 2019 the most valuable brand in the world after ousting Google and Apple, according to the 2019 edition of the BrandZ ranking prepared by WPP and Kantar. The e-commerce giant, which sells millions of products to users around the world every day, has made a massive fortune, but its beginnings were much humbler. Like other major technology companies, it began in a garage in Seattle in 1994, founded by Jeff Bezos as a start-up selling second-hand books.

At just over 30 years old, Bezos already knew that business would be on the web. He was struck by a report on the future of the Internet that projected an annual growth rate for web usage of 2,300%. "I’d never seen or heard of anything that grew that fast, and the idea of building an online bookstore with millions of titles, something that couldn't exist in the physical world, was very exciting for me," Bezos said in his 2010 speech at Princeton University.

 

From second-hand books, in the beginning, to clothing or groceries, Amazon has become the largest e-commerce platform in the world. Credit: Álvaro Ibáñez.

The world's largest online bookstore

The American entrepreneur chose to sell books after creating a list of 20 products that could be marketed online. These included CDs, computers and videos. In the end, he opted for books, considering that they did not generate a great cost to the company and their demand was universal.

Bezos, who before creating Amazon worked as a financial analyst at global technology development and investment firm D. E. Shaw & Co., soaked up knowledge about the book industry and then launched the business. He was aware that he could succeed or fail, but he was game to try: "I wanted to quit my job and go do this crazy thing that probably wouldn’t work, since most start-ups don't..."

With $300,000 borrowed from his parents, he founded the company in 1994. He called it Cadabra, but shortly afterwards it would be renamed Relentless because Cadabra had a certain similarity to "cadaver". It was later renamed Amazon, inspired by the largest river in the world. His ambition was to turn the company into the world's largest online bookstore—a goal he achieved in 2018.

But before he succeeded, the company would have to go a long way. Amazon was one of the first big companies to sell goods over the Internet.  At first, it had only four employees and offered the user an extensive catalogue of online books from different publishers. Unlike today in the e-commerce giant's robotic warehouses, shipping boxes were prepared on the floor. Bezos even considered buying kneepads for his workers to make it easier to pack the books. 

In the first two months of business he managed to sell in more than 40 countries. Although sales were as high as $20,000 a week, the company made losses for eight years straight. "There is no guarantee that Amazon.com can be a successful company. What we're trying to do is very complicated," said Bezos in 1999. A computer science and electrical engineering graduate from Princeton University, the entrepreneur was named Time magazine's Person of the Year that same year. He was also called "the king of e-commerce" by that same publication.

 

Content production, physical libraries, ad platforms, Amazon even leads the race for distribution through drones. Credit: Amazon.

Diversification

The key to its success is that little by little it has been expanding its business and looking for new horizons. Amazon earns a percentage of the selling price of each item sold through its website and also allows companies to advertise their products on the platform. It stopped distributing only books in the late 1990s and started selling other items such as music and DVDs. It now sells all kinds of products ranging from its own smart devices to clothing, video games or groceries. In addition, it has opened physical stores and has a delivery system that allows users to receive an order in as little as an hour. It has even dared to compete in the entertainment industry with its own productions, becoming one of the largest creators of original content.

The Amazon logo represents the company's philosophy. It has a curved arrow that goes from letter A to Z, which aims to spread the idea that users can find on the platform any item that begins with each letter of the alphabet. Users can buy products either via the website or by using Alexa, the company's virtual assistant.

Twenty-five years after the creation of Amazon, some predictions from Bezos, who has become the richest man on the planet, have come true. "The vast bulk of store-bought goods—food staples, paper products, cleaning supplies, and the like—you will order electronically," he told Wired in 1999. More and more users are opting for this option. Bezos saw this trend very early, which would turn Amazon into a true e-commerce giant.

 

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Tungsteno is a journalism laboratory to scan the essence of innovation. Devised by Materia Publicaciones Científicas for Sacyr’s blog.

 

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