1995: AMAZON.COM
[Overview]
Amazon.com was a "pioneer" online bookstore that created an entirely new economic model. Amazon.com was launched by Jeff Bezos in July 1995, in Seattle, on the west coast of the U.S., after a market study which led him to conclude that books were the best products to sell on the internet. When Amazon.com started, it had 10 employees and a catalog of 3 million books. Unlike traditional bookstores, Amazon.com didn't have windows looking out on the street and books skillfully lined up on shelves or piled upon displays. The virtual window is its website, with all transactions made through the internet. Books are stored in huge storage facilities before being put into boxes and sent by mail. In November 2000, Amazon.com had 7,500 employees, a catalog of 28 million items, 23 million clients worldwide and four subsidiaries in UK (in August 1998), in Germany (in August 1998), in France (August 2000) and in Japan (October 2000). A fifth subsidiary opened in Canada in June 2002. A sixth subsidiary - named Joyo - opened in China in September 2004.
[In Depth (published in 1999)]
Jeff Bezos launched Amazon.com in July 1995, after a market study which led him to conclude that books were the best products to sell on the internet.
In Spring 1994, he drew up a list of twenty products that could be sold online, ranging from clothing to gardening tools, and then researched the top five, which were CDs, videos, computer hardware, computer software, and books.
"I used a whole bunch of criteria to evaluate the potential of each product, but among the main criteria was the size of the relative markets. Books, I found out, were an $82 billion market worldwide. The price point was another major criterion: I wanted a low-priced product. I reasoned that since this was the first purchase many people would make online, it had to be non-threatening in size. A third criterion was the range of choice: there were 3 million items in the book category and only a tenth of that in CDs, for example. This was important because the wider the choice, the more the organizing and selection capabilities of the computer could be put in good use." (excerpt from the Amazon.com press kit)
In 1998, Amazon.com was offering 3 million books, CDs, audio books, DVDs, computer games - more than 14 times as many titles as the large chain superstores - to 3 million people in 160 countries. "Businesses can do things on the web that simply cannot be done any other way", wrote Jeff Bezos. "We are changing the way people buy books and music." Amazon.com quickly became the largest online bookstore, with a catalog of these 3 million items that could be ordered online, authoritative reviews, author interviews, excerpts, customer reviews, and book recommendations. As an internet retailer, Amazon.com could offer more services than traditional retailers: lower prices, larger selection, and a wealth of product information.
Any book lover could post his own reviews of books on Amazon's website, and read others. He could read many interviews with authors, and a number of blurbs and excerpts from books. He could search for books by author, subject, title, ISBN or publication date. Prices were discounted, with savings of 20-40% on 400,000 titles (40% on selected feature books, 30% on hardcovers, and 20% on paperbacks). The client usually received the books within a week. If he requested it, he could receive an email announcing a new book by a favorite author or a new book on a favorite topic. He could select some book categories (44 listed), to be sent a monthly review of new books by email. All things that were entirely new at the time.
What we take for granted now, i.e. buy a book in Europe from the US site of Amazon.com, or buy a book in the US from the German site of Amazon.de, was making big waves at the time, first as "unfair competition" with the local online bookstores, then for taxation. A first outline agreement was concluded between the US and the European Union in December 1997, and this agreement was followed by an international convention. The internet was decided a free trade area, i.e. without any custom taxes for software, films and electronic books bought online. Material goods (books, CDs, DVDs, and so on) and services were subject to existing regulations, with collection of the VAT for example, but with no additional custom taxes.
Amazon.com and others had great assets, but there were bad news for small bookstores. Like the small bookstore set up in 1971 by my friend Catherine Domain in central Paris, on the island Ile Saint-Louis, surrounded by the Seine river.
The small Ulysses Bookstore is known as the oldest travel bookstore in the world. It has more than 20,000 books, maps and magazines, out of print and new, in a number of languages, about any country and any kind of travel, all packed up in a tiny space. Catherine has been a traveller since she was a child. She travels every summer - usually sailing - while her boyfriend runs the bookstore. She is also a member of the French National Union of Antiquarian and Modern Bookstores (SLAM), the Explorers' Club and the International Club of Long-Distance Travellers.
Catherine visited 140 countries, where she sometimes had a hard time. But one of her most difficult challenges was to set up a website on her own, from scratch, without knowing anything about computers. Catherine wrote in December 1999: "My site is still pretty basic and under construction. Like my bookstore, it is a place to meet people before being a place of business. The internet is a pain in the neck, takes a lot of my time and I earn hardly any money from it, but that doesn't worry me…" Nevertheless, despite the internet, she was pessimistic about the future. "I am very pessimistic, because the internet is killing off specialist bookstores."