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Amazon At 25: A Fascinating Journey Through Retail History

In July 1994, Jeff Bezos founded 25 years later, he is the wealthiest man in the world and Amazon controls 50% of the online business in the U.S. with no signs of slowing down. I have been tracking developments in the world of retail for an even longer period of time (by writing for Retail Watch which began publishing in July 1986) and wish I could tell you that I saw it coming. Amazon didn’t even make my radar until May 1997, when I wrote about its IPO and book wars with Barnes & Noble.  And at that time, internet was still a dial up, text heavy, largely unsearchable world where, I noted, a phone line would take your order if you were uncomfortable providing credit card details online.

Much has changed at Amazon, and in the world of retail, in 25 years. Here’s a quick look back at how Amazon has progressed in this period:

1994—While Amazon didn’t make my radar, I reviewed some of the stories that were covered during that time. I wrote about Expo, Home Depot’s revolutionary home store that is now defunct, but I also explored a number of “new” concepts that have withstood the test of time including CarMax, Dave & Buster’s and Anthropologie.

1997—Amazon goes public (at the equivalent of about $2/share in today’s stock price) with $16 million in sales and selling exclusively books. Music comes along in 1998, a deal with Toys R Us to move into toys comes along in 2000 and apparel in 2002.

2003—Amazon Web Services debuts in 2003. It would have been impossible to predict at the time, but this became the profitability engine that would fuel continued e-commerce expansion and operating losses.

2005—Amazon Prime is born and is probably the game changer, with 100 million global users and stickiness to the company that is almost impossible to replicate. Over time, Amazon sets the standard for shipping and the race towards immediacy.

2007—Kindle becomes the first major product with Echo (probably the real game changer) in 2014.

2009—Zappos is Amazon’s first major acquisition.

2015—In an ironic twist to the bookstores Amazon put out of business, Amazon Books debuts and ushers in (maybe) an era of Amazon in the physical world. Amazon Go arrives towards the end of 2016.

2017—Whole Foods is acquired marking a significant push into grocery and the world of physical retail. 2019 will likely mark the opening of an all new Amazon food format.

Of course, the timeline obscures the massive impact that Amazon has had on the industry. Revenues equal $232 billion at the end of 2018 with 50% of that occurring through third party sellers. Amazon operates in 13 countries around the world and the very mention of it entering a new market (or new product category) sets the entirety of the retail world on edge.

What is clear is that there are very few stories of true retail disruption in the market.  For fun, look at the Rule of 16—about every two decades concepts come along that fundamentally disrupt the marketplace. If this rule holds, the current major disruptor to retail already exists…it just may not be recognized as such (and it will quite likely not originate from the U.S.).

  • Walmart was founded in 1962, as was Target and Kohl’s. This introduced an era of discount stores that disrupted the department stores and became the dominant form of U.S. retailing.
  • Home Depot was founded in 1978. Big box category killer stores proliferated the retail market in the 1980’s. Almost holding to my theory, Price Club formed the club business in 1976 with Coscto (and Sam’s) entering the market in the early 80’s.
  • Amazon is founded in 1994, as was Old Navy.
  • So, who came along in 2010? Warby Parker was founded in 2010 and arguably heralded the era of digitally native retailers who begin their origin story online. I will cheat and make the observation that the Taobao mobile app was launched in this year as well. While Alibaba dates back to 1999, the mobile app becomes the real business game changer.

What will the next 25 years be like for Amazon? Likely a whole lot different than the first 25. Can Amazon drive wholesale adoption of voice activation as Alexa becomes embedded in more and more devices? Will physical retail stores play a more prominent role in its future as omnichannel converges? And perhaps most critically, how does Amazon contend with being the established behemoth versus the scrappy underdog? As Jeff Bezos has said, “Amazon is not too big to fail. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.”

This article first appeared in Forbes.

Neil Stern

Neil Stern is Partner Emeritus of McMillanDoolittle. During his career at McMillanDoolittle, Neil has developed strategies and new concepts for a diverse variety of clients across the retail industry. Neil currently serves as Chief Executive Officer for Good Food Holdings, which operates over 50 supermarkets on the West Coast of the United States under five different banners.

1 Comment
  • Allan Coviello

    July 15, 2019 at 11:59 am Reply

    Hi Neil – Love the summary! Incredible changes. We should talk about the impact on vendors, suppliers having moved from a retailer to a wholesaler/manufacturer…interesting impact Amazon and the changes you mentioned have had on the suppliers. al

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