Amazon was founded in 1994 with Jeff Bezos, a former employee of a wall-street investment firm, to sell books online. The company then grow to sell other kinds of goods from clothes to electronic goods, including producing its own line of consumer electronic products Kindle e-book reader.
The company started to expand and by 1998 it enter European market by buying online retailers in the UK and Germany and changed their name to Amazon.co.uk and amazon.de. Two years later, it set up a French website amazon.fr.
At first all of its units mostly operate independently, including product purchasing process, meaning that the units’ profit can be taxed by the local authorities but 1999, the UK unit changed its principal activity to “the provision of services to other group undertakings” from “marketing and selling of books via the internet.”
This, in the author’s view, is crucial from the tax perspective. Amazon basically changed its UK unit from a Permanent Establishment (PE) ( a fixed place of business through which the business of an enterprise is wholly or partly carried on), which required to pay income taxes, to a non-permanent establishment that doesn't oblige to pay taxes.
According to OECD, PE includes a place of management, a branch, an office, a factory, a workshop, and a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
However, if the company have an office in the UK but carrying on any other activity of a preparatory or auxiliary character such as storage, maintenance of stock of goods and collecting information then it will not be considered as PE and therefore will not be taxed.
UK potential customers would then do business with Amazon unit registered in Delaware, US. Such practices also happened in Germany and France that basically transformed the units into a storage, distribution and customer support units.
The move was aimed to channeled the profit overseas back at home in order to offset large loss from investment and business development it made in the US as the company never made any profit until 2003.
Furthermore, in 2003, the company changed the strategy again as its US unit starting to make a profit and because it was made it possible to be taxed for its global revenue in the US then eventually it will increase Amazon’s tax bill. Coincidentally, US’s corporate income tax rate is very high compare to some of the European countries and the company could use part of the money it has to pay for the tax bill to reinvested into new business or investment.
Associates would link customers to Amazon for order fulfillment and the originating web site would earn a commission from the sale (”Amazon.com, Inc. History”, n.d.). Within two years, Amazon had 60,000 websites signed up as Associates. By 1998 Amazon had become one of the largest booksellers in the US with 2.5 million titles and a customer list of over 2.26 million people. This same year they decided to launch their music store with 125,000 music titles and added toys and electronics in 1999. Even with all this growth, Amazon was still operating in losses into 2001 when sales hit 3.12 billion. When profits finally started to arrive in the fourth quarter of 2001, Bezos had finally proven that his market share driven approach could lead towards
Amazon was founded in 1995 by Jeff Bezos and became one of the first major companies to sell goods over the internet
Amazon has Corporate Governance, which includes a Code of Business Conduct and Ethics. This code addresses twelve different aspects of their business including, compliance with laws, rules, and regulations, conflicts of interest, insider trading policy, discrimination and harassment, health and safety, price fixing, bribery, recordkeeping, and financial integrity, questions, periodic certification, board of directors, and waivers. Basic guiding principles of how their employees should conduct business in reference to these aspects are included in the descriptions. While these guidelines are kept quite brief, extra emphasis is placed on Conflicts of Interest. A heightened sense of concern is placed on whether employees use their personal benefits on family members or affiliates and if position in the company or relationships with outside affiliates interferes with employee’s objective business judgment. A common theme found throughout this code is an emphasis on cautionary business, including many laws that employees are expected to comply with to ensure that they do not interfere...
Amazon’s macro-environment is made up of six external factors: political, economic, environmental, technological, social, and legal conditions. These factors are important because they shape how the company operates and you must know each piece to be able to compete within the retail and eCommerce industry. An evolving political factor are the efforts the government has made toward punishing offenders of cyber-crime. This kind of thief wasn’t walking into your store, but hacking into your computer. This type of crime wasn’t possible before the internet. The government has started to take these crimes more serious as technology evolves. Technology is a factor that Amazon.com must invest heavily in. They are reliant on having top of the line technology to survive against cyber-crime and to stay relevant in the tech world. ECommerce is everywhere now and competition is very high. This brings in legal conditions; Amazon must know what laws exist in which countries because they are a
Although Amazon has been active trying to find the perfect strategy to make profits, the numbers in its financial statements had not shown the most optimal results. We have discuss that even though its strategies have been right according to supply chain and logistics methodologies and theory, something had been missing to represent this successful strategies into financial results. It is seen that Amazon had spent too long time finding the right strategy which the last might be the one because in the financial statements profits started to come up. Amazon still have a long way to go to mature its strategy and represents it into profits for its shareholders.
Another part of Amazon’s retail strategy is to serve as the channel for other retailers to sell their products and take a percentage of cut of every purchase. Amazon does not have to maintain inventory on slower-selling products. This strategy has made Amazon a ‘long tail’ leading retailer, expanding its available selection without a corresponding increase in overhead costs.
Launched by Jeff Bezos, the Amazon.com website started in 1995 and is today considered as one of the most prominent retail website on the internet with a record turnover of US$ 14.87 billion in 2007. Jeff Bezos’s intention was to create an internet based company with the most dedicated product portfolio on the internet where customers could find anything they might want. Amazon’s success is based on technology, services and products (Jens et al., 2003).
Also, Amazon sells many products from many different brands and companies. The customers are most important to Amazon and Amazon knows that the delivery service is one thing that customers want the most. The way that Amazon fulfills the customer’s satisfaction of its delivery service is by having 55 fulfillment centers located in North America. Because fulfillment centers are not retail stores, Amazon products aren’t required to charge sale taxes. Along with the 53 fulfillment centers that Amazon has in North America, Amazon also has 53 distribution centers in Europe, Japan, Asia and India. Since Amazon has a lot of warehouses in many different locations, it can reach to its customers more conveniently. Amazon has been growing throughout the years has allowed its company to be able to reduce its costs. Besides being one of the top online shopping sites, Amazon has also developed the Kindle, which is now one of the most popular e-reader tablets out
When Amazon.com first began in 1995, as strictly a book retailer, Bezos knew he had discovered an excellent company. After all, a physical bookstore cannot stock anywhere close to the number of books Amazon can offer online. Within a year, the company had a customer base of approximately 340,000 consumers and daily site visits were huge as well. But Bezos wanted to expand the company to offer music and DVDs, because he realized there was little or no barrier of entry. In the next years Amazon would emerge as a marketplace, expanding the company globally offering products from toys to kitchenware. Because of the relatively cheap prices Amazon was offering and also the growing number of online shoppers, the company was doing tremendous amounts of sales and creating profits.
Amazon.com creates value for its customers by offering customers broad array of products to select from through their website and ensuring timely delivery of products to exhibit high level of commitment towards their business and customers
Amazon model initially offered customers access to massive selection without the needs to incur cost, time and stress of opening warehouses and stores and the needs for inventory handling. Amazon realized to ensure customers get a pleasant experience and Amazon acquire its inventory at reasonable prices, they need to be in control of the transaction process from beginning to the end through operating the business from their own warehouses.
Amazon has grown to become the largest internet-based retailer in the world by total sales. It began as primarily an online bookstore and soon began to sell more and more electronics and then over time began to sell pretty much anything. In 1998, Amazon earned about 0.6 billion dollars, it held a steady growth from 1998-2006 (“Amazon.com”). From
Amazon.com, Inc Company started in 1994 and featured online in 1995. The company has done extremely well in the market achieving remarkable success. Initially, Amazon was known as Cadabra. Inc. however, the name of the company changes when the owners of the company knew that people confused the name for cadaver. Jeff Bezos is credited for founding the company. The company has its base in the United States of America as a multinational e-commerce company. Its headquarters are in Seattle, Washington. It has been rated as the largest online retailing company, in the entire world. It has close to three times the sales revenue that staples, Inc made as a runner up, in January 2010 (Shire, 2008).
Amazon is the world’s largest retailer online. Founded in 1994 it has started as an online bookstore but soon expends its catalog with software, video games, electronics, furniture, food, toys etc.
Secondly, Amazon.com expanded internationally, pursued strategic acquisition and bought new firms to bring new services, assets, capabilities, services, and skills.