Amazon Rekindles Its Flair for Technology
As you probably know, selling things online—online retailing or e-tailing—is the only thing that Amazon. com does. Unlike such online rivals as, say, Barnes&Noble.com or Walmart.com, Amazon has no roof over its head—no bricks-and-mortar presence to anchor its online presence. The seller and its customers interact by website, email, or phone. Behind the website, however, is one of the largest direct-to-consu mer distribution operations in the world
Founded in 1995 as a bookseller, Amazon does pretty well these days—$32.4 billion in sales for 2010—but it's had its ups and downs. Early investors believed that the promise of online business outweighed the risks associated with the new type of enterprise, but it wasn't long before giddy expectation gave way to more sober assessment, as soaring costs kept pace with expanding sales and wiped out profits. That's when Amazon diversified its range of product offerings, adding toys, music, electronics and software, and household goods. Expansion continued to eat into profits, and the company had to make huge investments in infrastructure and IT before it finally went into the black in 2002.

Though fairly commonplace among today's online enterprises, Amazon's business model was revolutionary for its time. There was no need to open stores in high-rent shopping areas, and the company was free to choose locations for distribution centers based on cost and convenience to transportation facilities. Amazon's seven distribution centers stock thousands of popular items, but many of the goods that end consumers buy through Amazon are in fact “drop-shipped” directly from manufacturers. Amazon, therefore, can offer a multitude of products without incurring high inventory expenses, and because the middleman has been eliminated, delivery times are faster.

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