Amazon is Now Worth More than Microsoft

In July 2017, Jeff Bezos overtook Bill Gates to become the richest person in the world, with a net worth of more than $90 billion. Then, in February 2018, their companies also switched position.

With the market value of Amazon leapfrogging over Microsoft for the very first time. Amazon is now the third largest company in the U.S., surpassed only by Google and Apple.

From Book Seller to Industry Game Changer

Bezos started Amazon in 1995 in his garage. The company’s servers competed with the hair dryers in his house for electricity. Running both at the same time would blow a fuse. Publishers required book sellers to order a minimum of 10 books at a time. The fledgling Amazon couldn’t afford that. So, they got around the requirement by ordering nine copies of a book they knew was not in stock and wouldn’t be shipped.

Fast forward to today: Amazon sells more than 562 million different products. The category with the highest number of products is clothing, jewelry, and shoes. Coming in second is home and kitchen. Books, Amazon’s original category, now comes in at number three. It’s safe to say, though, that the company can order far more than 10 books at once.

Amazon’s offices are a far cry from the garage where the company started. The office space occupied by its headquarters in Seattle is estimated to be 13.6 million square feet, spread across 45 buildings. The company now has plans to invest $5 billion in a second headquarters in a city that has yet to be disclosed.

About 4 percent of all retail sales in the United States are through Amazon — and a whopping 44 percent of all U.S. e-commerce sales. From a company that struggled to place orders for 10 books, Amazon has grown to dominate the country’s online retail industry.

How Amazon Became So Successful

When Bezos started Amazon, he thought there was only a 30 percent chance the company would be successful. Commerce on the internet was in its early days. Bezos’ vision of the possibilities for online selling, along with his drive to make his vision a reality, propelled the company to success.

Early innovations included features that made Amazon site visitors want to return. Product reviews, wish lists, 1-click shopping, and fast, efficient delivery all changed the way that people thought of retail. It also helped that Amazon was willing to sell at a loss in the early days to gain market share.

Since these formative days, Amazon has seized every opportunity. It leveraged its expertise in online technology to become the leader in cloud computing. It sells almost everything that can be sold online. Its voice-activated Echo and Alexa devices are a hit. It produces award-winning movies and television. Prime membership is exploding and with it the number of customers who have incentives to be loyal Amazon shoppers. With almost half of U.S. households subscribing to Prime, that’s a lot of people who will turn to Amazon first for their shopping needs.

On February 1, 2018, Amazon reported its largest quarterly profit ever — nearly $2 billion, with sales up by 34 percent.

What Does the Future Hold for Amazon?

For Amazon, it looks like the upward trend will continue. Millennials form Amazon’s core demographic. As they get older, they start buying houses and then need to fill them with items they can buy from Amazon. They are also at an age where they are having children, and once again, Amazon is there ready to sell them all the things their kids need.

For all its success, the company continues to invest heavily in growth. Currently in the works are an expansion in the number of items the company sells under the Amazon Basics brand, a continued drive to increase Prime membership, and selling advertising on Alexa. Amazon also took a big step into the grocery business with its purchase of Whole Foods and will be applying its expertise in cutting-edge retailing and technology to find innovative ways to sell food.

Amazon grew into a retail empire because of one man’s vision and persistence. He outlasted the skeptics from the early days. He seized opportunities in what was then the brand-new world of online retailing. He was willing to take risks. And it all paid off. All signs indicate that Amazon will continue to be a powerhouse into the foreseeable future.

Regards,

Ethan Warrick
Editor
Wealth Authority


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