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REV: JUN E 6, 2021
JOHN R. WELLS
BENJAMIN WEINSTOCK
GALEN DANSKIN
GABRIEL ELLSWORTH
Amazon.com, 2021
In February 2021, Amazon announced 2020 operating profits of $22,899 million, up from $2,233
million in 2015, on sales of $386 billion, up from $107 billion five years earlier (see Exhibit 1). 1 The
shareholders expressed their satisfaction (see Exhibit 2), but not all were happy with Amazon’s
meteoric rise. Many traditional retailers in the United States were going bankrupt, while major
competitors such as Walmart and Best Buy were forced to invest aggressively in online retailing to
prevent their market share from eroding. Every retail sector appeared to be under threat, fueling
anxieties that Amazon and America’s other tech giants were becoming too big and powerful. These
anxieties were only exacerbated by the COVID-19 pandemic, during which Amazon grew rapidly,
while most traditional retailers foundered. Amazon’s increasingly clear ambitions in healthcare and
autonomous vehicles were also causing concern.
In early 2021, Amazon was drawing criticism from across the political spectrum in the United States,
with calls for it to be broken up. 2 The European Union was also investigating its practices. 3 Meanwhile,
on February 2, 2021, Amazon reported that company founder and CEO Jeff Bezos would step down
from his role and become executive chairman of the board. Andy Jassy, the leader of Amazon Web
Services (AWS) would become the new CEO. 4 How would Jassy navigate the many challenges to come
and continue Amazon’s record of success?
History
Bezos began his career as a programmer for Wall Street trading firms and hedge funds. After
working for hedge fund D. E. Shaw on investments in technology companies, Bezos began exploring
the idea of founding an Internet retailer. He considered over 20 categories of products for his venture
and ultimately chose to focus on books.
The Book Business
In the 1990s, the book retailing business was highly fragmented, complicated, and prone to
inventory and return problems. A major part of the problem was that there were tens of millions of
books available and several million were being added each year. Matching billions of readers with the
Professor John R. Wells and Research Associates Benjamin Weinstock, Galen Danskin, and Gabriel Ellsworth prepared this case. This case was
developed from published sources. Funding for the development of this case was provided by Harvard Business School and not by the company.
HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or
illustrations of effective or ineffective management.
Copyright © 2015, 2016, 2018, 2019, 2021 President and Fellows of Harvard College. To order copies or request permission to reproduce materials,
call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be
digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
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Amazon.com, 2021
books they would enjoy was a challenge. For this reason, trusted reviewers played a major role in book
sales because they pointed the way to which books a reader might enjoy. Best seller lists also had a
heavy influence on sales.
The traditional book retail market was composed of national chains and independent booksellers.
The two major chains were Barnes & Noble and Borders. These chains collectively had more than 2,000
stores across the United States and typically offered discounts of 10% to 30% off popular books. They
offered a wide range of books but typically positioned best sellers and books recommended by major
book reviewers in prominent displays in the stores. There were also 5,500 independent booksellers in
the United States operating 7,000 stores. 5 This number had been falling through the 1990s, partly as a
result of price competition from chain stores. Owners of small books stores typically stocked a range
of books to suite their local customers and provided advice on what to read. Mass merchants (e.g., WalMart and Kmart), wholesale clubs (e.g., Sam’s Club and Costco), grocery stores, and other nonbookstore outlets were another major source of competition, accounting for almost half of book sales. 6
They typically carried a narrow line of best sellers.
For an author’s book to reach a retail store, the book typically had to go through four intermediaries:
agents, publishers, distributors, and wholesalers. a First, an agent would accept a book and market it to
a publisher. Some of the major publishers in the 1990s were Penguin Books, Harper Collins, Random
House, and Simon & Schuster. The top 20 publishers accounted for 88% of sales in North America. If a
publisher accepted the book, it would manage publication, marketing, and sales.
In order to distribute the book, the publisher would contract with a distributor. A distributor’s
primary responsibility was to act as an intermediary between the wholesaler and the publisher.
Distributors would ship and return books from the wholesaler to the publisher, and they would give
smaller publishers the bargaining power to get their books stocked by a major wholesaler.
Wholesalers were the key link between retailers and the publishing world. Ingram was the largest
wholesaler and controlled 50% of the US market. Wholesalers would distribute catalogues to
bookstores and fulfill book orders placed by retailers. To ensure that they could meet retail demand,
wholesalers would maintain inventories of publishers’ books and ship them out to bookstores on
demand. If a retailer misjudged the number of copies that would sell, a bookstore could return to the
book to the wholesaler (who would then return it to the publisher) for a full refund (minus shipping
costs). In this way, books were sold on consignment and had high return rates and high inventory costs
to the publisher. Publishers typically received back over 30% of their initial book run. 7
Barnes & Noble and Borders sourced much of their inventory directly from publishers, cutting out
wholesalers and distributors, and stored their inventory in company-owned distribution centers. In
1996, 40% of Barnes & Noble’s inventory was pushed directly from publishers, and the company
expected this figure to increase to 50% by 1998. It took several weeks to source a book directly from the
publisher, and Barnes & Noble and Borders could ship a book from their own distribution centers to a
retail store in two to three days. 8
Amazon’s Entry
In 1994, Bezos quit his job at D. E. Shaw and drove across the country to Seattle, Washington. Bezos
chose Seattle for three reasons: its technology cluster; its proximity to Ingram, the largest book
wholesaler; and its lack of sales tax. 9 Wherever Bezos shipped a book in the United States, he would
a Reviewers also played an important part in the success of a book
2
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not have to levy sales tax, which put him at an immediate advantage over local bookstores. Sales tax
varied from state to state but averaged about 6% of sales. Bezos began Amazon out of his garage. The
company name reflected his ambitions for the firm: like the Amazon River, he intended to be the
biggest in the world. After a year of software development with a team of 10 employees, Amazon’s
website was launched in July 1995 (see Exhibit 3a). 10
From the start, Amazon was focused on making e-commerce attractive, secure, and easy for firsttime online buyers. Customers needed only an email address, a credit card, and a password to place
an order. Amazon listed over 1 million titles in its database, and prices were often deeply discounted
compared to physical retailers’. 11 The goal was to offer “much more selection than was possible in a
physical store . . . and presented it in a useful, easy-to-search, and easy-to-browse format in a store
open 365 days a year, 24 hours a day.” 12
By September 1995, Amazon was generating weekly sales of $20,000. 13 For 1995, annual sales were
$511,000. 14 To accommodate the rapidly increasing demand, the company moved out of Bezos’
basement into headquarters in Seattle and built a 50,000-square-foot distribution center. 15
In July 1996, the company launched Amazon Associates, which allowed individuals to embed links
to Amazon within their own websites, write reviews or recommendations, and gain a 3% to 8%
commission on books purchased through these links. There was no cost to join the program, and
associates could enroll through Amazon and begin selling products through their site within hours.
This network of sellers helped to drive traffic to the Amazon site. While the typical newly launched
Internet company spent 119% of sales on advertising during the late 1990s, Amazon’s marketing was
10% of sales. 16 In 1996, Amazon recorded sales of $15.7 million and an operating loss of $6.0 million. 17
Going Public and Growth (1997-1999)
In May 1997, Amazon went public at $18 a share, raising $54 million, valuing the company at $438
million. 18 By December of 1997, Amazon’s stock had risen to $59 per share. The company recorded
sales of $148 million in 1997 and operating losses of $29 million. 19
Amazon’s IPO success was not unusual at the time. Starting in January 1997, Internet companies
began achieving sky-high valuations. According to CNN, “Investors would buy almost anything even
vaguely associated with the Internet, regardless of valuation.” 20 In total, web companies raised $1
billion through 34 IPOs in 1997, $2 billion through 45 IPOs in 1998, and $24.1 billion through 292 IPOs
in 1999. 21 In January 1999, Amazon took advantage of this continued optimism to issue $1.25 billion of
bonds, which gave the company a substantial cash cushion. 22
Amazon’s rapid expansion in 1997 was partly fueled by several major Amazon Associates,
including Yahoo, American Online, and Netscape. In 1998, Amazon launched Amazon.com
Advantage, which focused on the sales of independent authors and publishers. The same year, Amazon
released Amazon.com Kids, which marketed titles for younger children and teenagers. 23 Amazon also
began to expand internationally, acquiring Bookpages (UK) and Telebook (Germany) in 1998.
In 1998, Amazon moved beyond the book category with the acquisition of IMDb (the Internet Movie
Database), an online database of information and reviews about movies and television shows. 24 Before
year-end, Amazon became the leading online video retailer. The same was true of music CDs. Amazon
made 125,000 titles available in 1998 and soon led the category.
In 1999, the company entered more categories, including toys and electronics (July), home
improvement and tools (November), video games and software (November), and patio furniture and
3
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Amazon.com, 2021
kitchenware (December). 25 In addition to these category entries, Amazon also released a new online
marketplace called zShops in 1999. On this site, Amazon rented space at a fixed rate ($9.99 per month)
to smaller merchants who sold items and paid a sliding commission based on the final sale price,
generally between 2.5% and 5%. Sellers managed stocking and shipping, while Amazon processed
transactions through its 1-Click payment system, guaranteed refunds to protect buyers against fraud,
and hosted reviews for the products. 26
During this time, Amazon also made significant investments in its distribution and warehouse
infrastructure. By early 2000, Amazon operated 10 distribution centers (in Seattle, Delaware, Georgia,
Kansas, Kentucky, Nevada, North Dakota, the United Kingdom, and Germany) totaling 4.5 million
square feet of space, with capacity of $10 billion worth of sales—more than five times Amazon’s 1999
revenues. 27 The company also operated six customer service centers across the United States, the
United Kingdom, and Germany.
Amazon’s distribution centers and customer service centers were tied together with a digital
infrastructure that linked operations throughout the world. 28 In the December holiday season, more
than 99% of orders were shipped on time. In Amazon’s 1999 Annual Report, Bezos noted that
Amazon’s investments in digital and physical infrastructure had put the company at a “‘tipping point’
where this platform allows us to launch new e-commerce businesses faster, with a higher quality of
customer experience, a lower incremental cost, a higher chance of success, and a clearer path to scale
and profitability than perhaps any other company.” 29
In 1999, sales reached $1.6 billion with an operating loss of $606 million. Bezos was named Time’s
“Person of the Year.” However, investors were wary about Bezos’s focus on market share and revenue
growth over profitability. The article announcing Bezos’s award described how “naysayers referred to
it as ‘Amazon.org.’” 30 (The .org domain was reserved for nonprofits).
Dot.com Bust and the Route to Profitability (2000–2003)
In February 2000, Amazon signed a five-year agreement with Living.com that guaranteed the
company as the exclusive supplier for the Amazon.com Home Living store. Through this agreement,
Amazon acquired an 18% stake in Living.com for $10 million. 31 Amazon made similar deals with
numerous other new, high-potential start-ups. The Wall Street Journal described Amazon as “the
granddaddy of Internet shopping” and said that the company had “played patron to other electronic
retailers, funneling hundreds of millions of dollars and throngs of its customers to the start-ups.” 32
In August 2000, Living.com filed for Chapter 7 bankruptcy and closed its website. Other e-retailers
were also in trouble. Many renegotiated contracts with Amazon that had been signed only months
before. Greenlight negotiated payments of $15.25 million over two years rather than $82.5 million over
the next five. Bezos noted, “What good partners do is when circumstances change, they try to help each
other.” 33 Tom Courtney, an analyst at Bank of America, noted, “We don’t think they’re going to end
up with much of a return on those investments.” 34
In June 2000, Ravi Suria, a Lehman Brothers bond analyst, published a report that questioned
Amazon’s ability to survive, and Amazon’s stock price fell by one-fifth. 35 By the end of 2000, the
company’s share price fell below $20, down from a high of over $100 at the beginning of the year. Bezos
lost 80% of his net worth, but he remained optimistic about the future of the company. He noted, “It
has been a great business year.” 36
4
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Despite the 2000 dotcom collapse, Amazon expanded its customer base from 13 million to 25 million
and its operations into Japan and France. 37 In November 2000, Amazon launched Amazon
Marketplace, which allowed sellers to sell new and used items next to Amazon’s product selection
rather than separately through zShops. 38 Amazon also began offering free shipping for orders over
$100. 39 In addition, the company strengthened the management team, hiring Joseph Galli from Black
& Decker as president, Jarren Kesnon from Delta Air Lines as CEO, and Jeffrey Wilker from
AlliedSignal as chief logistics officer. 40 Bezos remarked that prior to 2000, he had failed to create a more
formal strategic planning process. He noted, “We have done a reasonable job in that area, but it’s been
by the seat of our pants. Not with finesse, but because we have tons of smart people who care, which
is great, but [it] needs to be much more of a process.” 41 Amazon’s cash balance at the end of 2000 stood
at $1.1 billion.
The new team began structuring operations. In early 2001, Amazon laid off 1,300 employees
(around 15% of its workforce), closed a distribution facility, and initiated a policy of “Get the Crap
Out.” This was designed to cut unprofitable products. 42 The company found that “more than 10 percent
of the products sold from the electronic, kitchen, and tool departments lost money, while 5 percent of
the book, music, and video products were losers.” 43 Bezos noted, “We’ll ferociously manage the
products we carry so that we sell only products that are profitable. . . . The thirty-pound box of nails
isn’t long for our world.”44 Amazon also focused on alternative ways of making product lines
profitable—for example, selling items in packs to save on shipping, reducing inventory levels, pressing
vendors for more discounts, or raising prices. 45
In 2001, the company was re-organized into four operating segments: US Books, Music, and
DVD/Video accounted for 54% of sales; US Electronics, Tools, and Kitchen for 17%; Services for 7%;
and International for 22% of sales. 46 The company reported financial information for these four
segments for two years only. Beginning in 2003, it reported only for two segments: North America and
International.
Amazon also began offering “e-commerce solutions” to traditional retailers through three
programs: [email protected], the Merchant Program, and the Syndicated Stores Program. In
[email protected], a company’s products were integrated into Amazon’s website, and customers
purchased products through Amazon’s one-click process. The third party would pay Amazon a fixed
fee and sales commission, and Amazon offered the option of delivering and storing products for the
merchant. Toys “R” Us, Target, Circuit City, Gap, and Land’s End were all part of this program. In the
Merchant Program, a third party used Amazon’s software and technology, but the website was located
under its own URL. Target migrated to this system in 2002. In the Syndicated Stores Program, a thirdparty seller’s site would use Amazon’s e-commerce services and offer Amazon’s product selection,
with Amazon controlling all fulfillment and payment. This program was an outgrowth of Amazon
Associates, and bookseller Borders used it for its website. 47
Amazon did not disclose revenue from these relationships, but analysts estimated that 14% of
products sold in 2002 were by third parties. Jeetil Patel, a Deutsche Bank analyst, estimated that
Amazon charged a commission of 10% to 15% on third-party products and that most of this
commission was profit, resulting in an estimated gross margin of more than 70% for the third-party
services segment. 48 In contrast, estimated margins for products that Amazon had to stock and ship
were around 22%. 49
When Amazon had come under pressure in 2000, the company reduced its discounting on books.
Prices were raised again in 2001, bringing growth to a halt. To revive sales, in April 2002, the company
discounted all books over $15 by 30%. In June, it dropped its Free Shipping sales minimum to $49.
5
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Third-quarter 2002 sales for its book, music, and video unit were up 17%. 50 The Free Shipping
minimum was dropped again in August to an order size of $25. 51
In 2002, sales reached $3.9 billion, and Amazon posted its first yearly operating profit of $106
million. Amazon’s shares rose 75% in 2002, while markets were generally falling. 52
As it turned to profitability, Amazon continued to add new categories including Apparel and
Accessories (2002), Sports and Outdoor (2003), and Health and Personal Care (2003). 53
Amazon Prime
In 2005, Amazon launched Amazon Prime, a two-day delivery service for 1 million eligible products
for an annual flat fee of $79, with a one-day delivery upgrade for $3.99 (see Exhibit 3b). 54 Free video
streaming was added to the Prime offering in 2011 (see Digital Media below). 55 Prime membership
grew rapidly, reaching “tens of millions” by 2013, by which time more than 20 million items were
eligible. 56 The fee was raised to $99 in 2014, and free music streaming was added. 57 By 2015, 10 years
after launch, over 30 million items sold on Amazon’s website were eligible for Prime delivery, Sunday
delivery had been added, and Free Same-Day Delivery was offered on hundreds of thousands of items
in 35 cities worldwide.58 Scot Wingo of consultants ChannelAdvisor estimated that Prime members
spent four times the amount of non-Prime members and accounted for half of all spending at
Amazon. 59
In December 2014, Amazon launched Prime Now in Manhattan, New York, offering Prime
members a range of 25,000 daily essentials for delivery in two hours for free or one hour for a charge
of $7.99. It was rolled out rapidly to major cities around the world. By the end of 2015, it was offered
in more than 30 cities. 60 Independent drivers made the deliveries using their own vehicles, summoned
on a mobile app in much the same way as Uber offered taxi rides. 61
After Amazon’s acquisition of luxury grocer Whole Foods in 2017, Prime members were offered
special discounts when shopping at the store, adding another benefit to the long list of benefits
available. 62
By the end of 2017, Prime members exceeded 100 million worldwide, and they acquired 5 billion
items during the year. Over 100 million items were eligible for Prime delivery in the United States.
Prime Free Same-Day and Prime Free One-Day delivery were available in 8,000 cities, and Prime Now
in 50 cities. 63 In May 2018, the annual fee was raised again to $119. 64 This move triggered much debate
on what the package of services was worth. Creditcards.com estimated the annual benefits at $1,166.65
In February 2019, market research firm Consumer Intelligence Research Partners (CIRP) reported that
Prime members had reached 100 million in the US, up from 90 million the year before. In September
2020, CIRP reported that the number of Prime members in the US had grown to 126 million. 66 Prime
members spent $1,400 per year on average compared to $600 for non-Prime members. 67
Digital Media
In 2005, Amazon moved into digital content by releasing an online service that allowed users to
browse and purchase specific pages or chapters of books before physical publication (see Exhibit 3c).68
This service evolved into a preliminary e-book purchasing service which allowed users to buy short
stories and chapters of books. 69 In 2007, Amazon launched its Digital Text Platform which provided
authors with the ability to self-publish. 70 Authors received 70% of the royalties from the sale of these
6
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e-books, retained rights control, and could see their e-books available on Amazon’s site within 24 to 48
hours of submission. Amazon also operated its own publishing arm, Amazon Publishing, started in
2009, with 14 imprints focusing on diverse genres. By 2011, Amazon was selling more digital books
than physical books.71 By 2017, Amazon accounted for 83% of the US e-book market.72
In 2006, Amazon partnered with all of Hollywood’s major film studios except Walt Disney and
released a service called Amazon Unbox that sold movies for download for $7.99 to $14.99. This
offering included new releases and popular television shows. 73 In 2011, Amazon launched Prime
Instant Video, a video streaming service with 5,000 titles free to Prime members. 74 The same year,
Amazon completed the acquisition of Lovefilm, a UK-based DVD rental and online video company in
which it had first invested in 2008. 75 In 2018, Amazon Prime’s Instant Video was the second most
popular video streaming service in the United States, behind Netflix and ahead of Hulu. 76
In May 2007, Amazon purchased Brilliance Audio, the largest independent publisher of audiobooks
in the United States. 77 Amazon also began negotiating copyright contracts and developing a digitalmusic store, which was launched in September 2007. 78 The Prime Music streaming service, free to
Prime members, was launched in 2014. 79 In March 2018, Amazon Music was the seventh largest music
streaming service in the United States with 12.7 million monthly users. The leaders were Apple Music
with 49.5 million users and Spotify with 47.7 million. 80 In March 2019, eMarketer reported that Amazon
Music was on pace to grow faster than any other audio streaming service and cross the 35 million
monthly listener threshold by the end of the year. 81 By January 2020, Amazon Music reached 55 million
users, just 5 million behind the leader, Apple. 82
In 2010, Amazon launched Amazon Studios to begin producing its own content. In 2013, it released
14 original pilots of television shows. 83 The next year, it released Transparent, an original series that
garnered Amazon Studios its first Golden Globe awards. 84 The 2016 Amazon Studios film Manchester
by the Sea became the first movie from a streaming service to receive an Academy Award nomination
for Best Picture. 85 In November 2017, Amazon Studios made headlines again, when it purchased the
rights to a Lord of the Rings spinoff for $250 million. 86 Amazon also released the hit comedy The
Marvelous Mrs. Maisel in 2017, which went on to receive 8 Emmy Awards, including the 2018 Emmy
Award for best comedy series. In 2019, Amazon was set to spend nearly $6 billion on original content,
compared to Netflix’s $15 billion. 87
In 2011, Amazon launched the Amazon Appstore for Android with 3,800 apps. The Google Android
Market offered 200,000 apps at the time. 88 By early 2019, Amazon’s offering had expanded to 475,000
apps. The Google Play Store offered 2.1 million. Apple offered 1.8 million. 89
In 2014, Amazon acquired Twitch, the world’s leading gameplay streaming site, for $970 million in
cash. 90 The site allowed gamers to share videos of their more interesting game moments and even earn
a living from doing so. Competitors included HitBox, Beam, Azubu, Bio Live, and YouTube Gaming. 91
Twitch was founded in 2011. Google’s response, YouTube Gaming, was launched in 2015. 92 In 2019,
Twitch attracted 15 million daily users, with an average of 1.27 million concurrent viewers. 93
Meanwhile, Amazon had also begun building a portfolio of streaming rights for professional sports
competitions. In 2017, the National Football League selected Amazon as its exclusive partner for
streaming 10 Thursday Night Football matches across the globe. 94 Amazon reportedly paid $50 million
for these rights. 95 In 2020, Amazon and the NFL agreed to a multi-year deal where Amazon would
continue to exclusively stream Thursday Night Football games, as well as one regular season Saturday
game. 96 Amazon had also begun streaming baseball (MLB), soccer (English Premier League and UEFA
Champions League), tennis (US Open), and other professional sporting events. 97
7
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In September 2020, Amazon launched Luna, a cloud gaming service. Members paid $50 for a
controller and $5.99 per month for access to dozens of games from top publishers. There were high
hopes that Luna would be a “credible competitor” to other, more established cloud gaming providers
like Microsoft, Apple, Sony, and Nintendo. 98
Digital Devices
Amazon’s entry into digital devices came in November 2007 with the release of the Kindle, a device
that allowed users to download and read books, newspapers, and magazines (see Exhibit 3d). The
Kindle was initially priced at $399, and the first run sold out within six hours. 99 By the end of 2008,
Amazon had 125,000 digital books available,100 and by 2009 this had risen to 290,000. Most were priced
at or below $9.99, sometimes less than what Amazon paid publishers. 101
In 2011, Amazon introduced the Kindle Fire, a smart tablet that offered video, gaming, and Internet
capabilities, directly competing with Apple’s iPad. After a series of price reductions and spec
improvements, the Fire became the most popular item on Amazon.com. 102 A brand study from
Consumer Intelligence Research Partners found that Amazon customers who owned a Kindle spent
$443 more per year than customers without a Kindle product. 103 In Q1 2019, Kindle accounted for 8%
of global tablet sales, behind Apple (27%), Samsung (13%), and Huawei (10%). 104
Amazon continued to expand its offering, with new devices ranging from the poorly received Fire
Phone – a low-priced smart phone – to the Fire TV Stick, which competed with Apple TV, Roku, and
Google Chromecast, to Ring, a video-doorbell device. Most notable, however, was the suite of Alexaenabled devices. Alexa, a digital personal assistant that could answer questions, play music, and help
with various other tasks, was first introduced with the voice-command Amazon Echo in November
2014. By 2017, Alexa-enabled devices were some of the best-selling items on Amazon, making the year
a record for Amazon hardware sales. Third-party developers had created more than 30,000 skills for
Alexa, and customers could control over 4,000 smart home devices using the system. 105 In September
2018, Amazon introduced a suite of upgraded and new Alexa-enabled devices for the home and, for
the first time, for the car. Tom Taylor, Senior Vice President, Amazon Alexa, commented, “We want
you to have access to Alexa everywhere – in your kitchen, in your living room, in your office, and now
in your car or truck.” 106
In February 2019, Amazon acquired eero, which offered home mesh WiFi systems that promised to
deliver reliable and secure WiFi in every room of a customer’s home. 107 Industry observers described
the acquisition as a significant step in Amazon’s “in-home strategy” to connect smart devices and
collect data to better target products to customers. 108 Amazon continued to update its family of Echo
devices, introducing new spherical designs and improved audio across all devices in September
2020. 109
In December 2019, Amazon made an agreement with Apple and Google to build a common
standard for voice-enabled devices. The alliance, called “Project Connected Home,” was expected to
further boost adoption of smart home devices. 110
8
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New Categories
Fashion
In 2002 Amazon launched an Apparel & Accessories Store with merchandise from 400 labels (see
Exhibit 3e). Amazon did not own the inventory. Two years later, it began to manage inventory for itself
and began offering fine jewelry. In 2006, Amazon acquired online fashion retailer Shopbop. 111 This was
followed in 2007 with the launch of Endless, a shoe and handbag website. In 2009, it purchased Zappos,
an online footwear retailer, for $1.1 billion. 112
In 2011, the company launched MyHabit, selling heavily discounted designer fashions in
competition with several other sites and added its own private-label lines. Meanwhile, it tried to woo
a number of leading brands who were reluctant to sell on Amazon. Eventually, in 2016, Amazon closed
MyHabit. In 2017, marking a major turning point, leading brand Nike finally agreed to sell apparel on
Amazon. 113 Subsequently, a number of other major brands, including Calvin Klein, Kate Spade, and
Levi Strauss, began selling on Amazon.114
In April 2017, to support its fashion ambitions, Amazon began testing the Echo Look, a device with
a full-lengt
