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.
The most obvious technological advance that helped Amazon, and the one that launched the company, was the internet (Parnell, 2014). Jeff Bezos knew that he wanted to open an online business and decided to start with a bookstore due to low pricing and an existing worldwide demand (”Amazon.com, Inc. History”, n.d.). After deciding on a model, he chose Seattle as a home for his business due to its proximity to high tech workers and a large book distributor. The website opened with a database of more than one million titles, whereas many competitors only stocked 2,000, and the orders went directly to wholesalers. Amazon quickly expanded their database to 1.5 million books and started offering deep discounts which attracted many new customers.
Amazon was founded in 1995 by Jeff Bezos and became one of the first major companies to sell goods over the internet
PACE represented Amazon. For our business profile project, we focused on Amazon. Amazon.com Inc. was founded by Jeff Bezos in 1994. Amazon was first started in Bezos' garage and has turned into a billion dollar operation over the course of 22 years (Smith). Amazon is currently headquartered in Seattle, Washington and has branch locations all over the world.
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...
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.
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
Saunders. R (2001) Amazon.com way – Secrets of the world’s most astonishing web business, Capstone
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
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.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 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.
Jeffrey Bezos, the founder and current CEO of Amazon.com, initially started the company as an online bookstore in 1994. Within several months, Amazon spread its operation to all 50 states and abroad. Presently, customers from over 45 countries buy at Amazon. Over a short period of time, the company expanded sales to electronics, video games, software, CDs, DVDs, MP3 downloads, food, furniture, apparel, jewelry, and toys. Today, the company even produces its own products such as the Kindle series. Also, Amazon.com is one of the major providers of cloud computing services. Currently, the company is the largest global online retailer responsible for 20% of online retail market share.
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.
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.
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.