Amazon’s such a well known company that these days, you’d have a pretty hard time finding someone who hasn’t heard of it.
Over the years, we’ve come to know a lot about the ecommerce juggernaut that Jeff Bezos created from his garage in the mid-90s.
Today, however, we’re covering 10 little-known facts about Amazon that we feel more people should be aware of (especially Fact #6).
For even more facts, check out this Bible of Amazon stories.
When Amazon initially launched, it started as a drop-shipping business.
If you’re not familiar with the drop-shipping business model, it’s’ simple.
Amazon would put a book up for sale on its site for $30.
After collecting the $30, Amazon buys the book at a far lower price from a wholesaler, who’ll mail it to the buyer.
Amazon, like most other startups, was cash-strapped and needed to keep every dime they had.
The wholesaler they were using for their drop-shipping business had a minimum order of 10 books.
This would be too risky for Amazon – what if they couldn’t sell the other nine books they ordered?
After a few rounds of head-scratching, Jeff and his crew discovered a loophole on the wholesaler’s website.
Turns out, if you order a book that’s out of stock, the company would still ship out the one book you ordered that was in stock.
So every time Amazon had an order come in for a one book, they would order that title and nine copies of an out-of-stock book.
This loophole helped Amazon save a lot of money and grow a lot faster.
Another example of growing pains for Amazon was the jewelry category.
Bezos desperately wanted to grow that category fast, for it was the one with the most promise and biggest returns.
It proved to be harder to grow than most other categories, but not because of the expensive overhead cost that is typical of jewelry.
Of all the categories, jewelry had the highest internal theft rate among Amazon employees.
One of the other reasons it grew more slowly is that, as it turns out, jewelry is very hard to photograph and the process of taking pictures for tens of thousands of items really held back the pace of growth.
In the early 2000s, Amazon was growing at such a breakneck speed, that management couldn’t always control all staff.
This is part of the reason why so much jewelry theft, as well as the theft of other items could happen.
But it goes beyond theft – all kinds of bad behavior went unnoticed.
In one amusing story, Amazon managers were so busy with operations that one slacking employee created a tunnel inside a stack of unused palettes in a far-off corner of a warehouse.
The slacker went on to create a hang-out den for himself inside the stack of palettes and decked it out with a television, images of nude women and food – all of which he took from the warehouse.
This slacking employee managed to get away with hanging out in his den for all eight hours of his shifts for a week before finally being caught and escorted out of the building.
While it’s perfectly natural for rival companies to hire away talent from each other, in the early goings of the company, Amazon went on a poaching binge of Walmart’s talent.
The situation got so extreme that Walmart eventually intervened with a lawsuit to prevent Amazon from hiring away any other members of their staff.
Here’s something you might find hard to believe: at the time the poaching was happening, Walmart didn’t even have a live website yet!
Jeff Bezos learns from his mistakes.
In the late 90s, Bezos spent hundreds of millions of dollars to acquire several unproven, risky startups.
When the infamous dotcom bubble burst, however, none of those acquisitions survived, losing every last dime Amazon had invested.
Many people are aware that Amazon had acquired the company Zappos, but they aren’t aware of the key details of how it happened.
It took Bezos and his cohorts two entire years of negotiations to come to a deal.
At the time negotiations started, Bezos was hoping to acquire Zappos for less than $500 million.
When an initial offer wasn’t accepted, Amazon even tried to put Zappos out of business with a site called endless.com (spoiler – it didn’t work).
What most people don’t know is what motivated Tony Hsieh to finally sell Zappos to Amazon: when the 2008 housing crisis hit, many of Tony’s employees felt the brutal financial impact.
Since all employees held Zappos stock, Tony knew a sale to Amazon would instantly help everyone who was affected by the crash, and that’s what pushed him to finally sign the deal.
That is the truest definition of Delivering Happiness.
All the more reason we’ll miss Tony – go here to read our homage to Hsieh, revealing what truly made him special.
As Amazon grew, it was perceived as such a threat to the major big box retailers that they pulled off one of the most shameless stunts to slow Amazon down.
Walmart, Target, Best Buy, Home Depot and Sears all teamed up to create an organization called The Alliance for Main Street Fairness.
Through this Alliance, they promoted the need to protect small mom and pop businesses from what they called “the evils of Amazon”.
Ironically, Amazon.com is now actually a member The Alliance for Main Street Fairness.
In 1998, Jeff Bezos met with Sergey Brin and Larry Page, the founders of Google, at a spa and during this encounter, they presented their search engine to him.
Bezos proposed they use the search engine to place advertisements, which at the time (most ironically), the young founders strongly opposed.
Regardless of the difference of opinion, Bezos managed to get the pair to accept some of his personal investment money for Google, which earned Bezos well over a billion dollars in returns.
In its early years, Amazon looked to save money while expanding fast by outsourcing inventory.
They wanted to have large brick-and-mortar retailers such as Best Buy, and Harper Collins provide Amazon with products while Amazon took care of the sales and distribution.
Sony was one of the companies on that list and almost signed on…
…but when executives toured one of Amazon’s warehouses while negotiating the deal, they discovered unauthorized Sony products for sale.
Unsurprisingly, they promptly cancelled the deal.
Before the Sony fiasco, Toys R Us was the first major offline retailer to reach a major partnership with Amazon in which they’d supply products and Amazon would deal with distribution.
Negotiations were long and many concessions were made on both sides.
When all was said and done, Amazon violated it’s agreement with Toys R Us and lost $51 million in court for doing so.
Ironically enough, after going through bankruptcy and changing ownership, Toys R Us has re-partnered with Amazon as of 2020.
More Facts About Amazon
Amazon still has a whole lot more growing to do – and with that growth will certainly come more facts that slip through the cracks.
If you’re looking for the perfect gift or you happen to receive an Amazon gift card, be sure to check out The Everything Store.
The book’s author, Brad Stone, does a stellar job of documenting all of the facts about Amazon.
From covering the company’s ups and downs as well as the exploits of Jeff Bezos, you’ll come away with a very different view of your favorite online store.