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					                                Amazon.com, Inc. – An Icon in the E-Business Arena



                                         A
                               Management Process
                                    Assignment




              Amazon.com, Inc.
   A Brief Study of this E-Commerce Firm’s Business Models, Revenue Models and the
         Systems which make them one of the pioneers in E-Business worldwide




                                    Prepared By
                                ANU .P. ASHOKAN
                                     Roll No. 04
                         FW-ISBE-A-10-12 (TRIMESTER-I)




                                    Submitted to
                               MR. DHAIWAT SHAH




                IIPM SCHOOL OF BUSINESS & ECONOMY (ISBE)
             INDIAN INSTITUTE OF PLANNING AND MANAGEMENT
                                   AHMEDABAD


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                       INDEX

  Sr. No.                         CONTENTS                             PAGE
                                                                        No.
     1                      INTRODUCTION                                 1
     2                   PRODUCTS & SERVICES                             6
     3                     REVENUE MODEL                                12
     4              HOW AMAZON.COM, INC. WORKS?                         16
     5          SYSTEMS & MODELS USED BY AMAZON.COM,                    28
                              INC.
     6           AMAZON’S NEWER BUSINESS MODEL                           48
     7        WHAT MAKES AMAZON.COM, INC. SO SPECIAL?                    51




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 INTRODUCTION




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Amazon.com, Inc. (NASDAQ: AMZN) is an American-based multinational electronic
commerce company. Headquartered in Seattle, Washington, it is America's largest online
retailer, with nearly three times the Internet sales revenue of the runner up, Staples, Inc.,
as of January 2010.


Jeff Bezos founded Amazon.com, Inc. in 1994 and launched it online in 1995. The
company was originally named Cadabra, Inc., but the name was changed when it was
discovered that people sometimes heard the name as "Cadaver." The name Amazon.com
was chosen because the Amazon River is the largest river in the world, and so the name
suggests large size, and also in part because it starts with 'A' and therefore would show up
near the beginning of alphabetical lists. Amazon.com started as an online bookstore, but
soon diversified, selling DVDs, CDs, MP3 downloads, computer software, video games,
electronics, apparel, furniture, food, and toys. Amazon has established separate websites
in Canada, the United Kingdom, Germany, France, Japan, and China. It also provides
international shipping to certain countries for some of its products. A 2009 survey found
that Amazon was the UK's favorite music and video retailer, and third overall retailer.




   History

Amazon was founded in 1994, spurred by what Bezos called "regret minimization
framework", his effort to fend off regret for not staking a claim in the Internet gold rush.
Company lore says Bezos wrote the business plan while he and his wife drove from New
York to Seattle, although that account appears to be apocryphal. Bezos flew from New
York to Texas, where he picked up a car from a family member, and then drove from
Texas to Seattle.

The company began as an online bookstore; while the largest brick-and-mortar
bookstores and mail-order catalogs for books might offer 200,000 titles, an online
bookstore could offer more. Bezos named the company "Amazon" after the world's
largest river. Since 2000, Amazon's logotype is an arrow leading from A to Z,



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representing customer satisfaction (as it forms a smile); a goal was to have every product
in the alphabet.

Amazon was incorporated in 1994, in the state of Washington. In July 1995, the company
began service and sold its first book on amazon.com - Douglas Hofstadter's Fluid
Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of
Thought. In 1996, it was reincorporated in Delaware. Amazon issued its initial public
offering of stock on May 15, 1997, trading under the NASDAQ stock exchange symbol
AMZN, at an IPO price of US$18.00 per share ($1.50 after three stock splits in the late
1990s).

Amazon's initial business plan was unusual: the company did not expect a profit for four
to five years. Its "slow" growth provoked stockholder complaints that the company was
not reaching profitability fast enough. When the dot-com bubble burst, and many e-
companies went out of business, Amazon persevered, and finally turned its first profit in
the fourth quarter of 2001: $5 million or 1¢ per share, on revenues of more than $1
billion, but the modest profit was important in demonstrating the business model could be
profitable. In 1999, Time magazine named Bezos Person of the Year, recognizing the
company's success in popularizing online shopping.



Influence

The Amazon business model has been used by a number of competing companies. The
Middle East and Arab World are served regionally by neelwafurat.com, a competing
business launched in 1998 in Beirut. Neelwafurat.com is known for offering books
otherwise banned in many Middle Eastern nations, such as Cities of Salt by Abdul-
Rahman Munif and The Insane Asylum by Ghazi al-Gosaibi.




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Business results

The company remains profitable: net income was $35 million in 2003, $588 million in
2004, $359 million in 2005, and $190 million (including a $662 million charge for R&D)
in 2006. Retained earnings were negative $1.8 billion in 2006, negative $1.4 billion in
2007, negative $730 million in 2008, and $172 million in 2009. Annual revenues, aided
by product line expansion and rapid growth in international sales, grew from $3.9 billion
in 2002 to $10.7 billion by 2006.

On November 21, 2005, Amazon entered the S&P 500 index, and, on December 31,
2008, the S&P 100 index. On March 26, 2010, Amazon had a higher market cap than
Target Corporation, Home Depot, Costco, Barnes and Noble, and Best Buy, only lagging
that of Walmart among American brick and mortar retailers.

Locations

Amazon.com has offices, fulfillment centers, customer service centers and software
development centers across North America, Latin America, Europe and Asia.



Headquarters




Amazon.com's headquarters in the PacMed building in Beacon Hill, Seattle.




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The company's global headquarters are located on Seattle's Beacon Hill. It has offices
throughout other parts of greater Seattle, including Union Station and The Columbia
Center.

Amazon has announced plans to move its headquarters to the South Lake Union
neighborhood of Seattle beginning in mid-2010, with full occupancy by 2011. This move
will consolidate all Seattle employees onto the new 11-building campus.




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          PRODUCTS

                                 &

               SERVICES



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Timeline: A Few Highlights

   •   1994: Amazon.com is incorporated.
   •   1995: It sells its first book.
   •   1996: It launches its affiliate program ("Associates Program").
   •   1997: It goes public.
   •   1998: It buys the Internet Movie Database (IMDb) and opens two new Amazon
       stores: Music and DVD/Video.
   •   1999: It launches Amazon Auctions and zShops and opens six new stores:
       Consumer Electronics, Toys & Games, Home Improvement, Software, Video
       Games and Gift Ideas.
   •   2000: It launches Amazon France, Amazon Japan and Amazon Marketplace and
       opens two new stores: Kitchen and Camera & Photo.
   •   2001: It introduces the "Look Inside the Book" function and teams up with Target
       stores.
   •   2002: It launches Amazon Canada and Amazon Web Services and opens two new
       stores: Office Products and Apparel & Accessories.
   •   2003: It launches Amazon Services and A9.com subsidiaries and opens three
       news stores: Sports & Outdoor, Gourmet Food and Health & Personal Care.
   •   2004: It buys Joyo.com (which becomes Amazon China) and opens one new
       store: Beauty.
   •   2005: It buys BookSurge LLC.
   •   2007: It launches Kindle E-Book reader
   •   2008: They began their MP3 Service
   •   2010: It launches two publishing Imprints; AmazonEncore and AmazonCrossing

Amazon product lines include books, music CDs, videotapes and DVDs, software,
consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby
products, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-




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care items, beauty products, musical instruments, clothing, industrial & scientific
supplies, and groceries.

The company launched amazon.com Auctions, a Web auctions service, in March 1999.
However, it failed to chip away at industry pioneer eBay's large market share.
amazon.com Auctions was followed by the launch of a fixed-price marketplace business,
zShops, in September 1999, and the now defunct Sotheby's/Amazon partnership called
amazon.com in November. Auctions and zShops evolved into Amazon Marketplace, a
service launched in 2001 that let customers sell used books, CDs, DVDs, and other
products alongside new items. Today, Amazon Marketplace's main rival is eBay's
Half.com service.

In August 2005, Amazon began selling products under its own private label, "Pinzon";
the trademark applications indicated that the label would be used for textiles, kitchen
utensils, and other household goods. In March 2007, the company applied to expand the
trademark to cover a more diverse list of goods, and to register a new design consisting of
the "word PINZON in stylized letters with a notched letter O whose space appears at the
"one o'clock" position.". Coverage by the trademark grew to include items such as paints,
carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and
jewelry. On September 2008, Amazon filed to have the name registered. USPTO has
finished its review of the application, but Amazon has yet to receive an official
registration for the name.

Amazon MP3, its own online music store, launched in the US in September 25, 2007,
selling downloads exclusively in MP3 format without digital rights management. This
was the first online offering of DRM-free music from all four major record companies.

In August 2007, Amazon announced AmazonFresh, a grocery service offering perishable
and nonperishable foods. Customers can have orders delivered to their homes at dawn or
during a specified daytime window. Delivery was initially restricted to residents of
Mercer Island, Washington, and was later expanded to several ZIP codes in Seattle
proper. AmazonFresh also operated pick-up locations in the suburbs of Bellevue and



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Kirkland from summer 2007 through early 2008. In 2008 Amazon expanded into film
production, producing the film The Stolen Child with 20th Century Fox.

Amazon's Honor System was launched in 2001 to allow customers to make donations or
buy digital content, with Amazon collecting a percentage of the payment plus a fee. The
service was discontinued in 2008. and replaced by Amazon Payments. Amazon launched
Amazon Web Services (AWS) in 2002, which provides programmatic access to latent
features on its website. Amazon also created "channels" to benefit certain causes.

Amazon Prime offers two day shipping with no minimum purchase amount for a flat
annual fee, as well as discounted priority shipping rates. Amazon launched the program
in the continental United States in 2005, in Japan, the United Kingdom and Germany in
2007, and in France (as "Amazon Premium") in 2008. Launched in 2005, Amazon Shorts
offers exclusive short stories and non-fiction pieces from best-selling authors for
immediate download. By June 2007, the program had over 1,700 pieces and was adding
about 50 new pieces per week. In November 2005, amazon.com began testing Amazon
Mechanical Turk, an application programming interface (API) allowing programs to
dispatch tasks to human processors. In March 2006, Amazon launched an online storage
service called Amazon Simple Storage Service (Amazon S3). An unlimited number of
data objects, from 1 byte to 5 gigabytes in size, can be stored in S3 and distributed via
HTTP or BitTorrent. The service charges monthly fees for data stored and transferred. In
2006, Amazon introduced Amazon Simple Queue Service (Amazon SQS), a distributed
queue messaging service, and product wikis (later folded into Amapedia) and discussion
forums for certain products using guidelines that follow standard message board
conventions. Also in 2006, Amazon introduced Amazon Elastic Compute Cloud
(Amazon EC2), a virtual site farm, allowing users to use the Amazon infrastructure to run
applications ranging from running simulations to web hosting. In 2008, Amazon
improved the service adding Elastic Block Store (EBS), offering persistent storage for
Amazon EC2 instances and Elastic IP addresses, static IP addresses designed for dynamic
cloud computing.




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In 2007 Amazon launched Amapedia, a wiki for user-generated content to replace
ProductWiki, the video on demand service Amazon Unbox, and Amazon MP3, which
sells downloadable MP3's. Amazon's terms of use agreements restrict use of the MP3's,
but Amazon does not use DRM to enforce those terms. Amazon MP3 sells music from
the Big 4 record labels EMI, Universal, Warner Bros. Records, and Sony BMG, as well
as independents. Previous to the launch of this service, Amazon made an investment in
Amie Street, a music store with a variable pricing model based on demand. Also in 2007
Amazon launched Amazon Vine, which allows reviewers free access to pre-release
products from vendors in return for posting a review, as well as payment service
specifically targeted at developers, Amazon FPS.

In November 2007, Amazon launched Amazon Kindle, an e-book reader which
downloads content over "Whispernet", via the Sprint Nextel EV-DO wireless network.
The screen uses E Ink technology to reduce battery consumption. In 2008 Amazon stated
that its Kindle-based library included 200,000 titles. In December 2007, Amazon
introduced SimpleDB, a database system, allowing users of its other infrastructure to
utilize a high reliability high performance database system. In August 2007, Amazon
launched an invitation-only beta-test for online grocery delivery. It has since rolled out in
several Seattle, Washington suburbs.

In January 2008 Amazon began rolling out their MP3 service to subsidiary websites
worldwide. In December, 2008, Amazon MP3 was made available in the UK. In
September, IMDB and amazon.com launched a Music metadata browsing site with wiki-
like user contribution. In November, Amazon partnered with Fisher-Price, Mattel,
Microsoft and Transcend to offer products with minimal packaging to reduce
environmental impact and frustration with opening "clamshell" type packaging. Amazon
Web Services launched a public beta of Amazon Elastic Compute Cloud running
Microsoft Windows Server and Microsoft SQL Server. Amazon Connect enables authors
to post remarks on their book pages to customers. WebStore allows businesses to create
custom e-commerce websites using Amazon technology. Sellers pay a commission of 7
percent, including credit-card processing fees and fraud protection, and a subscription fee
of $59.95/month for an unlimited number of webstores and listings.


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In July 2010 Amazon announced that e-book sales for its Kindle reader outnumbered
sales of hardcover books for the first time ever during the second quarter of 2010.
Amazon claims that during that period sold 143 e-books for every 100 hardcover books,
including hardcovers for which there is no digital edition; and during late June and early
July sales rose to 180 digital books for every 100 hardcovers.

In 2010 Amazon launched two publishing imprints, AmazonEncore and
AmazonCrossing. AmazonEncore publishes books that were previously self-published.
AmazonCrossing translates foreign works into English, the first book published was the
French-language novel The King of Kahel in November 2010.

Website

The domain amazon.com attracted at least 615 million visitors annually by 2008, twice
the numbers of walmart.com. Amazon attracts approximately 65 million customers to its
U.S. website per month.




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 REVENUE MODEL




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What is a Revenue Model?

Revenue model is a description of how an organization will earn income, produce
financial gain, and produce a better return on invested capital. The major revenue models
are:


a) Sales revenue model – a company generates the revenue by selling goods, information
or services.


b) Subscription fees revenue model – a company charges a subscription fee by monthly
or yearly for the users who access to the content and services offered.


c) Transaction fees revenue model – a company receives commissions which paid on
volume of transactions. The higher the volumes of transactions, the higher will be the
transaction fees. E.g., e-Bay


d) Advertising revenue model – a company provides forums for advertisements and
receives the payments from advertisers. E.g., Yahoo and Google


e) Affiliate fees revenue model – a company receives commissions by referring
customers to other websites.




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Revenue model of Amazon.com


Amazon.com, generally, follows a Sales Revenue Model, Transaction Fees Revenue
Model and Affiliation Fees Revenue Model.


Amazon.com was one of the major companies and one of the first to sell goods by
Internet, which started business as online bookstore, but, nowadays they have become
multi sellers. Amazon uses the internet as the sole method for selling goods to its
consumers. Amazon generates revenue primarily by selling books, videos, computer
software, toys, industrial tools and etc. Amazon’s initial competitors, such as Barnes and
Noble, and Borders used brick and mortar as their main distribution channel.

This method of using many store fronts is extremely costly. They pay premium rents to
be in central locations, and must pay salaries to sales representatives. Amazon does not
share this same high overhead, which gives Amazon a competitive advantage.

Amazon’s competitive advantage, combined with the good reputation they have
established over the years has made it extremely difficult for such stores to compete with
Amazon online. Moreover, Amazon is a pioneer of Affiliate Partnership Marketing
Model (read Affiliate Fees Revenue Model).



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Amazon Marketplace is a fixed price online market place that allows sellers to offer
their goods alongside Amazon’s offerings. Buyers can purchase new and used items
which sold directly by a third party via Amazon.com by using Amazon Marketplace.
Amazon charges a commission rate based on the sale price, a transaction fee and a
variable closing fee which is a very profitable sales strategy.


Furthermore, Amazon.com was one of the first online businesses to set up an affiliate
marketing program. AStore is an Amazon.com affiliate product which website browsers
can use to create an online store on their sites. Website owners are not allowed to sell
their own products directly; they have to pick products from the store and earn referral
fees on the products purchased by their readers. The fee structure ranges from 4% to 10%
of the product price.




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                            HOW

      Amazon.com, Inc.
                          works?




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Amazon Technology



AMAZon-ING TRIVIA: Amazon’s Progress


Amazon has four software development centers worldwide. These units are constantly
creating new features for Amazon.com and developing the technology to support them.




The massive technology core that keeps Amazon running is entirely Linux-based. As of
2005, Amazon has the world's three largest Linux databases, with a total capacity of 7.8
terabytes (TB), 18.5 TB and 24.7 TB respectively [ref]. The central Amazon data
warehouse is made up of 28 Hewlett Packard servers, with four CPUs per node, running
Oracle 9i database software.

The data warehouse is roughly divided into three functions: query, historical data and
ETL (extract, transform, and load -- a primary database function that pulls data from one
source and integrates it into another). The query servers (24.7 TB capacity) contain 15
TB of raw data in 2005; the click history servers (18.5 TB capacity) hold 14 TB of raw
data; and the ETL cluster (7.8 TB capacity) contains 5 TB of raw data. Amazon's
technology architecture handles millions of back-end operations every day as well as
queries from more than half a million third-party sellers. According to a report released
by Oracle after it helped migrate Amazon's data warehouse to Linux in 2003 and 2004,
the central task process looks something like this:




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         AMAZon-ING TRIVIA: Amazon Patents


         Amazon has tried to patent nearly every aspect of its e-commerce architecture, drawing
         more than a little controversy for the affiliate program patent it won back in 2000.
         Reportedly, other e-commerce sites were already using affiliate programs that looked a lot
         like the one Amazon developed and patented. Here are just a few of Amazon's dozens of
         patents:


             •      Internet-based customer referral system, U.S. Patent 6,029,141, February 22, 2000

             •      Content personalization based on actions performed during a current browsing
                    session, U.S. Patent 6,853,982, February 8, 2005
             •      Method and system for integrating transaction mechanisms over multiple internet
                    sites, U.S. Patent 6,882,981, April 19, 2005


             •      Use of product viewing histories of users to identify related products, U.S. Patent
                    6,912,505, June 28, 2005




In the 2003 holiday season, Amazon processed a top-end 1 million shipments and 20
million inventory updates in one day. Amazon's sales volume means that hundreds of
thousands of people send their credit card numbers to Amazon's servers every day, and
security is a major concern. In addition to automatically encrypting credit card numbers
during the checkout process, Amazon lets users choose to encrypt every piece of
information they enter, like their name, address and gender.

Amazon employs the Netscape Secure Commerce Server using the SSL (secure socket
layer) protocol (see How Encryption Works to learn about SSL). It stores all credit card
numbers in a separate database that's not Internet-accessible, cutting off that possible


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entry point for hackers. Customers who are particularly cautious can choose to enter only
a partial credit card number over the Internet and then provide the rest by phone once the
online order is submitted. Aside from the usual security concerns regarding online credit-
card purchases, Amazon suffers from the same phishing problem that has plagued eBay
and PayPal, so watch out for fake e-mails asking for your Amazon.com account
information. Check out Anti-Phishing Working Group: Amazon.com for details on how
to recognize a fake.

Now let's get back to the business of selling stuff. Amazon's approach to e-commerce is
one that leaves no stone unturned.


Amazon E-commerce




                       AMAZon-ING TRIVIA: Amazon on Paper


                       Amazon.com delivers print catalogs to a limited
                       number of Amazon customers during the holiday
                       season.




Amazon.com has always sold goods out of its own warehouses. It started as a bookseller,
pure and simple, and over the last decade has branched out into additional product areas



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and the third-party sales that now represent a good chunk of its revenue (some estimates
put it at 25 percent).

Both retailers and individual sellers utilize the Amazon.com platform to sell goods.
Large retailers like Nordstrom, Land's End and Target use Amazon.com to sell their
products in addition to selling them through their own Web sites. The sales go through
Amazon.com and end up at Nordstrom.com, Land's End.com or Target.com for
processing and order fulfillment. Amazon essentially leases space to these retailers, who
use Amazon.com as a supplemental outlet for their online sales.




                                      Courtesy Amazon.com

                              Target's Amazon.com-based store




Small sellers of used and new goods go to Amazon Marketplace, Amazon zShops or
Amazon Auctions. At Marketplace, sellers offer goods at a fixed price, and at Auctions
they sell their stuff to the highest bidder. Amazon zShops features only used goods at
fixed prices. If an item listed on zShops, Marketplace or Auctions is also sold on the main


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Amazon.com, it appears in a box beside the Amazon.com item so buyers can see if
someone else is selling the product for less in one of the other sales channels.




                                      Courtesy Amazon.com




The level of integration that occurs on Amazon is a programming feat that few (if any)
online sales sites can match.

Another sales channel called Amazon Advantage is a place where people can sell new
books, music and movies directly from the Amazon warehouse instead of from their
home or store. Sellers ship a number of units to Amazon, and Amazon handles the entire
sales transaction from start to finish. In all of these programs, Amazon gets a cut of each
sale (usually about 10 percent to 15 percent) and sometimes charges additional listing or
subscription fees; in the case of Amazon Advantage, the company takes a 55 percent
commission on each sale. The Advantage channel is something like a consignment setup,
a sales avenue for people who create their own music CDs or have self-published a book
and are simply looking for a way to get it out there.

One of the latest additions to Amazon's repertoire is a subsidiary company called
Amazon Services. Through Amazon Services, Amazon sells its sales platform, providing
complete Amazon e-commerce packages to companies looking to establish or revamp
their e-commerce business. Amazon sets up complete Web sites and technology
backbones for other e-commerce companies using Amazon software and technology.




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Target, for instance, in addition to having a store on Amazon.com, also uses Amazon
Services to build and manage its own e-commerce site, Target.com.




                                    Target.com homepage




But selling goods isn't the only way to make money with Amazon.com. The Web site's
affiliate program is one of the most famous on the Web. Through Amazon's Associate
Program, anyone with a Web site can post a link to Amazon.com and earn some money.
The link can display a single product chosen by the associate, or it can list several "best
seller" products in a particular genre, in which case Amazon updates the list
automatically at preset intervals. The associate gets a cut of any sale made directly
through that link. The cut ranges from 4 percent to 7.5 percent depending on which fee
structure the associate signs up for (see Amazon Associates for complete program
details). The associate can also take advantage of Amazon Web Services, which is the
program that lets people use Amazon's utilities for their own purposes. The Amazon Web
Services API (application programming interface) lets developers access the Amazon
technology infrastructure to build their own applications for their own Web sites. All
product sales generated by those Web sites have to go through Amazon.com, and the
associate gets a small commission on each sale.



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Check out Amazon Web Services to learn more about what you can do with Amazon's e-
commerce platform.




Amazon Tools, Marketing and Community




                   AMAZon-ING TRIVIA: The Gold Box


                   There's probably a little "Gold Box" icon at the
                   top of the Amazon.com homepage every time
                   you visit. This box holds special treats for you:
                   Time-sensitive discounts. Once you click on the
                   Gold Box and view an offer, you have to
                   complete the transaction (if you want it) in a
                   specified time period. After that time period,
                   the offer disappears.




The goal is pretty straightforward: "To be Earth's most customer-centric company where
people can find and discover anything they want to buy online." The implementation is
complex, massive and dynamic. Amazon's marketing structure is a lesson in cost-
efficiency and brilliant self-promotion. Amazon's associates link to Amazon products in
order to add value to their own Web sites, sending people to Amazon to make their


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purchases. It costs Amazon practically nothing. Some associates create mini-Amazons --
satellite sites that do new things with Amazon data and send people to the mothership
when they're ready to buy. Amazon Light, built and maintained by software developer
Alan Taylor, is one of those satellite sites.




          Alan Taylor does not work for Amazon.com. He joined the Associate Program,
           signed up for Amazon Web Services, downloaded the API and built Amazon
                                                Light.

The level of customer tracking at Amazon.com is another best-of-breed system. Using
the data it collects on every registered user during every visit to the Web site, Amazon
points users to products they might actually be glad to discover -- and buy. Amazon
recommends products that are:




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   •   similar to what you're currently searching for (on-the-fly recommendations that
       use up tons of processing power)
   •   related to what you've searched for or clicked on at any time in the past
   •   purchased by other people who've searched for what you're searching for or have
       bought what you've bought

You can even customize the recommendations by giving Amazon more information
about yourself and your interests and rating the products you've already purchased.

A recent development in customer tracking actually collects information on people who
may have never visited Amazon.com. Amazon's gift-giving recommendations collect
data on the stuff you buy for other people. For instance, if you buy a toy train set in
December and ship it to your nephew, Amazon knows you give gifts to a boy aged four
to 10 who lives in Ohio and likes trains. Might your nephew enjoy the latest addition to
that train series? Might he also have an interest in RC cars? Amazon will give you all
sorts of ideas about what to get your nephew when the next holiday season rolls around.

This type of information gathering has generated a fair amount of controversy. Some say
Amazon gathers too much information for comfort, and the Electronic Privacy
Information Center reports that in 2000, Amazon started sharing its customer data with its
partners and subsidiaries. The concern has increased with the tracking of "gift-giving
habits," because the gift-giving information Amazon collects could be about minors,
which is against the law, and because the gift receivers don't even know that their name,
age, gender, location and interests may be stored in Amazon's database of customer
information.

Despite concerns about Big Brother Amazon, tons of people love the personalized
experience Amazon offers. It's not just sales offers -- there's a community on
Amazon.com that's based on people providing even more information about themselves
to other Amazon users. People write their own reviews, recommendations, "So You'd
Like To..." guides and "Listmania" lists based on Amazon's product offerings and share
them with all of Amazon.com. One Listmania list, "The Top 25 Weirdest Items You Can



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Purchase Through Amazon!" by Sheila Chilcote-Collins of Van Wert, Ohio, includes a
jar of S.E.P. (Stop Eating Poop) that should make your dog stop eating its own feces; bird
feed in the form of live caterpillars shipped to your doorstep; and a book entitled "Owl
Puke" that comes complete with a genuine pellet of regurgitated owl meal. You can make
any sort of list you want, and any Amazon member can view it and rate it. (Click here to
view the Top 100 Listmania lists.)

Beyond e-commerce and its trappings, some of the more recent Amazon endeavors have
the company branching out into new realms. Amazon's Mechanical Turk project seeks
to combine community, technology and compensation. Using the Mechanical Turk
system, software and Web developers can post tasks they need help with, usually tasks
related to things computers can't do but humans can, like quickly caption a set of photos.
Anyone can post a task, and the person who completes it gets a small amount of money in
return. Amazon gets a commission on each completed transaction. In a much more
visible trek into the unknown, Amazon has funded the A9 search engine. It has full
search capabilities, mapping functions, a toolbar with pop-up blocking and an easily
accessible personal search history. A9 also provides a "Diary" where you can makes
notes to yourself about specific Web pages and lists of recommended links for you to
check out based on your previous searches. In keeping with Amazon's omnipresent
marketing techniques, you can sign up to get an Amazon.com discount for using A9 on a
regular basis, and when you type in a search term, you'll see a display of Amazon book
results related to that term.

From a "Where's Amazon going?" point of view, perhaps the most notable project is the
previously mentioned Amazon Services subsidiary. Amazon Services is building
complete e-commerce solutions for companies that are potential Amazon competitors,
leaving open the possibility that Amazon will ultimately head in the direction of
technology service over retail sales.




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SYSTEMS & MODELS
                       USED BY
      Amazon.Com, Inc.




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The following are the major systems and models used by Amazon.com, Inc. to
provide products and services to its customers in the most unique ways possible.

1) Compute

      Amazon Elastic Compute Cloud (EC2)
      Amazon Elastic MapReduce
      Auto Scaling

2) Content Delivery

      Amazon CloudFront

3) Database

      Amazon SimpleDB
      Amazon Relational Database Service (RDS)

4) E-Commerce

      Amazon Fulfillment Web Service (FWS)

5) Messaging

      Amazon Simple Queue Service (SQS)
      Amazon Simple Notification Service (SNS)

6) Monitoring


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     Amazon CloudWatch

7) Networking

     Amazon Virtual Private Cloud (VPC)
     Elastic Load Balancing




8) Payments & Billing

     Amazon Flexible Payments Service (FPS)
     Amazon DevPay

9) Storage

     Amazon Simple Storage Service (S3)
     Amazon Elastic Block Storage (EBS)
     AWS Import/Export

10) Support

     AWS Premium Support

11) Web Traffic

     Alexa Web Information Service
     Alexa Top Sites

12) Workforce


     Amazon Mechanical Turk




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1. COMPUTE


Amazon Elastic Compute Cloud (Amazon EC2)

Amazon Elastic Compute Cloud (Amazon EC2) is a web service that provides resizable
    compute capacity in the cloud. It is designed to make web-scale computing easier for
    developers.


    Amazon EC2’s simple web service interface allows you to obtain and configure
    capacity with minimal friction. It provides you with complete control of your
    computing resources and lets you run on Amazon’s proven computing environment.
    Amazon EC2 reduces the time required to obtain and boot new server instances to
    minutes, allowing you to quickly scale capacity, both up and down, as your
    computing requirements change. Amazon EC2 changes the economics of computing
    by allowing you to pay only for capacity that you actually use. Amazon EC2
    provides developers the tools to build failure resilient applications and isolate
    themselves from common failure scenarios.

Amazon EC2 Functionality
Amazon EC2 presents a true virtual computing environment, allowing you to use web
    service interfaces to launch instances with a variety of operating systems, load them



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    with your custom application environment, manage your network’s access
    permissions, and run your image using as many or few systems as you desire.

Amazon Elastic MapReduce
Amazon Elastic MapReduce is a web service that enables businesses, researchers, data
    analysts, and developers to easily and cost-effectively process vast amounts of data.
    It utilizes a hosted Hadoop framework running on the web-scale infrastructure of
    Amazon Elastic Compute Cloud (Amazon EC2) and Amazon Simple Storage
    Service (Amazon S3).


    Using Amazon Elastic MapReduce, you can instantly provision as much or as little
    capacity as you like to perform data-intensive tasks for applications such as web
    indexing, data mining, log file analysis, machine learning, financial analysis,
    scientific simulation, and bioinformatics research. Amazon Elastic MapReduce lets
    you focus on crunching or analyzing your data without having to worry about time-
    consuming set-up, management or tuning of Hadoop clusters or the compute
    capacity upon which they sit.

Amazon Elastic MapReduce Functionality

Amazon Elastic MapReduce automatically spins up a Hadoop implementation of the
    MapReduce framework on Amazon EC2 instances, sub-dividing the data in a job
    flow into smaller chunks so that they can be processed (the “map” function) in
    parallel, and eventually recombining the processed data into the final solution (the
    “reduce” function). Amazon S3 serves as the source for the data being analyzed, and
    as the output destination for the end results.

Auto Scaling

Auto Scaling allows you to automatically scale your Amazon EC2 capacity up or down
according to conditions you define. With Auto Scaling, you can ensure that the number of
Amazon EC2 instances you’re using scales up seamlessly during demand spikes to



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maintain performance, and scales down automatically during demand lulls to minimize
costs. Auto Scaling is particularly well suited for applications that experience hourly,
daily, or weekly variability in usage. Auto Scaling is enabled by Amazon CloudWatch
and available at no additional charge beyond Amazon CloudWatch fees.




2. CONTENT DELIVERY
Amazon CloudFront (beta)
Amazon CloudFront is a web service for content delivery. It integrates with other
Amazon Web Services to give developers and businesses an easy way to distribute
content to end users with low latency, high data transfer speeds, and no commitments.


Amazon CloudFront delivers your static and streaming content using a global network of
edge locations. Requests for your objects are automatically routed to the nearest edge
location, so content is delivered with the best possible performance. Amazon CloudFront
works seamlessly with Amazon Simple Storage Service (Amazon S3) which durably
stores the original, definitive versions of your files. Like other Amazon Web Services,
there are no contracts or monthly commitments for using Amazon CloudFront – you pay
only for as much or as little content as you actually deliver through the service.



Amazon CloudFront Functionality

Amazon CloudFront has a simple, web services interface that lets you get started in
minutes. In Amazon CloudFront, your objects are organized into distributions. A
distribution specifies the location of the original version of your objects. A distribution
has a unique CloudFront.net domain name (e.g. abc123.cloudfront.net) that you can use


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to reference your objects through the network of edge locations. If you wish, you can also
map your own domain name (e.g. images.example.com) to your distribution. You can
create distributions to either download your content using the HTTP or HTTPS protocols,
or stream your content using the RTMP protocol.




3. DATABASE
Amazon SimpleDB (beta)

Amazon SimpleDB is a highly available, scalable, and flexible non-relational data store
that offloads the work of database administration. Developers simply store and query data
items via web services requests, and Amazon SimpleDB does the rest.

Unbound by the strict requirements of a relational database, Amazon SimpleDB is
optimized to provide high availability, ease of scalability, and flexibility with little or no
administrative burden. Behind the scenes, Amazon SimpleDB creates and manages
multiple geographically distributed replicas of your data automatically to enable high
availability and data durability. The service responds to changes in traffic by charging
you only for the compute and storage resources actually consumed in serving your
requests. You can change your data model on the fly, and data is automatically indexed
for you. With Amazon SimpleDB, you can focus on application development without
worrying about infrastructure provisioning, high availability, software maintenance,
schema and index management, or performance tuning.



Amazon SimpleDB Functionality

Amazon SimpleDB provides a simple web services interface to create and store multiple
data sets, query your data easily, and return the results. Your data is automatically


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indexed, making it easy to quickly find the information that you need. There is no need to
pre-define a schema or change a schema if new data is added later. And scale-out is as
simple as creating new domains, rather than building out new servers.




Amazon Relational Database Service (Amazon RDS)
(beta)

Amazon Relational Database Service (Amazon RDS) is a web service that makes it easy
to set up, operate, and scale a relational database in the cloud. It provides cost-efficient
and resizable capacity while managing time-consuming database administration tasks,
freeing you up to focus on your applications and business.


Amazon RDS gives you access to the full capabilities of a familiar MySQL database.
This means the code, applications, and tools you already use today with your existing
MySQL databases work seamlessly with Amazon RDS. Amazon RDS automatically
patches the database software and backs up your database, storing the backups for a user-
defined retention period. You benefit from the flexibility of being able to scale the
compute resources or storage capacity associated with your relational database instance
via a single API call. In addition, Amazon RDS allows you to easily deploy your
database instance across multiple Availability Zones to achieve enhanced availability and
reliability for critical production deployments. As with all Amazon Web Services, there
are no up-front investments required, and you pay only for the resources you use.


Amazon RDS Functionality
Amazon RDS is designed for developers or businesses who require the full features and
capabilities of a relational database, or who wish to migrate existing applications and


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tools that utilize a relational database. It gives you access to the full capabilities of a
MySQL 5.1 database running on your own Amazon RDS database instance.




4. E-COMMERCE
Amazon Fulfillment Web Service (Amazon FWS)

Amazon Fulfillment Web Service (Amazon FWS) allows merchants to access
Amazon.com’s world-class fulfillment capabilities through a simple web services
interface. Merchants can programmatically send order information to Amazon with
instructions to physically fulfill customer orders on their behalf.

Registered merchants already use Fulfillment by Amazon to send inventory to Amazon’s
fulfillment centers, and when orders are placed (on Amazon.com or through other
merchant sales channels), Amazon will pick, pack and ship the products to the
merchant’s customers—anytime and to any place. FBA frees merchants from managing
the order fulfillment process while still maintaining control over their inventory. Amazon
FWS extends the benefits of FBA by allowing merchants to integrate FBA capabilities
directly into their own web sites or other sales channels. This enables merchants to
automatically store inventory in Amazon’s warehouses and ship orders to customers,
creating a nearly virtual business. There is no charge for using Amazon FWS; only fees
for the underlying FBA services apply.




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Amazon Fulfillment Web Service Functionality

With Amazon FWS, merchants can directly integrate with the FBA system, allowing
them to automatically process shipments to Amazon and then out to customers. This
functionality is contained in three key APIs: the inbound service, the outbound service,
and the inventory service.

Inbound Service

The inbound service allows merchants to create and send inbound shipments of inventory
to Amazon’s fulfillment centers.

        Create shipments of inventory to Amazon fulfillment centers- Our tools
make it easy for merchants to ship inventory to Amazon with everything from label
creation to packing slips. Merchants in the U.S. can also take advantage of Amazon’s
discounted UPS shipping rates.

Outbound Service

The outbound service allows merchants to use Amazon’s fulfillment processing for
orders sold on the merchant’s website or other non-Amazon channels.

        Submit fulfillment order/shipment requests- By integrating the outbound
service API into merchant software, customer orders are processed in real time,
informing Amazon what to ship and where to ship it.

        Track and manage shipment requests- After orders leave our fulfillment
centers, merchants can track shipments and keep their customers aware of arrival
times.

        Upload branding information- Merchants have the option of branding the
packing slips on Amazon.com boxes so their customers always know who they are
buying from.




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Inventory Service

The inventory service allows merchants to stay up to date on the status of inventory in
      Amazon’s fulfillment centers.


    Check Inventory Status- Merchants can discover when inventory items change
       status and get the current availability status to keep product listing information up
       to date.

5. MESSAGING
Amazon Simple Queue Service (Amazon SQS)
Amazon Simple Queue Service (Amazon SQS) offers a reliable, highly scalable, hosted
    queue for storing messages as they travel between computers. By using Amazon
    SQS, developers can simply move data between distributed components of their
    applications that perform different tasks, without losing messages or requiring each
    component to be always available. Amazon SQS makes it easy to build an automated
    workflow, working in close conjunction with the Amazon Elastic Compute Cloud
    (Amazon EC2) and the other AWS infrastructure web services.


    Amazon SQS works by exposing Amazon’s web-scale messaging infrastructure as a
    web service. Any computer on the Internet can add or read messages without any
    installed software or special firewall configurations. Components of applications
    using Amazon SQS can run independently, and do not need to be on the same
    network, developed with the same technologies, or running at the same time.

Amazon Simple Notification Service (Amazon SNS)
    (beta)
Amazon Simple Notification Service (Amazon SNS) is a web service that makes it easy
to set up, operate, and send notifications from the cloud. It provides developers with a
highly scalable, flexible, and cost-effective capability to publish messages from an



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application and immediately deliver them to subscribers or other applications. It is
designed to make web-scale computing easier for developers.


Amazon SNS provides a simple web services interface that can be used to create topics
you want to notify applications (or people) about, subscribe clients to these topics,
publish messages, and have these messages delivered over clients’ protocol of choice (i.e.
HTTP, email, etc.). Amazon SNS delivers notifications to clients using a “push”
mechanism that eliminates the need to periodically check or “poll” for new information
and updates. Amazon SNS can be leveraged to build highly reliable, event-driven
workflows and messaging applications without the need for complex middleware and
application management. The potential uses for Amazon SNS include monitoring
applications, workflow systems, time-sensitive information updates, mobile applications,
and many others. As with all Amazon Web Services, there are no up-front investments
required, and you pay only for the resources you use.



Amazon SNS Functionality

Amazon SNS is designed for developers and businesses that have event-driven needs
within their applications and require a flexible, reliable, cost-effective messaging solution
that can scale seamlessly. Amazon SNS can be highly customized by developers to meet
a wide range of application needs.




6. MONITORING
Amazon CloudWatch
Amazon CloudWatch is a web service that provides monitoring for AWS cloud
resources, starting with Amazon EC2. It provides customers with visibility into resource
utilization, operational performance, and overall demand patterns—including metrics
such as CPU utilization, disk reads and writes, and network traffic. To use Amazon



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CloudWatch, simply select the Amazon EC2 instances that you’d like to monitor; within
minutes, Amazon CloudWatch will begin aggregating and storing monitoring data that
can be accessed using the AWS Management Console, web service APIs or Command
Line Tools.




7. NETWORKING
Amazon Virtual Private Cloud (Amazon VPC) (beta)

Amazon Virtual Private Cloud (Amazon VPC) is a secure and seamless bridge between a
company’s existing IT infrastructure and the AWS cloud. Amazon VPC enables
enterprises to connect their existing infrastructure to a set of isolated AWS compute
resources via a Virtual Private Network (VPN) connection, and to extend their existing
management capabilities such as security services, firewalls, and intrusion detection
systems to include their AWS resources. Amazon VPC integrates today with Amazon
EC2, and will integrate with other AWS services in the future. As with all Amazon Web
Services, there are no long-term contracts, minimum spend or up-front investments
required. With Amazon VPC, you pay only for the resources you use.




Amazon VPC Functionality

     Amazon VPC enables you to use your own isolated resources within the AWS
       cloud, and then connect those resources directly to your own datacenter using
       industry-standard encrypted IPsec VPN connections. With Amazon VPC, you
       can:
      Create a Virtual Private Cloud on AWS’s scalable infrastructure, and specify
its private IP address range from any block you choose.




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       Divide your VPC’s private IP address range into one or more subnets in a
manner convenient for managing applications and services you run in your VPC.

       Bridge together your VPC and your IT infrastructure via an encrypted VPN
connection.

       Add AWS resources, such as Amazon EC2 instances, to your VPC.

       Route traffic between your VPC and the Internet over the VPN connection so
that it can be examined by your existing security and networking assets before heading
to the public Internet.

       Extend your existing security and management policies within your IT
infrastructure to your VPC as if they were running within your infrastructure.




Elastic Load Balancing

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Elastic Load Balancing automatically distributes incoming application traffic across
multiple Amazon EC2 instances. It enables you to achieve even greater fault tolerance in
your applications, seamlessly providing the amount of load balancing capacity needed in
response to incoming application traffic. Elastic Load Balancing detects unhealthy
instances within a pool and automatically reroutes traffic to healthy instances until the
unhealthy instances have been restored. Customers can enable Elastic Load Balancing
within a single Availability Zone or across multiple zones for even more consistent
application performance.




8. PAYMENTS & BILLING
Amazon Flexible Payments Service (Amazon FPS)
Amazon Flexible Payments ServiceTM (Amazon FPS) is the first payments service
    designed from the ground up for developers. It is built on top of Amazon’s reliable
    and scalable payments infrastructure and provides developers with a convenient way
    to charge Amazon’s tens of millions of customers (with their permission, of course!).
    Amazon customers can pay using the same login credentials, shipping address and
    payment information they already have on file with Amazon.


    With Amazon FPS, developers can accept payments on their website for selling
    goods or services, raise donations, execute recurring payments, and send payments.


    Amazon FPS offers developers unmatched flexibility in how they can structure
    payment instructions, including standing instructions that can remain in place for
    multiple transactions. These instructions impose conditions and constraints on money
    movements and can be set by both senders and receivers of funds. For example, a
    sender might set a spending limit per week for a particular named recipient. Only
    that named recipient would be able to withdraw funds and only up to an amount per
    week equal to the spending limit.



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    Amazon FPS offers easy-to-integrate, lightweight APIs that are categorized by use
    cases into interoperable packages called Quick Starts. With enhanced documentation,
    SDKs and sample code, it will now be faster and more convenient to enable
    payments on your application.

Amazon FPS Functionality

With Amazon FPS, you can build innovative payment applications with a new level of
    flexibility in how you execute payments. Amazon FPS supports the processing of
    payments using credit cards, bank accounts and Amazon Payments account balances
    to send or receive money.

Amazon DevPay
Amazon DevPay is a simple-to-use online billing and account management service that
makes it easy for businesses to sell applications that are built in, or run on top of,
Amazon Web Services. It is designed to make running applications in the cloud and on
demand easier for developers.


Amazon DevPay removes the pain of having to create or manage your own order pipeline
or billing system, which is traditionally a challenge for online subscription services or
applications running on demand. It allows you to quickly sign up customers,
automatically meter their usage of AWS services, have Amazon bill them based on the
prices you set, and collect payments. Amazon DevPay provides a simple web interface
for pricing your application based on any combination of up-front, recurring and usage-
based fees. It uses Amazon Payments to process payments from your customers, and lets
you leverage Amazon’s trusted billing infrastructure, making it easy for tens of millions
of Amazon customers to pay for your application using their existing Amazon accounts.


Amazon DevPay Functionality




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Amazon DevPay allows you to use Amazon’s infrastructure to manage customer
subscriptions and billing for your Amazon EC2 Machine Images (AMIs) or applications
that use Amazon S3.

9. STORAGE
Amazon Simple Storage Service (Amazon S3)
Amazon S3 is storage for the Internet. It is designed to make web-scale computing easier
    for developers.


    Amazon S3 provides a simple web services interface that can be used to store and
    retrieve any amount of data, at any time, from anywhere on the web. It gives any
    developer access to the same highly scalable, reliable, secure, fast, inexpensive
    infrastructure that Amazon uses to run its own global network of web sites. The
    service aims to maximize benefits of scale and to pass those benefits on to
    developers.

Amazon Elastic Block Store (EBS)

Amazon Elastic Block Store (EBS) provides block level storage volumes for use with
Amazon EC2 instances. Amazon EBS volumes are off-instance storage that persists
independently from the life of an instance. Amazon Elastic Block Store provides highly
available, highly reliable storage volumes that can be attached to a running Amazon EC2
instance and exposed as a device within the instance. Amazon EBS is particularly suited
for applications that require a database, file system, or access to raw block level storage.


AWS Import/Export

AWS Import/Export accelerates moving large amounts of data into and out of AWS
using portable storage devices for transport. AWS transfers your data directly onto and
off of storage devices using Amazon’s high-speed internal network and bypassing the




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Internet. For significant data sets, AWS Import/Export is often faster than Internet
transfer and more cost effective than upgrading your connectivity.

AWS Import/Export supports importing and exporting data into and out of Amazon S3
buckets in the US Standard and EU (Ireland) Regions. To start using this service, click on
the “Sign Up for AWS Import/Export” button.




10. SUPPORT
AWS Premium Support
AWS Premium Support is a one-on-one, fast-response support channel to help you build
and run applications on AWS Infrastructure Services. It offers technical assistance from
the Amazon Web Services team whenever and as frequently as your business demands.
With pay-by-the-month pricing and an unlimited number of support cases, you are not
constrained by long-term support contracts or limited support privileges. AWS Premium
Support covers issues related to your use of Amazon Simple Storage Service (Amazon
S3), Amazon CloudFront, Amazon Elastic Compute Cloud (Amazon EC2), Amazon
Virtual Private Cloud (Amazon VPC), Amazon Simple Queue Service (Amazon SQS),
Amazon Simple Notification Service (Amazon SNS), Amazon SimpleDB, Amazon
Relational Database Service (Amazon RDS), Amazon Elastic MapReduce, AWS
Import/Export, and Amazon Linux AMIs. Whether you are experiencing operational
issues or have technical questions during development, test or integration, you can
contact our team of AWS developer support engineers and count on predictable response
times and personalized support to help bring your issues to resolution.




11. WEB TRAFFIC
Alexa Web Information Service


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The Alexa Web Information Service makes Alexa’s vast repository of information about
    the traffic and structure of the web available to developers.

Alexa Top Sites

The Alexa Top Sites web service provides access to lists of web sites ordered by Alexa
Traffic Rank. Using the web service developers can understand traffic rankings from the
largest to the smallest sites. The service enables users to page through the list 100 web
sites at a time, and by making multiple requests, to retrieve lists of any size – be it the top
1,000, 5,000, or 100,000 web sites.

In addition to Alexa Traffic Rank, the information returned for each web site includes the
number of page views the site receives per million users, the average page views per user,
and the number of Alexa users visiting the site.




12. WORK FORCE
Amazon Mechanical Turk (beta)

Amazon Mechanical Turk is a marketplace for work that requires human intelligence.
The Mechanical Turk web service enables companies to programmatically access this
marketplace and a diverse, on-demand workforce. Developers can leverage this service to
build human intelligence directly into their applications.

While computing technology continues to improve, there are still many things that human
beings can do much more effectively than computers, such as identifying objects in a
photo or video, performing data de-duplication, transcribing audio recordings or
researching data details. Traditionally, tasks like this have been accomplished by hiring a
large temporary workforce (which is time consuming, expensive and difficult to scale) or
have gone undone.




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Mechanical Turk aims to make accessing human intelligence simple, scalable, and cost-
    effective. Businesses or developers needing tasks done (called Human Intelligence
    Tasks or “HITs”) can use the robust Mechanical Turk APIs to access thousands of
    high quality, low cost, global, on-demand workers—and then programmatically
    integrate the results of that work directly into their business processes and systems.
    Mechanical Turk enables developers and businesses to achieve their goals more
    quickly and at a lower cost than was previously possible.


Amazon Mechanical Turk Functionality

Mechanical Turk offers access to a virtual community of workers that are available to
help you accomplish your business goals. A robust set of APIs and command line tools
enable you to programmatically distribute tasks that require human intelligence to a
widely distributed, on-demand workforce.




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                    Amazon's
                          newer
          business model




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Amazon.com announced an expansion of its Elastic Compute Cloud (EC2) service. The
still-in-beta EC2 is a twist on the much-discussed, if rarely seen in the wild, compute
utility whereby customers rent computing by virtual machine (VM)-hour; Amazon's EC2
infrastructure is based on a Xen hypervisor structure rather than running directly on
physical hardware.

One implication of Amazon using VMs is that they can easily offer a variety of different
VM sizes up to the size of the physical hardware. That was the most recent change
announced. In addition to the default "Small Instance," users can now get "Large
Instances" or "Extra Large Instances." These might be useful if, for example, you need to
pair a heavyweight database instance with some lightweight Web services.

Another implication is that VM images, called Amazon Machine Images (AMI) in this
case, can be archived and transported. This is analogous to VMware's virtual appliances.
Amazon itself hasn't done much to jump-start an image marketplace at this point as
VMware has. However, it does provide a mechanism for customers to post and publicly
share AMIs and sees the opportunity for people to offer paid AMIs over time.

I bring this up because Emre Sokullo over at Read/Write Web has a post and table that
does a great job of crystallizing why getting into Web services is such a big deal for
Amazon. In short, Amazon's revenue is comparable to Google's. The difference is that,
while Google is operating at a 29 percent profit margin, Amazon is under 2 percent,
which is probably about the best one can hope for with a big "mail order" retail operation.




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Some may be wondering why Amazon is de-focusing and entering into something that is
far from its DNA as an e-commerce service. To respond to that question, take a look at
the table below, which compares some financial data of Internet bigcos:




           Net Profit Margin      2006 Annual Revenue          Market Capitalization
Company
       (%)                        ($M)                         ($B)
Google 29.02                      10,604.92                    210
eBay   18.86                      5,969.74                     50
Yahoo  9.96                       6,425.68                     45
Amazon 1.77                       10,711.00                    37



"Web services" can be described as Amazon's offering, in part because Amazon also has a
    variety of pricing and other e-commerce products that fit more squarely into the
    "services" camp. However, another way to describe it is Hardware as a Service
    (HaaS),

Web Services have started to evolve into a H+SaaS [Hardware + Software as a Service]
model where bundled solutions will be offered rather than just empty-shell machines.
There's a business opportunity here for software companies to package and license their
applications in the H+SaaS model, and charge on a per-user/per-domain basis.

Yhis has already been seen to a degree with Amazon's complementary S3 Storage as a
Service model. For example, Jungle Disk offers data backup using Amazon's S3 as the
backend.

So, in general, there's little question that more and more storage and computing will
    move out into the cloud over time. The question--especially, one of them anyway--is
    where the economic scale points lie. In other words, will most software vendors find


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                                 Amazon.com, Inc. – An Icon in the E-Business Arena


   that it makes sense for them to deliver their own software as a service on their own
   hardware (i.e., the Salesforce.com model), or will they effectively subcontract out the
   datacenter infrastructure stuff to the likes of Amazon?




                      What makes
             Amazon.com, inc.
                         so Special?

  A Concise Conclusion of the entire Amazon.com, Inc.’s fabulous impact as an E-
   Business Venture and an Inspiring Success Story for all E-Business based firms
                                  around this world.
                                                                      -By Anu Ashokan




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                                  Amazon.com, Inc. – An Icon in the E-Business Arena




  "Amazon.com strives to be the e-commerce destination where consumers can find
                   and discover anything they want to buy online."
                         – Jeff Bezos, Founder of Amazon.com




Breaking the Rules


Amazon.com is a company that is closely tied with the e-commerce phenomenon. Jeff
Bezos, the founder of the company, broke the rules of the book business by using the
Internet rather than conventional distribution channels.
Based in Seattle, USA, the company has grown from a book seller to a virtual Wall Mart
of the Web selling products as diverse as music CDs, software, office products,
electronics, toys, games, cookware, hardware, food, and health products. The company
has also grown at a tremendous rate with revenue rising from about US$150 million in
1997 to US$5.2 billion in 2003.



Entrepreneurial Spirit of Jeff Bezos


Amazon.com was founded by Jeff Bezos, a computer science and electrical engineering
graduate from Princeton University. Bezos had moved to Seattle after resigning as a
Senior Vice-President at D.E.Shaw, a Wall Street investment bank. He didn’t know
much about the Internet. But he came across a statistic that the Internet was growing at




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                                   Amazon.com, Inc. – An Icon in the E-Business Arena


2300%, which convinced him that it was a large growth opportunity. Not knowing much
more, he plunged into the world of e-commerce with no prior retailing experience.
He chose to locate the company in Seattle because it had a large pool of technical talent
and since it was close to one of the largest book wholesalers located in Rosenburg,
Oregon. He was thinking of the company as a bookseller at the beginning. Moreover,
the sales tax laws for online retailers state that one has to charge sales tax in the state in
which one is incorporated. Therefore it was logical to locate in a small state.
The company was started in a garage. Initial business meetings were conducted at a
local Barnes and Noble store. Bezos picked the name Amazon for his company because
it started with the letter A, signified something big, and it was easy to spell.
The company went online in July 1995. In May 1997, Amazon.com went public.



Sources of Competitive Advantage


Maintaining and improving operational efficiencies is the key to sustainable competitive
advantage of Amazon.com. The ability to offer shopping convenience, ease of purchase,
speed, decision-enabling information, a wide selection, discounted pricing, and
reliability of order fulfillment are all tied directly to the company's logistical
competencies.
By purchasing large volumes of products directly from publishers the company offers a
wide selection to customers and receives great discounts from suppliers.
Amazon.com aims to ship 95% of products on the day they are ordered. Direct model
enables Amazon.com to shorten shipping times. The company invested also heavily in
warehousing and material handling systems to achieve multifold improvement in
throughput.




Building Brand Equity


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                                   Amazon.com, Inc. – An Icon in the E-Business Arena




 Amazon.com has steadily increased its spending on advertising and promotion to make
 its brand stronger and build brand equity. By 2003, the brand of Amazon.com was worth
 US$ 22 billion. "A brand for a company is like a reputation for a person. You earn
 reputation by trying to do hard things well," says Jeff Bezos, the founder of
 Amazon.com and a great entrepreneur.



 Value Added Information Services


 Amazon.com works hard to achieve value-added differentiation through customer-
 focused information services. Amazon.com's site retains customer preferences and
 provides automated customization for users.
 Jeff Bezos has a vivid vision for how this technology will be used: "Personalization is
 like retreating to the time when you have small-town merchants who got to know you,
 and they could help get the right products. The right products can improve your life, and
 the wrong products detract from it. Before the era of mass merchandizing, it used to be
 that most things were personalized. The purpose of ... customization is ... you get the
 economies of mass merchandising and the individuality of 100-years-ago
 merchandising."
Amazon.com's market success depends on its ability to maintain and grow its customer
base by knowing and serving its customers better than its competitors and providing a
higher level of value-added differentiation in customer service. Due to high level of
customer satisfaction, repeat customers account for approximately 60% of Amazon.com's
orders.




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                                  Amazon.com, Inc. – An Icon in the E-Business Arena




                                  NOTE

All the information and inferences drawn in this assignment was possible due to the
huge pool of data collected from the Internet and several Business Articles. Also,
extensive information study and data screening, along with a personal view of the
subject of the entire study was included in order to draw a concise sketch of the
entire matter-at-hand in brief.




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                             Amazon.com, Inc. – An Icon in the E-Business Arena




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