Creating the Global Shopping Mall: The Case of Amazon

Abstract

While Amazon managed to bring the shopping mall at one’s doorstep and currently seeks to bring the Internet of Things in one’s home, the company began much more humbly in 1995, by selling books. However, it was the first company in its industry to truly harness the power of the internet. At that time, the landscape of book retail entailed two main types of competitors: on the one hand, small market players such as independent bookstores located in city centers, neighborhoods and at focal points of mass transportation. On the other hand, large corporate groups were the ones dominating the market: bookstore chains such as Barnes and Noble and Borders, each with about a quarter market share in the U.S., together with walk-in chain stores such as Walmart. The market found itself in a phase of predatory competition, in which corporate groups drove out small, owner-managed bookshops. However, this fragmented group of booksellers had one thing in common—the absence of online book sales. There were only some minor exceptions: a small number of authors had own websites, where readers could order new publications. Amazon therefore faced no significant rivalry at the time of its launch—at least, not online. This fortunate outset helped the company to evolve from an online bookseller into an “everything store”. Moreover, it led to Amazon becoming the pioneer of online mass retail.