How Amazon Took Over

Some revolutions begin loudly and bloodily. Others start quietly and politely. When Jeff Bezos quit his job at a Wall Street hedge fund to start selling books online from his Bellevue, Washington, garage in 1994, no one other than perhaps Bezos himself could envision that he would change the world.

The internet was still in its infancy, and only about 2 percent of Americans were online. Shopping usually meant walking or driving to a store or the local mall. But Bezos had a different idea: What if you had a huge warehouse full of stuff and sold it to tons of people across the country without opening a physical store anywhere? He called his company Amazon, after the massive South American river—the only hint of the scale of what he had in mind.

Thirty years later—Amazon.com recently celebrated an anniversary—his company has transformed the way Americans and people around the globe buy things.

“Amazon has radically changed the shopping experience,” says Barbara Kahn, a professor at the Wharton School of Business in Philadelphia. “They are responsible for the total acceptance these days of online shopping.”

Some revolutions begin loudly and bloodily. Others start quietly and politely. In 1994, Jeff Bezos quit his job at a Wall Street hedge fund to start selling books online from his Bellevue, Washington, garage. No one other than perhaps Bezos himself could envision that he would change the world.

In 1994 the internet was still in its infancy. Only about 2 percent of Americans were online. Shopping usually meant walking or driving to a store or the local mall. But Bezos had a different idea. What if you had a huge warehouse full of stuff and sold it to lots of people across the country? What if you did it  without opening a physical store anywhere? He called his company Amazon, after the massive South American river. The name was the only hint of the scale of what he had in mind.

Thirty years later, his company has transformed the way Americans and people around the globe buy things.

“Amazon has radically changed the shopping experience,” says Barbara Kahn, a professor at the Wharton School of Business in Philadelphia. “They are responsible for the total acceptance these days of online shopping.”

For many young people today, it’s hard to imagine shopping without scrolling and clicking.

“Online shopping tends to be easier a lot of the time because everything’s just a click away,” says Lexi Cohen, a 10th-grader at Andover High School in Andover, Massachusetts. “It’s superefficient. You just go on your phone, search for whatever you want, and you can do it from anywhere.”

These days, about 20 percent of all retail sales happen online. The younger the customer is, the more likely they are to shop online. Globally, people are expected to spend more than $6.3 trillion buying products online in 2024, according to eMarketer, a company that tracks retail trends.

Amazon is the company that’s led this online shopping revolution. Though it started as a bookseller, Bezos’s vision of it as “the everything store” has come to pass. For many of us, whether we’re in the market for a soccer ball or shampoo or a flat screen TV, Amazon is often the first place that we look.

Today, especially for  young people, it’s hard to imagine shopping without scrolling and clicking.

“Online shopping tends to be easier a lot of the time because everything’s just a click away,” says Lexi Cohen, a 10th-grader at Andover High School in Andover, Massachusetts. “It’s superefficient. You just go on your phone, search for whatever you want, and you can do it from anywhere.”

Now about 20 percent of all retail sales happen online. The younger the customer is, the more likely they are to shop online. Globally, people are expected to spend more than $6.3 trillion buying products online in 2024, according to eMarketer, a company that tracks retail trends.

Amazon is the company that’s led this online shopping revolution. Though it started as a bookseller, Bezos’s vision of it as “the everything store” has come true. For many of us, Amazon is often the first place that we look, whether we want to buy a soccer ball or shampoo or a flat screen TV.

In 2021, Amazon surpassed Walmart to become the world’s largest retail seller outside of China. In 2023, it sold more than $575 billion worth of goods. In the U.S., Amazon captures almost 38 percent of all online sales. Walmart, its closest competitor, only accounts for around 6 percent, according to Statista. Amazon’s success has turned Bezos, its founder, into one of the world’s richest men. His net worth is upward of $200 billion.

Amazon has become so influential that its critics think it’s grown too big. In 2023, the U.S. government sued the company. The government accused Amazon of stifling fair competition online and essentially being a monopoly.

“Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform,” says Lina Khan, chair of the Federal Trade Commission when it filed the lawsuit in coordination with 17 states. The lawsuit seeks to “restore the lost promise of free and fair competition” to the online marketplace, she says.

Amazon denies any wrongdoing. The case is scheduled to go to trial next year.

Online shopping remains a fraction of all retail sales in the U.S., but it’s growing much faster than in-person sales. A big part of e-commerce’s appeal is the convenience. It is also easy to comparison shop quickly, says Praveen Kopalle, a marketing professor at Dartmouth’s Tuck School of Business in Hanover, New Hampshire.

“When you walk into a store,” Kopalle says, “you’re locked into the prices you see, but online you can compare prices and go for the best value.”

Online shopping is just the latest in a long history of innovations in how we buy things (see timeline slideshow, below). The technology has changed since the days when Sears and Roebuck began sending its huge catalogs all over the country in the late 19th century. But the basic needs of the customer have remained much the same.

“The convenience factor is also what made catalog shopping so successful in its day,” says Kopalle. “From your home, you could go through all these glossy pages and then pick up the phone and place an order.”

Over the years, Amazon has added features to attract more customers. Other online retailers have followed. In 1995, Amazon pioneered the practice of letting customers leave reviews of its books on the site. The practice was controversial at the time. Many publishers demanded that Amazon take down negative reviews. The company refused.

Today reviews and rating systems are an important part of online shopping. Instead of talking to a single salesperson in a store, shoppers can read hundreds or thousands of opinions from other customers.

Another key innovation at Amazon was the introduction in 2005 of Prime. Prime is a service through which customers could pay a flat annual fee for unlimited two-day delivery services. It took a few years for the service to become popular. Once it did, it had a huge impact. Suddenly, it made sense to shop for just about anything online since you didn’t have to pay for shipping.

Today Prime guarantees free overnight delivery for many products depending on where a customer lives. More than 180 million people subscribe in the U.S. alone. The subscription service generates more than $40 billion a year for Amazon.

Amazon spent its early years losing money. But Bezos was not bothered and continued investing in the company’s growth. It wasn’t until 2003 that Amazon turned a profit. But that early patience paid off. Today Amazon is one of the nation’s most valuable companies. Its estimated worth is upward of $2 trillion. It has branched out into everything from cloud computing to TV and film production and artificial intelligence (see “Amazon’s World,” below).

With Amazon’s success, however, has come growing criticisms of its business practices. This includes the treatment of its 1.5 million workers. The huge surge in online ordering during the pandemic—and promises of ever-faster delivery—put a spotlight on the stressful working conditions of the people who work in Amazon warehouses around the country.

In 2022, Amazon workers at a fulfillment center in Staten Island, in New York City, voted to unionize. Their priority was to negotiate for better pay and safer working conditions. So far, Amazon has refused to recognize the union. In 2024, the Amazon Labor Union (A.L.U.) joined forces with the Teamsters, one of the nation’s largest unions. Together, they’ve been working to get Amazon to recognize its unionized workers and begin bargaining.

“This is a prime example of the power people have when they come together,” says Christian Smalls, who spearheaded the union drive at the Staten Island warehouse.

Workers at Amazon facilities in Alabama and Albany, New York, have unsuccessfully tried to unionize. Amazon has said that it opposes the unions because “we believe having a direct relationship with the company is best for our employees.”

The rise of online shopping has come with serious costs. In the past decade, Sears, Toys “R” Us, and several other big retailers have closed their physical stores. In 2024, more than 7,100 brick-and-mortar stores closed in the US, according to CoreSight, a company that tracks retail data. Many Main Streets and malls now have a growing number of empty storefronts.

Some people also worry about e-commerce’s environmental impact. The data centers use vast amounts of energy to process orders. Millions of trees have to be cut down to make all of those boxes. Furthermore, the ease of online shopping tempts people to buy more and trash more.

But others say e-commerce can have positive effects. For example, a single truck delivering online orders to many homes can have a smaller carbon footprint than a bunch of shoppers individually driving to different stores, logistics experts say. And online sellers have been trying to make online shopping more climate-friendly. They have switched to electric delivery vehicles.

The rise of online shopping has also changed how we interact with each other. Alexandra Lange, author of Meet Me by the Fountain: An Inside History of the Mall, worries about the social effects of online shopping.

“I think shopping with your friends is really important, and I think that’s a loss with online shopping,” she says. “Going to a mall where there are lots of different kinds of shops is one way teens and tweens explore their identities because they can try on different things with friends in a nonjudgmental way.”

E-commerce is expected to continue growing. Still, experts predict that online shopping won’t entirely replace in-person shopping, which still represents about 80 percent of retail sales in the U.S., according to Statista. The social aspect of shopping is a big part of why Lange and other experts expect in-person stores to stick around.

“Shopping isn’t just about buying something new,” Lange says. “It’s about all the things you do around the shopping experience and who you’re having that experience with.”

The rise of online shopping has also changed how we interact with each other. Alexandra Lange, author of Meet Me by the Fountain: An Inside History of the Mall, worries about the social effects of online shopping.

“I think shopping with your friends is really important, and I think that’s a loss with online shopping,” she says. “Going to a mall where there are lots of different kinds of shops is one way teens and tweens explore their identities because they can try on different things with friends in a nonjudgmental way.”

E-commerce is expected to continue growing. Still, experts predict that online shopping won’t entirely replace in-person shopping. It still accounts for about 80 percent of retail sales in the U.S., according to Statista. The social aspect of shopping is a big part of why Lange and other experts expect in-person stores to stick around.

“Shopping isn’t just about buying something new,” Lange says. “It’s about all the things you do around the shopping experience and who you’re having that experience with.”