Amazon in America
Amazon, a diversified retailer going online in 1995 to become the earth's biggest online bookstore, now covers a range of products from computer software to toys, downloads, products and services such as self publishing, online advertising, and devices including Amazon's own portable e-reader, the Kindle. By May 2011, Kindle was outselling hardcover and paperbacks combined. While Amazon deals primarily with third party products, Amazon exclusives can be procured only through Amazon. Headquartered in Seattle, Washington, Amazon launched its own brand Pinzon in 2005. Significantly, though it started with a 'slow' growth business plan, unlike other online enterprises, it survived the dot com bubble burst and went on to register profits in the last quarter of 2001.
Amazon has faced various controversies from inception, prominent being the evasion of payment of sales tax, with sales tax garnered from only five of the 45 states. Critics feel Amazon utilizes unfair advantage as it manipulates the tax laws in those states where it has distribution centers and wholly owned subsidiaries. Legislation in May 2011, labeled the Main Street Fairness Act and its derivatives, though introduced to ameliorate the situation, led to no worthwhile solution. Amazon, on its part, continues political lobbying, spending a staggering $214,000 in the election cycle of 2010, double that of what it spent in 2008.Then there was the issue of the Kindle content removal without prior notification or permission. Amazon also earned ire for discontinuing the hosting of Wiki Leaks. Though it was suspected that authoritarian pressure had pushed the online giant to this move, Amazon attributed it to violation of its terms of service.
Amazon has to fend off competition from an intimidating roster of competitors, such as Barnes & Noble, eBay and Wal-Mart. To fight this, it plans to sell in the third quarter, a 9 inch iPad made with its own Android based tablets, thereby positioning it as a potential big player in the tablets market, its massive distribution vehicle factoring in lower prices with no middleman involved. Apple has already sued Amazon over the flimsy issue of the "app store!". Amazon also intends to build expensive infrastructure, sacrificing short-term profits. Accordingly, revenues soared in the first quarter of this year but profits tumbled as more money went into new services and expansion.
In July, it proposed an ambitious agenda of rewriting tax policy for the Internet era, eliminating virtual sales tax, arguing that it hurts investment and job growth, raising the hackles of such retailers as Wal Mart and Target. However, to keep its reputation intact, would it also not be advisable for Amazon to make determined efforts to steer clear of controversies instead of employing post debacle fire fighting measures?