Deep Dive: The Amazon Invasion—A Timeline of the E-Commerce Giant’s Global Conquest

Executive Summary

In this report, we analyze Amazon’s offering, global expansion and the routes it has chosen to the markets it operates in. Although it is primarily known for its e-commerce platform, Amazon’s businesses encompass a wide range of product types, service offerings and delivery channels. We provide timelines of significant corporate announcements and developments for each country in which the company operates.

Amazon has an e-commerce presence in 15 countries (as Amazon in 14 and as Souq.com in the UAE) currently, and while it entered many of these markets by launching a new website for that particular country, in many it chose to acquire existing, local websites and rebrand them under its own name. Amazon’s cloud technology services, called Amazon Web Services (AWS), are available in over 20 countries.

Amazon’s e-commerce platform may be present in fewer countries than those in which it provides its other services, but e-commerce contributes the lion’s share of its revenues. In 2016, Amazon reported $135.9 billion in global revenues, of which 72% was from the sales of electronics and general merchandise, including related shipping fees and seller fees. Media and digital content sales constituted 18% of total revenues, while AWS accounted for 9% and other services accounted for 1%.

In its early years, Amazon chose developed economies in which to launch its online book store and e-commerce platform. The US is its largest market, accounting for 67% of 2016 revenues, followed by Germany at 10%, Japan at 8% and the UK at 7%. The rest of the markets in which it operates account for just 8% of its total revenues.

Currently, Amazon operates under its own name in four emerging markets: China, India, Brazil and Mexico. It operates in the UAE under the name of Souq.com, a company that it recently acquired.

Introduction

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” This was the statement by Amazon CEO, Jeff Bezos, in the company’s 2016 letter to its shareholders. As dramatic as it may sound, it is this aggressive philosophy which considers every day as “Day 1” that has contributed to Amazon’s rise to becoming a global retail leader.

In this report, we analyze the company’s offering, global expansion and the routes it has chosen to the markets it operates in. While it is primarily known for its e-commerce platform, Amazon’s businesses encompass a wide range of product types, service offerings and delivery channels.

A Brief History of Amazon’s Product and Service Offerings

We offer Amazon timelines by country later in this report. Here, we run through some key developments.

1995—Amazon Goes Live

Amazon.com went live in 1995 when it sold its first book online. The company has come a long way since then. Its products and service offerings are numerous and diverse, and are often multi-layered in terms of their delivery channels.

One example is Amazon’s Kindle store, which sells physical, audio and electronic books, e-readers and accessories. It also sells tablets and TV sticks that enable media streaming under the brand “Fire,” and speakers with digital assistance under the brand “Echo.” These devices tend to be accompanied by multiple deliverables, such as software upgrades and cloud storage services, which are monetized separately. Amazon also creates its own digital media content, which it sells through the Kindle store and through its membership program called Prime, which came much later.

2000—Launches Marketplace

In 2000, Amazon launched its marketplace platform, which allows third-party sellers—including established brands, small and medium-sized businesses, and individuals—to set up digital storefronts on its site. Amazon charges various fees to sellers and provides marketing tools and logistics services to enable them to sell.

Amazon’s customer base is chiefly online and spans the globe, so its operations understandably entail a complex and sophisticated technological infrastructure.

2002—Launches AWS

Amazon Web Services (AWS) was first launched in 2002 to “expose technology and product data from Amazon and its affiliates, enabling developers to build innovative and entrepreneurial applications on their own.” After engineers at Amazon put forth a paper detailing a standardized and automated retail services infrastructure for the business, as well as a means to sell access to virtual services and storage as new revenue streams, AWS evolved into an independent service offering. In 2006, it was relaunched in the form of a suite of digital services including computing, storage and database solutions.

2005—Introduces Prime Membership

Over its initial 10 years of operations, the company saw tremendous success. To push its offer further, it introduced the Prime membership program in 2005. The program provides various shipping benefits to shoppers, such as same-day and next-day delivery. At first, Prime was available solely to US customers, but has since expanded across the world. The program has also added several layers to its offering, such as Prime Now, Prime Video and Prime Music, giving members added benefits and exclusive access to its video and music content.

Innovations from Amazon

Amazon has built new tools that enable efficiency and provide more opportunities or touchpoints to reach its customers. Some of these are:

• Echo devices with AI assistant Alexa: Amazon introduced a range of speakers under the name Echo in 2014. These speakers allow users to shop by voice commands as they house an artificial intelligence (AI)-powered digital assistant called Alexa.
• Dash Buttons: Introduced in 2015, Dash buttons allow “one-click” ordering of regular household staples such as laundry detergent and dog food.
• Prime Air: Amazon is currently working on a drone delivery system that will allow deliveries in 30 minutes or less using unmanned aerial vehicles.
• Amazon Go: Amazon is currently testing a new staffless convenience store concept that allows automatic checkout. Shoppers can pick up products at the store simply by using the retailer’s app.

Although Amazon has diverse revenue streams, it has not always offered everything in all the regions in which it is operates. In fact, it offers Prime Video in over 200 countries and AWS across several regions globally, but its e-commerce sites are still only available in a few countries, 15 to date.

Amazon’s e-commerce platform may be present in only a limited number of countries, but it continues to account for the lion’s share of revenues. In 2016, the company reported $135.9 billion in global revenues, of which:

• Fully 72% was from the sales of electronics and general merchandise, and related shipping fees and seller fees.
• Some 18% was from media or digital content sales.
• Only 9% was from AWS.
• Other services accounted for 1%.

Amazon’s E-Commerce Presence

Amazon has an established presence across North America and Europe, and has been expanding across the Asia-Pacific region more recently. Below, we provide key data on Internet use and online shopping in its markets.

In its early years, Amazon chose developed economies in which to launch its online book store and full e-commerce platform. Understandably, its market share of e-commerce is higher in such countries, most likely attributed to its early launch in these countries, which have a higher disposable income per capita and were early adopters of Internet shopping compared to the emerging markets.

The US is Amazon’s largest market, accounting for 67% of its 2016 revenues, followed by Germany, Japan and the UK, in order of importance. The remaining markets it operates in account for just 8% of total revenues. These geographical splits include any sales made to other countries—for example, sales from Amazon’s UK site to Sweden would be included under UK sales.

Currently, Amazon operates under its own name in four emerging markets: China, India, Brazil and Mexico. It operates in the UAS under the name of Souq.com, a company that it recently acquired.

Amazon in the US

Amazon was incorporated in 1994 in the US. It floated on the stock market in 1997, opening at $18 per share and raising $54 million, which valued the company at $438 million. On October 3, 2017, its shares opened at $958 per share, although they had hit the $1,000-mark earlier in the year. Amazon US revenues have also grown exponentially, from $511,000 in 1995 to $135.9 billion in 2016.

Amazon commands a 33% share of the e-commerce market in the US, up from 8.5% in 2007, according to market intelligence firm Euromonitor. While a large part of this gain can be attributed to organic growth, especially in its third-party marketplace, Amazon has made numerous strategic investments and acquisitions across several sectors.

Four of its five largest acquisitions by deal value have been in the US:

• 2009: Online shoe retailer Zappos for $1.2 billion
• 2012: Robotic fulfillment system firm Kiva Systems (now called Amazon Robotics) for $775 million
• 2014: Livestreaming firm Twitch for $970 million
• 2017: Grocery retailer Whole Foods Market for $13.7 billion—its most recent and highest-valued acquisition

Amazon first trials and introduces its innovations, products and service offerings in its home market of the US. These range from in-store pickup to AWS to Prime membership to its AI-powered Echo speakers.

Amazon in the UK

Amazon launched in the UK in 1998 with the acquisition of Bookpages, an online books and media store, for an undisclosed sum. Outside the US, the UK is one of the three largest markets for Amazon in terms of sales, accounting for 7% of the company’s total sales in 2016—this includes any sales made to other countries such as European countries that do not have a dedicated Amazon site.

Although Amazon has been slower to deploy innovations and new offerings in the UK than in the US, it has been capturing market share progressively. Amazon’s share of UK Internet sales, including third-party sales, rose from 16.4% in 2007 to 26.5% in 2016, according to Euromonitor.

Outside the US, Amazon’s Echo speakers are currently only available on the British and German websites.

In 2016, Amazon made two strategic moves into the UK’s food retail segment: 1) it signed a deal with Morrisons for the grocer to supply products for its Prime Now and Pantry services; and 2) it also began fresh food delivery the same year through its Amazon Fresh offer for its Prime members in London.

Amazon in Germany

Amazon announced the acquisition of online German bookstore Telebuch.de at the same time as it announced its acquisition of Bookpages in the UK. Germany is Amazon’s largest market outside the US, accounting for 10% of its total sales in 2016; this includes any sales made to other countries such as European countries that do not have a dedicated Amazon site. Compared to Amazon’s other markets, Germany is also where Amazon holds its highest e-commerce market share: 40.8% in 2016, according to Euromonitor. German consumers are enthusiastic online shoppers for nonfood categories, and particularly for Amazon.

Apart from on the US site, Amazon’s Echo speakers are only available on the UK and German websites. Amazon’s German site also serves customers in Austria, Luxembourg, Belgium, the Netherlands, Switzerland and Liechtenstein, as it does not yet have standalone online stores for these countries. In 2009, Amazon.de launched its free shipping offer to Belgium and the Netherlands. Currently, it also offers free shipping for orders over €20 and for all media orders to Austria, Luxembourg, Switzerland and Liechtenstein.

In May 2017, Amazon launched fresh food delivery for Prime members in Berlin and Potsdam.

Amazon in India

Amazon entered India in 1998, by acquiring US-based Junglee.com, which ran an online shopping search and comparison website in the country. It launched its Kindle store in 2012, and then in 2013, it introduced its e-commerce site.

Although Amazon’s journey in India has been short, the retailer has given local e-commerce players Flipkart, Snapdeal and others tough competition from the start, despite facing constraints from regulations governing foreign businesses in India. One such regulation was a 51% cap on foreign direct investment (FDI) in multibrand retail, subject to government approval. Marketplace sites were effectively exempted because FDI was permitted in business-to-business (B2B) e-commerce, and marketplaces are technically technology platforms that facilitate trade between buyers and sellers. Because of this, India is the only country in which Amazon operates a third-party marketplace without operating a first-party e-commerce operation alongside it.

Amazon has circumvented India’s regulations by setting itself up as a third-party seller on its own site. It sells as Cloudtail India Private Limited, a joint-venture between one of Amazon’s Asian subsidiaries and Indian investment firm Catamaran Ventures.

Amazon has progressively invested in developing its market in India. It has opened several fulfillment centers and equipped sellers with tools, and educated them to manage inventory better and ship efficiently.

Amazon has also tailored much of its technology to suit its Indian customer base. For example, it simplified its app and removed several redundant features to suit slow Internet speeds and lower-end smartphones, typically used by the majority of shoppers in India.

Amazon in France

Amazon opened its online store in France two years after it entered Europe. The retailer has proved much less popular in France than in the UK or Germany: it captured just 10.7% of 2016 French Internet sales, according to Euromonitor, compared to a 26.5% share in the UK and a 40.8% share in Germany. The relatively minor scale of France to Amazon is reflected in the absence of a country breakout of revenues in the company’s accounts, while the UK and Germany are listed as regional segments.

Amazon’s French site serves customers in the neighboring countries of Belgium, Luxembourg and the Netherlands. The retailer has not revealed if it will open standalone sites for these countries, but it opened a Kindle store for Dutch customers in 2014.

Amazon’s introductions in France have mostly followed a similar timeline as in Germany and the UK, but French shoppers are yet to see the launch of its Echo smart speakers.

According to French newspaper Le Monde in early October, Amazon is seeking to partner with local retailers to establish its physical presence in the country. Subsequently, Michel-Édouard Leclerc, CEO of French supermarket retailer E. Leclerc, told Reuters that Amazon had approached his company over a possible logistics partnership.

Amazon in Japan

Japan was Amazon’s first market in Asia. Amazon first launched there by selling books and has since built out its offering in step with the rollout in the US and Europe. Japan is Amazon’s second-largest market outside the US, accounting for 8% of the retailer’s 2016 revenues.

comScore’s 2015 data for Japan indicates that Amazon had 32 million unique visitors as of May that year, while domestic e-commerce player Rakuten had some 29 million. In contrast, several other statistics indicate that Amazon lags Rakuten in terms of shopper numbers. Fully 70.2% of online shoppers in Japan use Rakuten, compared to 66.7% who use Amazon’s Japan site, according to an April 2017 survey conducted by research firm DI Marketing.

Amazon in Canada

Despite Canada’s proximity to the US, Amazon has been slow to launch a standalone website and introduce new products in Canada. For example, it launched Amazon Prime only in 2013, and the service came without access to Prime Video, which was later deployed in 2016, when it was made available in over 200 other countries.

Amazon in China

Amazon entered China in 2004, when it acquired Joyo.com, a local online retailer of books, music, videos and DVDs. Since then, Amazon has been struggling to compete against Alibaba, a homegrown leader with a strong global presence, and other Chinese websites.

In 2016, Amazon held just a 1.35% share of the e-commerce market in China, versus Alibaba’s 43.5% and JD.com’s 20.2%, according to Euromonitor.

Amazon in Italy

Amazon’s next foray in the European e-commerce landscape, after France in 2000, came only in 2010, when it opened an online books and media store in Italy. It expanded later that year by offering other products such as electronics, toys, jewelry and watches. Amazon commanded a 14.4% share of the e-commerce market in Italy in 2016, according to Euromonitor data.

Amazon rolled out its Prime membership service in Italy in 2011 and opened its first distribution center in the country that year. Prior to that, Amazon’s Italian orders were fulfilled by centers elsewhere in Europe. In 2015, Amazon introduced its ultra-fast delivery service of selected products, Prime Now in Milan. However, unlike in the US and some other countries, when Amazon unveiled its Prime services in Italy and Spain, it offered only next-business-day delivery and photo storage. In the other countries, Amazon offered access to music and video streaming as well; it has since expanded these services to Italy and Spain, too.

eBay has a considerable lead over Amazon in Italy, controlling 23.6% of the e-commerce market in 2016, according to Euromonitor. However, eBay’s share has been steadily declining since 2011, while Amazon’s has changed little from 2011.

Italy sees low levels of online shopping and many domestic retailers lag their peers in other countries in terms of e-commerce and multichannel retailing.

Amazon in Spain

Amazon launched in Spain in 2011, a year after it launched in Italy. The retailer introduced its full product offering that year, unlike in most other countries where it launched with just an online book store. After unveiling its Kindle store, e-commerce platform and Prime membership in 2011, Amazon waited until 2016 to introduce its express one-hour delivery service Prime Now in Spain.

Amazon opened its first distribution center in Spain in 2012. Prior to that, it fulfilled orders from centers located elsewhere in Europe.

As of 2016, Amazon had captured a leading share of 7.9% of the very-fragmented Internet retailing market in Spain. Online shopping remains a minority activity in Spain, although the market is more developed than that of Italy.

Amazon in Brazil

Amazon launched its Kindle book store in Brazil only after it established AWS infrastructure in the country.

Brazil may be home to the Amazon rainforest, but Amazon.com has yet to make a considerable mark on the country’s e-commerce space. In 2016, it controlled only a 1.1% share of the e-commerce market, according to Euromonitor. The top three firms by Internet retailing market share in Brazil are Lojas Americans with 21.3%, Mercado Libre with 14.1% and Casino with 12.4%.

Amazon’s minor share reflects its limited offering in Brazil, with only the Kindle store. The three rivals mentioned above are multi-category retailers that have both and offline and online presence.

Amazon in Australia

Amazon launched its Kindle e-book store in Australia in 2013, but gave little indication as to when it would launch its full offer. In April 2017, Amazon announced that it plans to launch its shopping services in Australia, but did not specify dates. In August 2017, the company announced that it is looking to recruit for “hundreds of new jobs” for its new 260,000 square-foot fulfillment center in Melbourne.

We explored the implications of Amazon’s Australian entry in our earlier report Deep Dive: Aussies, Get Ready for Amazon!, which can be found here.

Amazon in the Netherlands

Amazon first established its presence in the Netherlands in 2013 when it acquired Liquavista, a local LCD monitor manufacturing arm of Korean electronics major Samsung Electronics. It launched a Kindle store in 2014, but has served Dutch customers via its French and German sites since 2009.

Amazon in Mexico

Mexico is one of Amazon’s newer markets, having launched its Kindle store in 2013 and its e-commerce site in 2015. In 2017, Amazon introduced its Prime membership program and held its Prime Day shopping event in the country for the first time.

In September 2017, Reuters reported that Amazon is looking to set up a larger warehouse in Mexico, in addition to two that it already has in the country. An Amazon spokesperson did not confirm news of the new warehouse, but Reuters reported that “the company’s Mexican unit is aiming to expand its product offerings, offer faster deliveries and make the purchasing process as smooth and secure as possible to inspire consumer confidence.”

Amazon in Singapore

Amazon launched in Singapore through Prime Now services, offering fast delivery of items ordered through its app. It has yet to launch a full-service offer through a desktop website and Prime membership in the country, and has not indicated a timeline of when it might do so. Amazon stated that “Prime Now will be available in Singapore to try without a Prime membership” for a limited time.

Amazon in the UAE

In May 2017, Amazon completed the acquisition of Dubai-based e-commerce firm Souq.com for a consideration of $586 million, making this its first incursion into the Middle East. Souq.com is also Amazon’s largest acquisition, by value, outside the US. In September, Souq acquired logistics firm Wing.ae, which will help it to bring Prime-style services to its UAE customers.

Amazon also announced in September that it plans to establish its AWS technology and infrastructure in the UAE by 2018 and across the Middle East by 2019.

Amazon’s AWS Presence

Amazon’s cloud technology services business contributes only a small share of the company’s total revenues, but enjoys a strong lead over its cloud competitors. In the last quarter of 2016, AWS alone commanded a share of 40% of the global cloud technology services market, according to Synergy Research Group.

Amazon’s Streaming Video on Demand (SVOD) Service

Amazon Prime Video offers movies, TV series and documentaries. By user numbers, Amazon lags YouTube and Netflix in this space. eMarketer projects that there will be 186 million YouTube users by the end of 2017, while Netflix will have 128 million and Amazon Prime will have 85.3 million.

Even in Western Europe, Netflix is expected to dominate with an estimated 21.4 million subscribers by the end of 2017, versus only 5.7 million subscribers for Amazon, according to Digital TV Research.

What We Think

Amazon is a clear leader in the retail, marketplace and cloud technology services areas, but it still has significant ground to cover in the entertainment segment. Over its lifetime, Amazon has been a constant innovator and we believe, that with the multiple touchpoints it has created to engage with its existing and new customers, it will continue to take the lead across the board.