The History of Amazon: How a Bookstore Became a Business Platform

Amazon began as an online bookseller. Three decades later, cloud computing accounted for more than half its consolidated operating income. In 2025, Amazon Web Services (AWS) had become a major source of earnings alongside the retail operations that first made the business known.

The route between those two businesses ran through new ways of serving shoppers and outside merchants: a broader product range, a marketplace, paid shipping memberships and fulfillment services. It also involved costly experiments and acquisitions that brought established grocery, entertainment and healthcare businesses under Amazon ownership.

After Andy Jassy succeeded founder Jeff Bezos as CEO in 2021, another set of challenges came into focus—fulfillment costs, heavy infrastructure investment, labor organizing and regulatory scrutiny. Amazon’s expansion is only part of the story; the pressures of operating what it built matter just as much.

A Quick Look at the History of Amazon

From a New Online Bookstore to a Public Company

Jeff Bezos established Amazon’s predecessor in Washington state in 1994, at a time when internet retail was still developing. The business began with books, a category suited to an online catalog that could present a wider searchable selection than any one physical store could stock. The bookselling website opened in July 1995.

Amazon reincorporated in Delaware in 1996 and completed its initial public offering on Nasdaq in May 1997. These were distinct steps in the same business’s development: founding the venture, opening the store to customers and raising capital through public markets were not the same event.

For 1997, Amazon reported $147.8 million in sales and more than 1.5 million cumulative customers. Those figures captured its rapid early growth, even as further expansion would require substantial investment.

In his 1997 shareholder letter, Bezos described a strategy centered on customer value, selection and long-term investment. “But this is Day 1 for the Internet,” he wrote. He also discussed expansion beyond books, even while bookselling remained the company’s starting point.

Beyond Books: European Expansion, Marketplace and the Profit Test

The bookstore did not remain confined to the United States or to books. In 1998, Amazon entered the British and German online book markets through acquisitions and the launch of Amazon.co.uk and Amazon.de. Its merchandise offerings also broadened, making the website less dependent on one product category.

A more consequential change was the growing place of outside sellers. Amazon launched its US Marketplace in November 2000, followed by a European Marketplace rollout in 2002. Earlier third-party selling programs had existed, so the 2000 date marks a particular Marketplace launch rather than the first time any outside merchant had sold through Amazon.

The change went beyond adding merchandise categories. In direct retail, Amazon sells goods itself; through Marketplace, independent merchants offer goods to its shoppers. That arrangement also made sellers customers for Amazon’s platform services, a relationship that would become increasingly important.

The expanded business also faced a demanding financial test. Amazon reported a $234 million consolidated GAAP net loss in the first quarter of 2001, during a period that included restructuring-related costs. Growth had not yet produced sustained profitability.

In January 2002, Amazon announced approximately $5 million in GAAP net profit for the fourth quarter of 2001—its first quarterly profit on that accounting basis. It still recorded a net loss for the full 2001 fiscal year. The distinction captures both the breakthrough and the financial strain of those early expansion years.

Prime and Fulfillment Turn Retail Traffic into Services

Once Amazon had widened its merchandise selection and opened Marketplace, services became a more prominent part of its retail model. In February 2005, it introduced Prime in the United States, initially charging $79 a year for a membership that included free two-day shipping on eligible purchases.

In September 2006, Fulfillment by Amazon (FBA) opened Amazon’s fulfillment and customer-service capabilities to participating outside sellers. Marketplace had already given merchants access to Amazon shoppers; FBA added the option to use Amazon’s operational infrastructure to help complete those sales.

The growing role of outside merchants emerged in Bezos’s 2018 shareholder letter, published in 2019. He reported that third-party sellers accounted for about 3% of gross merchandise sales on Amazon in 1999, compared with 58% in 2018. Those percentages refer to the value of merchandise sold, not Amazon’s recognized revenue from seller services.

How Amazon Web Services Became a Major Business

While Prime and fulfillment added services around shopping, Amazon’s technical infrastructure created another opening. In its account of AWS’s origins, Amazon describes the computing systems built for its own operations as part of the background to its cloud business.

In March 2006, Amazon Web Services introduced Simple Storage Service (S3), giving customers on-demand internet storage. Elastic Compute Cloud (EC2), an on-demand computing service, followed later in 2006. These services offered outside organizations access to computing infrastructure without requiring Amazon to sell them physical retail goods.

In 2015, AWS began appearing as a distinct reportable segment in Amazon’s financial results. It remained within Amazon.com, Inc., but the new disclosure made its financial contribution visible alongside the retail segments.

By 2025, AWS reported $128.725 billion in sales and $45.606 billion in operating income. Cloud services represented about 18% of Amazon’s consolidated sales but roughly 57% of its operating income. What began as a new infrastructure offering had become a major business serving enterprise and other technology customers.

Kindle, Robotics and the Limits of New Products

The expansion of Amazon’s capabilities was not limited to subscriptions and cloud computing. In November 2007, Amazon introduced Kindle, an electronic reading device priced at $399 at launch. Books remained part of the company’s identity, but the new device placed Amazon in a different position in how customers could access them.

Amazon also invested in the equipment behind its fulfillment network. Its 2012 acquisition of Kiva Systems brought an established warehouse-robotics business under Amazon ownership and provided a foundation for later robotics operations.

Consumer devices, however, produced mixed results. Amazon recorded a roughly $170 million inventory and related commitment charge associated with Fire Phone in 2014. The unsuccessful phone project stood in contrast to the continuing Kindle and robotics initiatives.

Physical Grocery and a Broader Set of Businesses

Amazon’s expansion eventually reached a large physical retail network. The company announced an agreement to buy Whole Foods Market in June 2017, and the approximately $13.7 billion transaction, including debt, closed on August 28, 2017. Whole Foods was an established grocery chain before the purchase; Amazon acquired its stores and business rather than building the chain from its own online bookstore.

The Whole Foods deal added an established store network to Amazon’s online commerce and logistics operations. Physical grocery became another part of the parent company’s activities, with its own history predating Amazon ownership.

After the 2017 grocery acquisition, a different operating challenge emerged in 2020. Pandemic-era e-commerce demand rose sharply, and Amazon expanded fulfillment capacity. Jassy later described the scale and expense of that expansion when explaining the US fulfillment-network reorganization that followed.

A New CEO, Acquisitions and an Operating Reset

In February 2021, Amazon announced that Bezos would become executive chair and Andy Jassy, previously the head of AWS, would succeed him as CEO. The transition took effect in July, putting Jassy in charge of a business spanning retail, cloud services and several newer operations.

Acquisitions continued across different industries. Amazon completed its purchase of the established MGM studio business in March 2022, adding its media assets to the group. In February 2023, it completed the acquisition of 1Life Healthcare, the parent of the existing One Medical healthcare-services business.

The financial picture in 2022 was difficult. Amazon recorded a consolidated GAAP net loss of about $2.7 billion, including substantial non-operating losses tied to the valuation of its Rivian investment. AWS, meanwhile, remained profitable on an operating-income basis.

Jassy also described a reorganization of Amazon’s US fulfillment network in shareholder letters published in 2023 and 2024. Management shifted toward a more regional structure, replacing the previous national arrangement. According to Jassy, the changes brought faster deliveries and reduced costs to serve customers.

The challenge differed from the early dot-com profit test. Management was now working to improve an extensive existing fulfillment operation rather than build the company’s original online store.

Labor Organizing and Regulatory Scrutiny

Amazon’s scale brought greater attention to labor relations. In April 2022, workers at the JFK8 facility on Staten Island voted for representation by the Amazon Labor Union. The National Labor Relations Board proceeding identified the employer as Amazon.com Services LLC; the vote concerned that facility, not Amazon’s entire workforce.

In September 2023, the Federal Trade Commission and state attorneys general sued Amazon.com, Inc., alleging unlawful monopolization and restrictive practices in US online retail marketplaces. The allegations were claims in litigation, not established judicial findings.

A separate FTC case over alleged Prime enrollment and cancellation practices reached a settlement in September 2025. The agency announced a $2.5 billion resolution consisting of a $1 billion penalty and up to $1.5 billion in consumer refunds and redress. Additional consumer payments were announced in September 2026. The settlement addressed that case without establishing an admission of every underlying allegation.

In June 2026, the European Commission announced a preliminary position concerning possible Digital Markets Act designation of major cloud services, including AWS. In August, the FTC and states brought separate allegations that Amazon operated an undisclosed advertising-auction surcharge scheme. Neither announcement established a final finding on the underlying claims.

Amazon’s Current Scale and the Investment in AI

By its 2025 annual report, Amazon’s financial structure showed just how far the business had moved beyond direct merchandise sales. The company reported $716.924 billion in consolidated sales and $79.975 billion in operating income, across its North America, International and AWS reporting segments.

Services were now integral to Amazon’s reported revenues: $172.162 billion came from third-party seller services, $68.635 billion from advertising services and $49.619 billion from subscriptions. These categories are included within consolidated segment totals, rather than added on top of them.

Jassy’s April 2026 shareholder letter placed cloud capacity, artificial intelligence, custom chips and automation at the center of his stated priorities. He wrote, “Wherever possible, invent the next inflections.” The line expressed an investment approach rather than a guaranteed result.

Second-quarter 2026 results showed consolidated sales of $200.6 billion and operating income of $27.5 billion. AWS contributed $42.2 billion in sales, up 37% year over year, and $16.6 billion in operating income. Cloud remained a major contributor while infrastructure spending accelerated.

Those investments carried a significant cash cost. Amazon reported a $7.6 billion free-cash-flow outflow over the trailing twelve months ending in the second quarter of 2026. The company attributed the movement primarily to higher spending on property and equipment, especially for AI infrastructure. The eventual returns from that investment remained uncertain.

From Bookstore to Multi-Business Platform

From an online bookstore, Amazon developed services surrounding the act of buying and selling: a marketplace for merchants, fulfillment for sellers and a shipping membership for customers. AWS followed a different path, offering computing infrastructure to organizations beyond retail. Each development widened what the parent company did and whom it served.

The expansion was accompanied by costly experiments, financial setbacks, operational changes and disputes over its business practices. As of October 12, 2026, Andy Jassy led the publicly traded company with Bezos as executive chair. Amazon was again spending heavily on infrastructure—this time for cloud computing and AI—while the results of those long-term investments remained to be seen.

Timeline

These milestones trace Amazon’s transition from an online bookstore to a business spanning retail services and cloud infrastructure.

1994

Jeff Bezos establishes the business that becomes Amazon.com in Washington state.

July 1995

Amazon’s online bookstore begins operating.

1996–1997

Amazon reincorporates in Delaware in 1996 and completes its Nasdaq IPO in May 1997.

1998

Amazon enters the British and German online book markets.

November 2000

Amazon launches its US Marketplace program for third-party sellers.

Q4 2001

Amazon records its first quarterly GAAP net profit, approximately $5 million; it announces the result in January 2002.

2005

Amazon launches Prime as a US paid shipping-membership program.

2006

AWS launches S3 and EC2 cloud infrastructure services; Amazon also introduces Fulfillment by Amazon.

2007

Amazon introduces the Kindle e-reader.

2012

Amazon acquires Kiva Systems, adding existing robotics capabilities to its operations.

2014–2015

Amazon reports a major Fire Phone-related charge in 2014. AWS becomes a separately disclosed reportable segment in 2015.

August 28, 2017

Amazon’s acquisition of Whole Foods Market closes.

July 2021

Andy Jassy succeeds Jeff Bezos as Amazon CEO; Bezos becomes executive chair.

2022

Amazon completes its MGM acquisition. Workers at JFK8 vote for union representation. Amazon records a consolidated GAAP net loss for the year, including investment valuation effects.

2023

Amazon completes its One Medical acquisition. The FTC and states file online-retail antitrust allegations against Amazon.

2025

Amazon reports $716.924 billion in consolidated annual sales. The FTC announces a settlement of its Prime enrollment and cancellation case.

2026

Amazon reports AWS growth and substantial AI-related investment. European regulators issue a preliminary cloud-services position, and US regulators file advertising-auction allegations.

FAQs

Question: When was Amazon founded, and when did the online bookstore open?

Answer: Amazon traces its corporate founding to 1994, when Jeff Bezos established the venture in Washington state. Its bookselling website opened in July 1995, and the company went public in May 1997. These are three different milestones.

Question: Who founded Amazon, and who runs it now?

Answer: Jeff Bezos founded Amazon in 1994. Andy Jassy became president and CEO in July 2021, while Bezos became executive chair. Both remained in those roles as of October 12, 2026.

Question: Is Amazon Web Services a separate publicly traded company?

Answer: No. AWS is part of Amazon.com, Inc. and is one of its reportable business segments. Its separate financial reporting began in 2015, but that was not a corporate spin-off.

Question: When did Amazon first make a profit?

Answer: Amazon’s first quarterly GAAP net profit came in the fourth quarter of 2001, at about $5 million, announced in January 2002. The company still reported a net loss for the full 2001 fiscal year.

Question: Why is AWS so important to Amazon?

Answer: AWS provides cloud infrastructure services rather than conventional retail merchandise. In 2025 it produced $45.606 billion of operating income on $128.725 billion of segment sales—about 57% of Amazon’s total operating income on about 18% of sales.

Question: Does Amazon record the full value of products sold by third-party sellers as its own revenue?

Answer: Not simply by virtue of those merchants selling through its marketplace. The gross merchandise value of seller transactions differs from the revenue Amazon recognizes for services such as seller and fulfillment fees. Bezos’s historical percentage figures about third-party merchandise sales therefore should not be read as percentages of Amazon’s recognized revenue.

Interviews & Firsthand Resources

Jeff Bezos’s Original 1997 Shareholder Letter

Bezos’s original letter captures the priorities he described to shareholders shortly after Amazon’s IPO: customer value, selection and long-term investment. It is a firsthand record of how he presented the business during its bookstore years.

Read the original shareholder letter

The Kindle Team’s Account of the Device’s Origins

Amazon’s retrospective account features people involved in developing Kindle. Their recollections add firsthand perspective to the 2007 e-reader launch, a point when the company extended its bookselling business into digital reading hardware.

Read the Kindle team’s account

Sources

• Amazon.com, Inc. / US Securities and Exchange Commission: Historical Form 10-K (2005), Q1 2015 Form 10-Q, 2022 year-end results, 2025 Form 10-K, Q2 2026 results.
• Jeff Bezos / Amazon: Original 1997 shareholder letter, 2018 shareholder letter.
• Amazon Press Center: 1998 European bookselling expansion, Q1 2001 results, Q4 2001 profit announcement, Marketplace history, Prime launch.
• Amazon Web Services / Amazon Press Center: 2006 infrastructure service launch, AWS origins, Fulfillment by Amazon launch.
• Amazon Press Center / Amazon News: Kindle introduction, Kiva Systems acquisition announcement, Amazon Robotics retrospective, Kindle team account, Whole Foods acquisition agreement, Whole Foods closing announcement, One Medical closing announcement.
• Amazon Investor Relations / Amazon News: 2021 leadership succession announcement, Jassy’s 2022 shareholder letter, Jassy’s 2023 shareholder letter, Jassy’s 2025 shareholder letter.
• History.com: Amazon Is Founded by Jeff Bezos.
• The Guardian: 2014 Fire Phone write-down reporting.
• Los Angeles Times: MGM acquisition closing report.
• National Labor Relations Board: Amazon.com Services LLC, case 29-RC-288020.
• Federal Trade Commission: 2023 online-retail complaint, 2025 Prime settlement, 2026 Prime refunds update, 2026 advertising complaint.
• European Commission: June 2026 preliminary cloud position.