Question: IT at Work

Amazon.com's IT Patents Create Competitive Edge

Entrepreneur and e-tailing pioneer Jeff Bezos envisioned the huge potential for retail sales over the Internet and selected books for his e-tailing venture. In July 1995, Bezos started Amazon.com, offering books via an electronic catalog from its web site. Key features offered by the Amazon.com mega e-tailer were broad selection, low prices, easy searching and ordering, useful product information and personalization, secure payment systems, and efficient order fulfillment. Early on, recognizing the importance of order fulfillment, Amazon.com invested hundreds of millions of dollars in building physical warehouses designed for shipping small packages to hundreds of thousands of customers. Amazon has continually revised its business model by improving the customer's experience. For example, customers can personalize their Amazon accounts and manage orders online with the patented "One-Click" order feature. This personalized service includes an electronic wallet, which enables shoppers to place an order in a secure manner without the need to enter their address, credit card number, and so forth, each time they shop. One-Click also allows customers to view their order status and make changes on orders that have not yet entered the shipping process. Amazon's other registered trademarks are EARTH'S BIGGEST SELECTION and IF IT'S IN PRINT, IT'S IN STOCK. In addition, Amazon added services and alliances to attract more customers and increase sales. In January 2002, Amazon.com declared its first-ever profit-for the 2001 fourth quarter; 2003 was the first year it cleared a profit in each quarter. Amazon has invested heavily in its IT infrastructure, many features of which it had patented. The selected list of patents give a glimpse into the legal side of the company, and explain why numerous major retailers, such as Sears and Sony, have used Amazon.com as its sales portal.

• 6,525,747-Method and system for conducting a discussion relating to an item.

• 6,029,141-Internet-based customer referral system, also known as the Affiliate program.

• 5,999,924-Method for producing sequenced queries.

• 5,963,949-Method for data gathering around forms and search barriers.

• 5,960,411-Method and system for placing a purchase order via a communications network (One-Click purchase).

• 5,826,258-Method and apparatus for structuring the querying and interpretation of semi-structured information.

• 5,727,163-Secure method for communicating credit card data when placing an order on a nonsecure network.

• 5,715,399-Secure method and system for communicating a list of credit card numbers over a nonsecure network. Amazon launched the e-reader Kindle in 2007. Its success proved the viability of the e-book market and led to the entry of numerous competitors, such as Barnes & Noble's Nook and the Apple iPad. Some analysts estimated the Kindle accounted for about 60 percent of the e-reader market in 2010. In mid-2010, Amazon started rolling out a software upgrade for Kindle, adding the ability for users to share e-book passages with others on Facebook and Twitter. The new social networking feature in version 2.5 adds another web link to the standard Kindle and the larger Kindle DX, as Amazon finds itself in an increasingly competitive market because of the iPad's features. The iPad is designed for reading digital books, watching online video, listening to music, and web browsing.

Discussion Questions: 1. Why is order fulfillment critical to Amazon's success?

2. Why did Amazon patent One-Click and other IT infrastructure developments?

3. How has Amazon adapted the Kindle to new technologies?

4. Why would other retailers form an alliance with Amazon.com?