style="margin-top: 2em">= Amazon in the U.S.

# First steps

The online bookstore Amazon.com was launched by Jeff Bezos in July 1995, in Seattle, on the West coast of the U.S., after a market study which led him to conclude that books were the best products to sell on the internet. When Amazon.com started, it had 10 employees and a catalog of 3 million books. Unlike traditional bookstores, Amazon.com didn't have windows looking out on the street and books skillfully lined up on shelves or piled upon displays. The "virtual" windows are its webpages, with all transactions made through the internet. Books are stored in huge storage facilities before being put into boxes and sent by mail.

What exactly was the idea behind Amazon.com? In Spring 1994, Jeff Bezos drew up a list of twenty products that could be sold online, ranging from clothing to gardening tools, and then researched the top five, which were CDs, videos, computer hardware, computer software, and books.

As recalled by Jeff Bezos in Amazon's press kit (in its 1998 version), "I used a whole bunch of criteria to evaluate the potential of each product, but among the main criteria was the size of the relative markets. Books, I found out, were an $82 billion market worldwide. The price point was another major criterion: I wanted a low-priced product. I reasoned that since this was the first purchase many people would make online, it had to be non-threatening in size. A third criterion was the range of choice: there were 3 million items in the book category and only a tenth of that in CDs, for example. This was important because the wider the choice, the more the organizing and selection capabilities of the computer could be put in good use."

People could search the online catalog by author, title, subject, date, or ISBN. The website was offering excerpts from books, book reviews, customer reviews, and author interviews. People could "leaf" through extracts and reviews, order some books online, and pay with their credit card. Books arrived within a week at their doorstep. As an online retailer, Amazon.com could offer lower prices than local bookstores, a larger selection, and a wealth of product information. Customers could subscribe to a mailing list to get reviews of new books by their favorite authors, or new books in their favorite topics, with 44 topics to choose from.

In 1998, there were discounts on 400,000 titles, with 40% on some feature books, 30% on hardcovers, and 20% on paperbacks. Amazon.com was also selling CDs, DVDs, audiobooks and computer games, with 3 million clients in 160 countries, and a catalog with ten times as many titles as the largest supermarkets' bookstores.

As mentioned by Jeff Bezos in Amazon's press kit: "Businesses can do things on the web that simply cannot be done any other way. We are changing the way people buy books and music. Our leadership position comes from our obsessive focus on customers. (…) Customers want selection, ease of use, and the lowest prices. These are the elements we work hard to provide. We continued to improve our customer experience during the quarter [the second quarter 1998] with the opening of our music store, our easier-to-navigate store layout, and our expansion into the local U.K. and German book markets. These initiatives will continue to require aggressive investment and entail significant execution challenges."

# Expansion

People began buying books across borders. What we take for granted now - buy a book in Europe from the U.S. website Amazon.com, or buy a book in the U.S. from the German website Amazon.de - was making big waves at the time. The local online bookstores called it "unfair competition".

There were also issues about custom taxes. A first outline agreement was reached between the U.S. and the European Union in December 1997. This agreement was followed by an international convention. The internet was decided a free trade area, i.e. without any custom taxes for software, films and digital books bought online. Material goods (books, CDs, DVDs) and services were subject to existing regulations, with collection of VAT (value added tax) for example, but with no additional custom taxes.

On the footsteps of the Internet Bookstore, based in United Kingdom and the largest online bookstore in Europe, Amazon.com launched is Associates Program. As stated in a press release dated June 8, 1998: "The Amazon.com Associates Program allows website owners to easily participate in hassle-free electronic commerce by recommending books on their site and referring visitors to Amazon.com. In return, participants earn referral fees of up to 15 percent of the sales they generate. Amazon.com handles the secure online ordering, customer service, and shipping and sends weekly email sales reports. Enrollment in the program is free, and participants can be up and running the same day. Associates range from large and small businesses to nonprofits, authors, publishers, personal home pages, and more. The popularity of the program is reflected in the range of additions to the Associates Community in the past few months: Adobe, InfoBeat, Kemper Funds, PR Newswire, Travelocity, Virtual Vineyards, and Xoom." There were 60,000 "associates" in June 1998.

Barnes & Noble, a leading U.S. bookseller, entered the world of e-commerce in 1997.

Barnes & Noble had 481 stores nationwide in 1997, in 48 states out of 50, as well as 520 bookstores (B. Dalton stores) in shopping malls, and a catalog of 175,000 titles from 20,000 publishers. Barnes & Noble also published books under its own imprint for exclusive sale through its retail stores - and its nationwide mail-order catalogs.

Barnes & Noble first launched its America OnLine (AOL) website in March 1997 - as the exclusive bookseller for the 12 million AOL customers -, before launching its own website, barnesandnoble.com, in May 1997. The site was offering reviews from authors and publishers, with a catalog of 630,000 titles available for immediate shipping, and significant discounts: 30% off all in-stock hardcovers, 20% off all in-stock paperbacks, 40% off select titles, and up to 90% off bargain books. Its Affiliate Network spread quickly, with 12,000 affiliate websites in May 1998, including CNN Interactive, Lycos and ZDNet.

In May 1998, Barnes & Noble.com launched a revamped website with a better design, and an Express Lane one-click ordering, improved book search capabilities, and expanded product offerings with a new software "superstore". Jeff Killeen, chief operating officer, stated in a press release dated May 27, 1998: "Through our first year in business we have listened intently to what our customers have asked for and believe we have delivered a vastly superior product based on those requests. (…) Innovation based on customer-focus has been the hallmark of our success and we see our new site as proof- positive of our commitment to be the leader in online bookselling and related products. We're also extremely excited to have Intel, a leader in the technology products category, open its SoftwareForPCs.com site at barnesandnoble.com."

Barnes & Noble.com began a fierce price war with Amazon.com for the best book discounts. Amazon.com came to be known as "Amazon.toast". Jeff Bezos, Amazon's CEO, didn't mind the competition. In the magazine Success of July 1998, he explained to journalist Lesley Hazleton: "The gap has increased rather than decreased. We went from $60 million annualized sales revenue in May to $260 million by the end of the year, and from 340,000 customers to 1.5 million, 58 percent of them repeat customers - all that in the context of 'Amazon.toast'. We're doing more than eight times the sales of Barnes & Noble. And we're not a stationary target. We were blessed with a two-year head start, and our goal is to increase that