Build story · United States · 1994–2023
Amazon: from online bookstore to the everything store
Jeff Bezos started by selling books online, survived a 90% share-price crash, and built a self-reinforcing flywheel of low prices, selection, and third-party sellers that made Amazon one of the world's largest companies.
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
by the numbers
- IPO (1997)
- $18 a share, about $438M valuation
- Share-price fall, 1999–2001
- about 90%
- First annual profit
- 2003
- Third-party share of units (2023)
- about 60%
- Net sales (2023)
- about $575 billion
What happened
Bezos left a hedge-fund job in 1994 after reading that web usage was growing about 2,300% a year. He chose books because there were millions of titles — far more than any physical store could stock — and the catalogue could be searched online. Amazon.com launched in July 1995 from a garage near Seattle.
From the start Amazon reinvested almost everything into growth. Its 1997 IPO letter promised to make decisions ‘in light of long-term market leadership considerations rather than short-term profitability’. When the dot-com bubble burst, the share price fell from over $100 in late 1999 to under $10 in 2001, and many expected Amazon to fail. It posted its first full-year profit only in 2003.
Around 2001 Bezos sketched the ‘flywheel’: lower prices bring more customers, more customers attract more third-party sellers, more sellers widen selection and spread fixed costs, which allows even lower prices. Prime (2005) locked in loyal shoppers with free two-day shipping; the Marketplace let outside sellers use Amazon's traffic; Fulfilment by Amazon let them use its warehouses too. By 2023 third-party sellers accounted for about 60% of units sold, and net sales reached roughly $575 billion.
Timeline
- 1995
Amazon.com opens as an online bookstore.
- 1997
IPO on Nasdaq; first shareholder letter sets the long-term philosophy.
- 2000
Marketplace opens to third-party sellers.
- 2005
Amazon Prime launches at $79 a year.
- 2006
Fulfilment by Amazon and Amazon Web Services launch.
what made it work
- Obsession with customer experience — price, selection, and convenience — over short-term profit.
- A flywheel where each improvement fed the next, so growth compounded.
- Turning internal capabilities (warehouses, servers) into services others pay for.
- Willingness to run long experiments and absorb failures such as the Fire Phone.
the lesson
Profit can be postponed if every rupee reinvested strengthens a loop that compounds — but only if customers keep getting a visibly better deal.
Apply it to your business
- 1Draw your own flywheel: which improvement makes the next one easier?
- 2Look for internal capabilities you could sell to others.
- 3Write down your long-term goal so short-term pressure doesn't derail it.
Laws at work in this story
Figures are rounded and drawn from public reports, company filings and widely cited coverage at the time. Check the company's latest filings before relying on any number.