Amazon.coms IT Patents Create Competitive Edge Entrepreneur and e-commerce pioneer Jeff Bezos envisioned the huge potential for

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Amazon.com’s IT Patents Create Competitive Edge

Entrepreneur and e-commerce pioneer Jeff Bezos envisioned the huge potential for retail sales over the Internet and selected books for his e-commerce venture. In July 1995, Bezos started Amazon.com, offering books via an electronic catalog from its website. Key features offered by Amazon.com 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 (e-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. To emphasize its large inventory of books, Amazon obtained registered trademarks for its retail slogans: “Earth’s Biggest Selection” and “If It’s in Print, It’s in Stock.”

Electronic wallet (e-wallet) A software application that can store encrypted information about a user’s credit cards, bank accounts, and other information necessary to complete electronic transactions, eliminating the need to re-enter the information during the transaction.

In addition, Amazon added services and alliances to attract more customers and increase sales. In January 2002, Amazon.com declared its first-ever profit during the 2001 fourth quarter; 2003 was the first year it cleared a profit in each quarter.

Amazon has heavily invested in its IT infrastructure and obtained patents for much of the technology that powers its website. The following list of patents gives a glimpse into the legal side of the e-commerce giant and explains why numerous major retailers, such as Sears and Sony, have used Amazon.com as their 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 semistructured 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 Kindle e-reader in 2007. Its success demonstrated 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. E-books now account for about 30% of all books sold, and Amazon’s share of the e-book market is 65% (Bercovici, 2014). Since 2011, Amazon has sold more e-books than print books (Miller and Bosman, 2011).

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, making it more of a tablet device than simply an e-reader. Amazon also created the Kindle app that can be used on a wide range of mobile devices, so now customers can purchase and read e-books from Amazon without having to purchase a Kindle reader.

Finally, as you read in Chapter 6, Amazon has been a pioneer in the development of recommendation engines designed to suggest products to customers based on their purchase history and shopping behavior. Amazon’s recommendation system is considered among the best in the industry.

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