The Business Value of Information Systems. Case Study: Amazon.Com

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Amazon.com In 1994, with a handful of programmers and a few thousand dollars in workstations and servers, Jeff Bezos set out to change the retail world when he created Amazon.com (ticker: AMZN). Shel Kaphan, Amazon’s first programmer, assisted by others, including Paul Barton-Davis, used a collection of tools to create Web pages based on a database of 1 million book titles compiled from the Library of Congress and Books in Print databases. Kaphan notes that “Amazon was dependent on commercial and free database systems, as well as HTTP server software from commercial and free sources. Many of the programming tools were free software” [Collett 2002]. In July 1995, Amazon opened its website for sales. Using heavily discounted book prices…show more content…
By 2004, 25 percent of Amazon’s sales were for its partners. But, one of Amazon’s major relationships took a really bad turn in 2004 when Toys ‘R’ Us sued Amazon and Amazon countersued. The complaint by Toys ‘R’ Us alleges that it had signed a ten-year ex-clusivity contract with Amazon and has so far paid Amazon $200 million for the right to be the exclusive supplier of toys at Amazon.com. David Schwartz, senior VP and general coun-sel for Toys ‘R’ Us stated that “We don’t intend to pay for exclusivity we’re not getting” [Claburn May 2004]. Amazon’s initial response was that “We believe we can have multiple sellers in the toy category, increase selection, and offer products that (Toys ‘R’ Us) doesn’t have” [Claburn May 2004]. The lawsuit counters that at least one product (a Monopoly game) appears to be for sale by third-party suppliers as well as Toys ‘R’ Us. A month later, Amazon countersued, alleging that Toys ‘R’ Us experienced “chronic failure” to maintain sufficient stock to meet demand. The court documents noted that Toys ‘R’ Us had been out of stock on 20 percent of its most popular products [Claburn June 2004]. Although the dis-pute sounds damaging, it is conceivable that both parties are using the courts as a means to renegotiate the base contract. Technology In the first years, Amazon intentionally kept its website systems separate from its order-fulfillment system. The separation was partly due to the fact that they did not
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