The Everything Store: Jeff Bezos and the Age of Amazon

by Brad Stone

“People were ripping apart every component of my investment thesis. At that point, they thought Amazon was some kind of nonprofit scam.” Inside Amazon, the pain endured over the previous seven years was paying off. Prime, the two-day shipping service, was an engine spinning the company’s flywheel ever faster. Amazon customers who joined Prime doubled, on average, their spending on the site, according to a person familiar with the company’s internal finances at the time. A Prime member was like a shopper who walked into a Costco warehouse for a case of beer and walked out with the beer plus an armful of DVDs, a nine-pound smoked ham, and a flatscreen television. Prime members bought more products across more categories, which in turn convinced sellers to let Amazon stock their merchandise and ship their orders from its fulfillment centers, since that meant their products qualified for Prime two-day shipping. Amazon was enjoying what analysts call operating leverage—it was getting more out of its assets, and its famously microscopic profit margins started to expand. (Although that was temporary—they would shrink again a few years later when Bezos started investing in new areas like tablets and streaming video.)