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Amazon hits trillion-dollar milestone, eyes long game

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Chief Executive Officer of Amazon, Jeff Bezos, tours the facility at the grand opening of the Amazon Spheres, in Seattle, Washington. JASON REDMOND/afp

Amazon hits trillion-dollar milestone, eyes long game

Amazon’s market value hit $1 trillion on Tuesday, the second company after Apple to hit the milestone, following an incredible journey for the internet giant which has kept a long-term focus since launching as an online bookseller two decades ago.

Early gains lifted Amazon’s value to $1 trillion only briefly, with the final close at $2,039.51 giving it a value of $995 billion.

Amazon’s journey from an online bookseller in a garage to a global e-commerce powerhouse has centred on obsession with the long road.

The company initially incorporated as “Cadabra” by Jeff Bezos in 1994 and backed with money borrowed from his parents joined Apple as the second US technology firm to be valued at $1 trillion on Tuesday.

Apple crossed the trillion-dollar value threshold a month ago and has remained above it. Amazon became the second US company at that eye-popping value.

GlobalData Retail managing director Neil Saunders called Amazon’s valuation achievement “extraordinary” and considered it a sign of the company’s potential.

“Despite its size and scale, there is still something young about Amazon,” Saunders said. “Amazon is really only just getting started.”

Created in a garage in a suburb of Seattle, Washington, the company renamed “Amazon” sold its first book – Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought by Douglas Hofstadter – in mid-1995.

By the end of that year, Amazon was selling books online throughout the US. Amazon went public in early 1997.

The company for more than a decade put growth over profit, investing heavily in warehouses, distribution networks, and data centres.

“Every cent they made they put back in the company,” said independent technology analyst Rob Enderle.

“They kept their eye on the prize, which was initially to take over most of commerce.”

Innovation sans scandal

Saunders said Amazon’s success comes from the fact that it innovates unlike any other.

“This heady pace of creativity is the key reason why it stays several steps ahead of the market and is able to generate so much growth,” Saunders said.

Bezos has kept firm control of Amazon, steering clear of hedge fund investors inclined to short-term tactics aimed at getting share prices to jump.

The founder and chief executive also avoided scandals or other distractions, keeping revenue and costs close enough to manage and easing into “adjacent markets” that play into Amazon strengths or interests, according to Enderle.

For example, Amazon’s lucrative cloud computing business is built on technology infrastructure that the company needed to run its own operations.

Investing in warehouses, trucking, drones, shipping and other distribution systems not only enables Amazon to drive down costs they position the company to compete with the likes of FedEx and UPS.

Buying the Whole Foods grocery chain last year got Amazon established real world outlets while putting its delivery and retail smarts and systems to work in the brick-and-mortar world.

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