Amazon.com 2004 Annual Report Download - page 14

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We use a set of applications for accepting and validating customer orders, placing and tracking orders with
suppliers, managing and assigning inventory to customer orders, and ensuring proper shipment of products to
customers. Our transaction-processing systems handle millions of items, a number of different status inquiries,
multiple shipping addresses, gift-wrapping requests, and multiple shipment methods. These systems allow the
customer to choose whether to receive single or several shipments based on availability and to track the progress
of each order. These applications also manage the process of accepting, authorizing, and charging customer
credit cards.
Competition
The environment for our products and services is intensely competitive. Our current and potential
competitors include: (1) physical-world retailers, catalog retailers, publishers, vendors, distributors and
manufacturers of our products, many of which possess significant brand awareness, sales volume, and customer
bases, and some of which currently sell, or may sell, products or services through the Internet, mail order, or
direct marketing; (2) other online e-commerce sites; (3) a number of indirect competitors, including media
companies, Web portals, comparison shopping websites, and Web search engines, either directly or in
collaboration with other retailers; and (4) companies that provide e-commerce services, including website
development; third-party fulfillment and customer-service. We believe that the principal competitive factors in
our market segments include selection, price, availability, convenience, information, discovery, brand
recognition, personalized services, accessibility, customer service, reliability, speed of fulfillment, ease of use,
and ability to adapt to changing conditions, as well as our customers’ overall experience and trust in transactions
with us and facilitated by us on behalf of third-party sellers. For services we offer to business and individual
sellers, additional competitive factors include the quality of our services and tools, our ability to generate sales
for third parties we serve, and the speed of performance for our services. Other companies also may enter into
business combinations or alliances that strengthen their competitive positions.
Intellectual Property
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets,
proprietary technologies, and similar intellectual property as critical to our success, and we rely on trademark,
copyright and patent law, trade-secret protection, and confidentiality and/or license agreements with our
employees, customers, partners, and others to protect our proprietary rights. We have registered a number of
domain names and been issued a number of trademarks, service marks, patents, and copyrights by U.S. and
foreign governmental authorities. We also have applied for the registration of other trademarks, service marks,
domain names, and copyrights in the U.S. and internationally, and we have filed U.S. and international patent
applications covering certain of our proprietary technology. We have licensed in the past, and expect that we may
license in the future, certain of our proprietary rights, such as trademarks, patents, technologies or copyrighted
materials, to third parties.
Seasonality
Our business is affected by seasonality, which historically has resulted in higher sales volume during our
fourth quarter.
Employees
We employed approximately 9,000 full-time and part-time employees at December 31, 2004. However,
employment levels fluctuate due to seasonal factors affecting our business. Additionally, we utilize independent
contractors and temporary personnel on a seasonal basis. None of our employees is represented by a labor union
and we consider our employee relations to be good. Competition for qualified personnel in our industry is
intense, particularly for software engineers, computer scientists, and other technical staff. We believe that our
future success will depend in part on our continued ability to attract, hire, and retain qualified personnel.
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