Amazon’s Market Cap Briefly Hits $1 Trillion Before Dipping

Amazon shares rose as much as 1.9 per cent, pushing the company briefly beyond a market value of $1 trillion, a milestone Apple Inc. reached last month.

After crossing the $1 trillion mark, Amazon’s valuation slipped to $988.8 billion. Tech competitors Alphabet Inc. and Microsoft Corp. are closing in on the mark, too.

Apple and Amazon aren’t the first trillion-dollar corporations. Energy company PetroChina Co. briefly crossed that valuation in late 2007 but slumped quickly as oil prices collapsed in the financial crisis. Still, the online retailer is among the most feared and menacing competitors across a broad swathe of industries.

Moving well beyond books, Bezos re-imagined the retail experience, seeing early on how the internet could connect shoppers with a selection of goods far larger than they’d find on shelves in nearby stores. He expanded the business from books to music and movies, then added toys and electronics.

In 2001, Amazon launched an online marketplace, looking to expand inventory more quickly by inviting independent merchants onto the site and charging them a commission on each sale.

The marketplace now accounts for more than half of all goods sold on the site, and many of the merchants pay Amazon additional fees for warehouse storage, packing and delivery. This also lets Amazon offer a tremendous inventory without having to buy anything, a key competitive edge over retail competitors like Walmart Inc., which is now building its own marketplace.

Bezos again displayed his forward-looking prowess in 2006 with the launch of cloud-computing division Amazon Web Services.

The biggest contributor to Amazon’s success is the Prime membership, launched in 2005. Bezos borrowed a page from discount warehouse shopping clubs and offered cheaper shipping rates to customers paying an annual membership fee that is now $119 in the U.S. Membership converts the occasional online shopper into an Amazon devotee eager to get their money’s worth on shipping. And Amazon keeps adding more perks, like video streaming, online photo storage and most recent discounts at Whole Foods Market, which Amazon acquired last year for $13.7 billion to jump-start its grocery business.

Amazon now has more than 100 million Prime members, which it uses to lure more inventory to its web store, where competition among merchants keeps prices low. Its annual Prime Day sale, sometimes called Christmas in July, generates tremendous publicity and helps attract new members seeking discounts.