#286 1995 · Amazon.com · E-commerce / book retailbuy-the-mispriced
Amazon needed one book from a wholesaler with a 10-book minimum, so it ordered nine copies of a book it knew would never arrive
the problem
A minimum-order rule blocks a customer who legitimately only wants one unit at a time
background
Amazon opened in 1995 selling books it didn't stock itself, fulfilling each customer order by placing a matching order with book wholesalers — but those wholesalers required a minimum order of ten books at a time, a rule built around the assumption that any buyer placing wholesale orders was a bookstore restocking shelves, not a retailer fulfilling single customer purchases one at a time. In Amazon's earliest months it wasn't reliably receiving ten individual customer orders a day, let alone ten orders for the same title, so the minimum threatened to stall order fulfillment entirely.
Jeff Bezos tried the direct route first: asking wholesalers to waive the ten-book minimum for a small fee. They declined. The obvious compliant workaround — buy nine books nobody wants just to hit the minimum — would have been expensive and wasteful at Amazon's thin early margins, so Bezos needed a way to satisfy the wholesaler's order-quantity rule without actually paying for nine unwanted books.
the move
Amazon found an obscure book about lichens that was listed in the wholesalers' ordering system but permanently out of stock. Whenever a customer ordered a single title, Amazon's order to the wholesaler listed that one book plus nine copies of the lichen book — satisfying the ten-book minimum on paper. The wholesaler shipped the one real book along with an apology that the other nine, the lichen book, were unavailable, and never billed Amazon for stock it couldn't supply.
the payoff
The workaround let Amazon fulfill single-book customer orders through wholesalers designed around ten-book minimums without either violating the rule or paying for books it didn't need, buying Amazon runway during its earliest, thinnest-margin months before it later negotiated volume relationships that made the trick unnecessary. Bezos told the story himself in a 1998 talk, three years after founding the company, recalling that he later joked about it directly with the wholesalers involved.
what came after
The lichen-book story is retold in Amazon origin-story retrospectives and startup/bootstrapping circles as a canonical example of satisfying a rigid counterparty rule's literal terms without accepting the cost the rule assumed you'd pay, and it's frequently cited alongside Amazon's other early scrappy-workaround stories from before the company had negotiating leverage with suppliers.
references
- [1]Jeff Bezos speech when Amazon was 3 years oldLoop Insight, 2013loopinsight.com
- [2]Jeff Bezos Used a Brilliantly Simple Trick at Amazon. Here's How It WorkedInc., 2019inc.com