Amazon Finally Clicks

Ten years old and profitable at last, it offers a textbook lesson on how to be both focused and flexible.

Beyond the third-party deals are other new concepts, like the Amazon Services subsidiary, which sells a turnkey, outsourced E-commerce product incorporating Amazon’s recognized shopping features and technology. “I think it’s brilliant actually,” says Patti Freeman Evans, an analyst at Jupitermedia Corp. “They realize that there are hundreds of thousands of independent small businesses out there that don’t have the technology or resources to launch their own E-commerce platforms.”

But for every brilliant move Amazon makes, observers point to something in its current business model that causes concern. Will tax policies change and chill the growing ardor for online shopping? Can Amazon continue to provide free shipping plus low prices? What about its slow acquisition pace, or the brand impact of allowing virtually anybody to sell almost anything (other than pornography, offensive material, and guns) through Amazon Marketplace?

As Amazon begins its second decade, few observers doubt that it will continue its online dominance in the categories that spawned it: books, CDs, and videos. And even those analysts who have concerns readily admit that the company has made history. “I can go up to any person in the street and ask if they’ve heard of Amazon.com,” Underwood says, “and they’ll almost certainly say yes. That’s incredible. Amazon did in a decade what Macy’s did in a century.” But, he adds, “Amazon is in a very competitive battle with these other major sites, and it is way too soon to declare a winner.”

Russ Banham is a Seattle-based writer.

All Things ‘R’ US

Veteran Web shoppers may have noticed something odd: visit Toysrus.com, Target.com, or Borders.com and you’ll see a site that looks an awful lot like Amazon.com. The resemblance varies from one retailer to another, but no matter how you slice it, Amazon.com is a ubiquitous if ghostly presence. The reason stems from what Mark Stabingas, Amazon’s vice president of worldwide business development, dubs a “change of mind-set” circa 2000, when the company began offering its technology service and E-commerce expertise to third parties.

First, the company accommodated third parties such as used-book sellers. Then, in a well-publicized move, it stepped in when Toy “R” Us had problems with its homegrown E-tail effort and provided the company with an E-commerce backbone. The next milestone came in October 2001, when Amazon provided department store Target with a similar backbone but allowed Target to entirely control the look and feel of its Website.

The Target deal is a high-profile success for Amazon’s Amazon Services subsidiary, a $1 billion effort that essentially falls into two categories: Merchants@amazon.com and Merchant.com. “Merchants@amazon is a merchandising relationship designed to open up an incremental sales channel to retailers that want to access our tens of millions of customers,” explains Stabingas. “A good example is Gap or Nordstrom. You can click on either one in our apparel section and buy online from these stores. They are the seller of record handling the fulfillment, and we earn a commission on each sale.”

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