Amazon pursuing more retail alliances
Published 9:00 pm Wednesday, February 6, 2002
Associated Press
Investors in Seattle’s Amazon.com Inc. can expect more savvy business partnerships in which other retailers try to preserve their own branding identity, a top company executive said.
Warren Jenson, the online retailer’s chief financial officer, said those companies include Target Corp., Borders Group Inc., Toys R Us Inc. and Circuit City. He made his comments earlier this week at the Goldman Sachs technology conference in LaQuinta, Calif.
Jenson said the Target relationship is a unique one that Amazon began recently. It involves managing the retail chain’s Internet site so Target can retain its branding independence while avoiding the hassles of managing its own online store.
There are other partnering deals, including the ones it runs for Toys R Us, Circuit City and Borders, where it brings online customers to the Amazon Web site for shopping of each chain’s merchandise.
The retailers essentially brand their products through Amazon.
Amazon also is trying other marketing angles in the online space, including buying the bankrupt name Egghead.com, the 1980s software chain that filed for bankruptcy protection last year, and make a go of it by utilizing Amazon’s asset base to sell merchandise. "It takes five people a year to operate," Jenson said.
He also said that Amazon has met with success with its "in-store pickup" concept, which it launched with Circuit City last fall. This is where customers pick up their merchandise from a local Circuit City store after ordering it online. It’s all part of what Jenson described as developing "a better customer experience."
The e-commerce bellwether recently hit a big milestone in its 2001 fourth quarter when it turned its first profit, eking out a net gain of $5 million, partly because of a $16 million gain on foreign currency exchanges.
Amazon accomplished the not-so-small feat by diversifying its sources of revenue last year and reducing its technology spending to $30 million a year from $80 million to $90 million by focusing on the Linux operating system, tangible operational efficiencies and other cost-cutting initiatives, according to Jenson.
"In one year, we’ve gone from one source of revenue to four," said Jenson, citing its bread-and-butter sale of books, and now its foray into used books, and selling merchandise from its business partnership, and a "Detail Page" where consumers can sell their own merchandise.
Copyright ©2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
