Amazon.com still sitting pretty - East Valley Tribune: Business

Amazon.com still sitting pretty

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Posted: Monday, July 11, 2005 5:57 am | Updated: 9:07 am, Fri Oct 7, 2011.

SEATTLE - Soon after Amazon.com debuted 10 years ago, Jeff Bezos and his handful of employees spent late summer nights packing books in a tiny warehouse, scrambling to ship a growing gush of orders.

Today, the man who has grown accustomed to being hailed the king of Internet commerce runs a global powerhouse that did nearly $7 billion in sales last year, dealing in everything from banjo cases to wild boar baby back ribs.

As more businesses beef up their online operations, is the company that helped get it all started in danger of seeing its dominance eroded by the competitors it helped spawn?

Time will tell, but industry experts say Amazon is well positioned to maintain a firm grip on its title as the undisputed e-commerce leader.

‘‘I think Amazon’s biggest challenge is itself. They’ve really raised the bar for the entire industry,’’ said Kurt Peters, editor of Internet Retailer, a monthly magazine that covers the business.

In the beginning, Bezos said he had no plans to sell anything but books online. But after it went live on July 16, 1995, the business took off more quickly than anyone had predicted, and before long customers started clamoring for more.

‘‘We actually started to get e-mails from customers saying, ‘Would you consider selling music, because I’d really like to buy music this way, and DVDs, and electronics?’ " Bezos said in a recent interview.

Amazon has nearly 49 million active customers. They bought more electronics during last year’s holiday blitz than books, a first for the company.

With $6.92 billion in sales in 2004, Amazon ranked at the top of Internet Retailer’s annual top 400 list, well ahead of computer maker Dell, which posted $3.25 billion in online business-to-consumer sales. Office Depot, which has a partnership with Amazon, wasn’t far behind with $3.1 billion.

EBay users sold $34.2 billion in merchandise through the online auction house in 2004 but the magazine doesn’t include it on the list because it’s essentially an online shopping bazaar, not a retailer.

Scott Devitt, an analyst with the Baltimore investment firm Legg Mason Wood Walker said he thinks comparison shopping sites like shopping.com and shopzilla.com pose the most formidable threat, because they can often push prices lower than Amazon.

‘‘But when you buy from a comparison shopping site, just like when you buy from eBay, you don’t know what you’re getting from the merchant,’’ Devitt said. Amazon has had a decade to build up trust that it will deliver orders on time and cheaply enough to keep customers coming back.

Amazon’s groundwork paved the way for competitors to follow, but Devitt says he thinks most retailers, especially brick-and-mortar shops, have a lot of catching up to do: ‘‘Amazon is always one step ahead.’’

‘‘Earth’s Biggest Selection’’ no doubt owes at least part of its name to the alliances it has forged with dozens of highprofile retailers, including Target Corp., Macy’s, Nordstrom, Toys R Us and wine.com.

‘‘If there were a significant interruption to those, that could be a problem for Amazon,’’ said Richard Hastings, a retail analyst for the creditratings firm Bernard Sands.

To hold onto its spot as top dog, Hastings said Amazon will have to keep being nimble to fend off attackers at the flanks of its business, like eBay, online DVD rental Netflix and discount retailer overstock.com.

More than 900,000 thirdparty sellers now hawk their wares on Amazon, making up more than a quarter of last year’s overall sales — a sure sign that Amazon is getting serious about taking on eBay.

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