July 15, 2005 4:00 AM PDT

Amazon faces the challenges of its second decade

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be "Earth's most customer-centric company," goes on to promise "to build a place where people can come to find and discover anything they might want to buy online."

For an increasing number of online shoppers, however, that second goal is more efficiently accomplished by online shopping engines. The shopping comparison business heated up recently with a pair of big acquisitions: Scripps last month acquired Shopzilla for $525 million, days after eBay said it would acquire Shopping.com for $620 million. Google has been testing its online retail search, Froogle, since 2002.

"That's where the search challenge to Amazon's growth comes into play," Alvarez said. "Now that they offer a lot of categories, getting you in front of the product in as few clicks as possible really matters."

More competition looms in the as-yet-undefined world of digital and on-demand delivery. Apple Computer demonstrated the potential of digital delivery with its successful iTunes music store, but that success has yet to be replicated with movies or books.

Amazon has tried to shore up its on-demand offerings with the acquisitions of the BookSurge print-on-demand service in April and of the CustomFlix DVD-on-demand start-up this month.

On average, analysts show ambivalence about Amazon's prospects. Of 22 analysts surveyed by Thompson First Call, six rate it "buy" or "strong buy," 10 rate it "hold," and six rate it "sell" or "strong sell."

Despite concerns about competitive pressure, Smith Barney's Mahaney said his "hold" rating reflects the solid position Amazon has staked out in its 10 years.

"From a really long-term point of view, given where it started, it's a profitable, fast-growing business," Mahaney said. "You're still talking about a company with a market cap of $15 billion. I think Amazon's worth $15 billion."

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13 comments

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Amazon Won't Last Alone
In 2000, I was running Gartner's eBusiness Resource Center. I predicted that Amazon would ultimately merge with one of the major retailers - either Barnes & Noble or Borders Books and Music. What has actually happened is that B&N wasted a ton of money replicating Amazon and getting sued in the process while Borders ultimately cut a deal with the online giant (www.borders.com IS Amazon).

I still predict an ultimate merger between Borders and Amazon - unless Wal*Mart steps in and buys them first.

Al Case - CEO, &lt;a href="http://www.stamfordresearch.com&gt;Stamford Research</a>
Posted by afbcasejr (5 comments )
Reply Link Flag
Amazon Won't Last Alone
In 2000, I was running Gartner's eBusiness Resource Center. I predicted that Amazon would ultimately merge with one of the major retailers - either Barnes &#38; Noble or Borders Books and Music. What has actually happened is that B&#38;N wasted a ton of money replicating Amazon and getting sued in the process while Borders ultimately cut a deal with the online giant (www.borders.com IS Amazon).

I still predict an ultimate merger between Borders and Amazon - unless Wal*Mart steps in and buys them first.

Al Case - CEO, &lt;a href="http://www.stamfordresearch.com&gt;Stamford Research</a>
Posted by afbcasejr (5 comments )
Reply Link Flag
I love Amazon! No taxes, free shipping
I just had to return a product last week. No questions asked, they took it back, paid for shipping and I already have my refund.

Agree, that Amazon rocks! Let's hope Congress doesn't screw it up by creating internet taxes.
Posted by bobby_brady (765 comments )
Reply Link Flag
Internet Sales Taxes Coming Soon
I read on another news.com story that the states are creating a simpler sales tax system. My guess is, once that system is in place, they will lobby Congress to force all online retainers to use it.

Sales tax AND shipping costs with every purchase, yay. :-P
Posted by bluemist9999 (1020 comments )
Link Flag
I love Amazon! No taxes, free shipping
I just had to return a product last week. No questions asked, they took it back, paid for shipping and I already have my refund.

Agree, that Amazon rocks! Let's hope Congress doesn't screw it up by creating internet taxes.
Posted by bobby_brady (765 comments )
Reply Link Flag
Internet Sales Taxes Coming Soon
I read on another news.com story that the states are creating a simpler sales tax system. My guess is, once that system is in place, they will lobby Congress to force all online retainers to use it.

Sales tax AND shipping costs with every purchase, yay. :-P
Posted by bluemist9999 (1020 comments )
Link Flag
Amazon - best thing to happen to the net
Fast,free shipping, great customer service and lots of stuff.

On top of that, the user reviews can be really helpful in choosing the right product.

I hope they can pull through.
Posted by (56 comments )
Reply Link Flag
Amazon - best thing to happen to the net
Fast,free shipping, great customer service and lots of stuff.

On top of that, the user reviews can be really helpful in choosing the right product.

I hope they can pull through.
Posted by (56 comments )
Reply Link Flag
Former customer
I once drank the Amazon.com Kool-Aid as well. That was until I ordered a book through them from a rare book vendor named Booksquire. Amazon charged my credit card. Booksquire did not deliver and when I inquired after several months wait told me they would send me a check, which they never did. When I complained to Amazon.com, they would do nothing because more than 90 days had elapsed. After several attempts to get them to refund me the money that THEY charged me without them or THEIR merchant partner delivering anything, I canceled what had been a very active account for several years. I will not deal with companies that do not deal in good faith, and Amazon.com is one of them. No more Amazon.com Kool-Aid for me.
Posted by (3 comments )
Reply Link Flag
Former customer
I once drank the Amazon.com Kool-Aid as well. That was until I ordered a book through them from a rare book vendor named Booksquire. Amazon charged my credit card. Booksquire did not deliver and when I inquired after several months wait told me they would send me a check, which they never did. When I complained to Amazon.com, they would do nothing because more than 90 days had elapsed. After several attempts to get them to refund me the money that THEY charged me without them or THEIR merchant partner delivering anything, I canceled what had been a very active account for several years. I will not deal with companies that do not deal in good faith, and Amazon.com is one of them. No more Amazon.com Kool-Aid for me.
Posted by (3 comments )
Reply Link Flag
No time for Amazon....
... it's a great pile of PR, but I can get better prices locally, wthout
shipping or delay, on almost anything I might buy from Amazon.
And I don't have to put up with all the 'suggestions' Amazon thinks
that I would be interested in. And there's only one way to turn off
the Amazon garbage stream - don't go to the Amazon website.
That's a relatively easy solution.......
Posted by Earl Benser (4310 comments )
Reply Link Flag
No time for Amazon....
... it's a great pile of PR, but I can get better prices locally, wthout
shipping or delay, on almost anything I might buy from Amazon.
And I don't have to put up with all the 'suggestions' Amazon thinks
that I would be interested in. And there's only one way to turn off
the Amazon garbage stream - don't go to the Amazon website.
That's a relatively easy solution.......
Posted by Earl Benser (4310 comments )
Reply Link Flag
amazon provide many facilities like u have to pay 30 dollars per year and get many features,what if someone publisches a common account with password and earns .5 dollar with that account and buys things of customers from money sent buy customers on his account?

or if someone tomorrow instead of getting 2 dollar per sale only make 1/100 of it?

or if some viruses attack customers?

or
or...
Posted by chingrichard1 (1 comment )
Reply Link Flag
 

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