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From...
Industry Standard

Amazon.com already gearing up for holiday crush

July 15, 1999
Web posted at: 9:20 a.m. EDT (1320 GMT)

by Bernhard Warner

(IDG) -- Three months to prepare for the crucial Christmas sales push may not be enough time for some online merchants. The toy-retailing industry may feel the pain most sharply, now that Amazon.com has entered the business.

Getting a head start on the imminent holiday crush, Amazon.com announced Wednesday the opening of two new stores: one for toys and games and another for consumer electronics. The online retail giant is hoping that shoppers will prefer to click a mouse rather than struggle through a noisy, stroller-cluttered toy store or a consumer-electronics shop filled with busy sales clerks.
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"With this launch, our goal is to give customers the Amazon.com experience -- everything from one-click shopping and helpful information to the high level of customer service we traditionally provide -- in the two important categories of toys and electronics," said the company's CEO and founder, Jeff Bezos, in a statement.

Amazon's foray into these new categories will make matters worse for established retailers such as Toys "R" Us and Wal-Mart, who are struggling to mobilize an effective online-commerce strategy. In a further sign that the online retailers intend to get a solid jump on the offline competition, eToys, the Web's top toy seller, has recently diversified into books and baby products.

EToys CEO Toby Lenk narrows his company's competition in the children's products category to three big players: Wal-Mart, Toys "R" Us and now Amazon. Wal-Mart and Toys "R" Us haven't demonstrated a Web proficiency yet, he says, and Amazon has other product categories to fret over. "We're not going to be a general merchandiser. We're going to be a kid specialist," Lenk says. He adds that eToys intends to expand its product selection, though he won't elaborate.

But Amazon has shown that it doesn't take long to exert dominance in any market category. After it launched its music store in June of last year, Amazon wrested the No. 1 spot away from CDnow in under six months. However, eToys' Lenk points out, Amazon has not chipped into eBay's lead in the auction category, and BlueMountainArts.com is still considered king in the electronic-greeting-cards arena.

On the consumer-electronics front, Amazon had been rumored to cut a deal with or even buy one of the top merchants, such as Beyond.com. In the end, it decided to grow the business in-house.

While Amazon wouldn't reveal how many products it will carry in either store, the company is bullish on its chances. No one has an insurmountable lead in either category, the company says. "Far less than 1 percent of electronics sales is done online," says Christopher Payne, general manager of Amazon.com Electronics.

For now, Amazon is steering clear of accepting cooperative advertising monies from either toy or consumer electronics manufacturers in exchange for better placement -- a common practice in the offline world. "That could change though," Payne says.


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