Word: amazon
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Dates: during 1990-1999
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...Amazon has managed to hold that early lead, amassing a base of 4.5 million customers that is the envy of the "e-tailing" world. Service has been its secret weapon. Its website deftly mixes simplicity with depth, offering book reviews and personalized recommendations. Orders automatically generate a thank-you e-mail. And Amazon will hunt down any title you can't find, even out-of-print books, with the friendly zealousness of a small-town Midwesterner giving you directions to the doughnut shop. "Word of mouth is incredibly powerful online," explains Jeffrey Bezos, 34, Amazon's founder...
While the selection at Amazon is far greater than even at the megabookstores, and the shopping is PC-potato easy, it's seldom cheaper and certainly not faster. Amazon chops an impressive 30% or 40% off the list prices of most hardcovers, but standard shipping adds back about $4 and takes three to seven business days. Next-day shipping runs $11, eating nearly every penny of the $11.58 you'd save on Tom Wolfe's A Man in Full, for instance, compared with the full list price...
...week before Thanksgiving, Amazon announced it would try its hand at stuffing stockings with videos and an assortment of holiday gifts, including toys and electronic games. There's reason to believe the crossover can work. Amazon began selling music in June and quickly grabbed the lead in online CD retailing...
...more Amazon sells, though, the more money it loses. Last quarter's net loss of $24.7 million was more than double the loss in the same period last year, even as sales tripled to about $38 million and the ranks of its notoriously loyal customers nearly quadrupled. And those losses are expected to continue at least through 1999. Bezos insists that focusing on profits during this growth phase would be a "strategic mistake." Amazon's proponents believe market share is what matters, and the company will reap its earnings rewards when online buying heats up and its marketing blitz cools...
This vision is embraced by the individual investors (many of them trading online) who have driven Amazon's stock beyond any established benchmark of price-to-revenues. But many analysts and institutional investors view the stock as overpriced and believe the company faces a tangle of challenges. Its principal foe, Barnes & Noble, recently purchased the Ingram Book Group, the largest U.S. wholesaler to book retailers, including Amazon. This follows Barnes & Noble's sale of 50% of its website operations to giant publisher Bertelsmann AG, creating a potent synergy. Meanwhile, nine other major Web retailers, including CDnow and eToys, recently banded...