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Monday, Jul. 30, 2007 at 2:25 pm

Amazon Still Dominates e-Commerce for a Reason

By Robert Gorell
July 30th, 2007

When they started out, Amazon.com (AMZN) promised us “Everything from A to Z.” A decade later, that’s almost true. Unless you’re looking for enriched uranium at a discount price, they’ve likely got you covered.

Thanks to the vision of founder/CEO Jeff Bezos, Amazon showed early on that they distribution, fulfillment, and an amazing customer experience — online and offline — were the way to win.

That hasn’t changed.

While the likes of eBay (EBAY) and Best Buy (BBY) suffer, USA Today writes that “Amazon won’t go down with the ship” — they won’t ditch free shipping, that is…

Wall Street hates it when we lower prices, give away free shipping, and offer Amazon Prime,” Bezos said in an e-mail interview. “But we know in our bones that siding with the customer pays off for everyone in the end.”

But for now, all cylinders seem to be firing. During the normally sleepy April-to-June quarter, Amazon’s sales zoomed 35% higher than the year-earlier period. That came after a 32% first-quarter jump, preceded by a 34% year-over-year spike in last year’s fourth quarter — the holiday shopping season.

[...] Amazon’s sales of consumer electronics and general merchandize grew 55% to $970 million, in this year’s second quarter. The company projects 2007 sales of $13.8 billion to $14.3 billion, which would be a 29% to 34% improvement over 2006.

“It’s a pretty interesting dynamic,” Munarriz says. “There’s no back-to-school reason to buy a new computer, no holiday gifts to give, and yet Amazon has begun landing the sales these other companies aren’t.

Without divulging specifics, the company alludes to Prime playing a larger role in boosting sales. “Once customers try Amazon Prime, it changes the way they shop with us,” Bezos says. “They love taking advantage of unlimited two-day shipping for a flat fee, and they shop across more categories.”

Why Jeff Bezos is rarely mentioned along with digerati Steve Jobs or Bill Gates is beyond me (and others, apparently*). Still, a better comparison might be made between Bezos and Wal-Mart founding father Sam Walton; both understood the power of creating value for the customer and infused it in their respective companies’ DNA.

Maybe Jeff Bezos isn’t sweating it because he knows we’re still early in the game. (If you’ve got 18 minutes, this presentation is worth its weight in gold.)

[*Another blogger, whose post I can't find at the moment, said the same thing over the weekend in a different context. Wish I remembered who it was so I could give you credit.]

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Comments (5)

  1. Here’s my list of 10 Reasons Why Jeff Bezos is My Favorite CEO that I published back in February. I think he’s highly underestimated.

  2. Siding with the customer in the end is always smarter, at least if you give off that allusion!

  3. It is almost true that amazon has brought the house, and the kitchen sink, but that is why they dominate. They have become a trusted source, which isn’t easy.

  4. very interesting stuff.

  5. My only complaint with Amazon is it does not offer PayPal services. I find this quite frustrating of late as I prefer to use PayPal as does many of my associates. Come on AMazon!

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