By Rachel Chalmers
Amazon.com Inc held its first ever press conference on September 29, 1999 in order to re-launch itself as a kind of web mall. The company’s new zShops are available to any and all third-party merchants, from micro-manufacturers to mega-corporations. The service is expected to add another 500,000 products to Amazon’s existing inventory: only guns and live animals are ruled out of bounds. Even rival booksellers, music, video and consumer electronics stores are welcome to try their hand at competing with the Seattle-based giant, CEO Jeff Bezos insisted. In the categories where we are selling things directly, if we can’t be competitive, then we shouldn’t be standing in the way of our customers, he argued. We don’t really care whether we sell something through zShops or sell something directly ourselves. It’s sort of a wash for us.
In order to maintain its reputation, Amazon promises to guarantee purchases made at zShops through a new Amazon.com Payments service, up to a value of $1000. zShops merchants will be charged $9.99 per month for access to the 12 million shoppers expected to visit the site. Amazon will take a commission of 2 to 5% of the purchase price of every product sold through zShops. On top of that, merchants using the Payments service will be charged at 60 cents per transaction plus 4.75% of the purchase price. As well as zShops and Payments, Amazon announced a new search engine, All Products Search, designed to scour the internet to match buyers with sellers. All three features are slated to go live today (Thursday September 30 1999).
The market welcomed the news, and Amazon shares closed up 22% at $80.75. BancBoston Robertson Stephens senior eTailing analyst Lauren Cooks Levitan reiterated her Strong Buy rating on Amazon. We believe zShops creates an attractive and inexpensive entry vehicle to the online channel for a variety of retailers and manufacturers, she explained, representing open-ended opportunity for Amazon. While we are maintaining our estimates until we gain visibility on the impact of these moves, we believe zShops could generate significant high-margin revenue for the company.
