Bezos Explains How Amazon's CE Sales Grew 50 Percent In '03
By Alan Wolf -- TWICE, 1/26/2004
LAS VEGAS — A larger assortment, a robust holiday selling season and a free shipping offer helped Amazon.com grow its CE business by 50 percent in unit sales in 2003, founder/CEO Jeff Bezos told CES attendees here earlier this month.
Speaking at a press luncheon, Bezos said he was "very happy with the holiday season" overall, during which the company shipped 2.1 million units in total. That helped push the e-tailer's Electronics and General Merchandise unit, of which CE represents the lion's share of revenue, over the $1 billion sales mark last year for the first time.
Fueling that growth was a 40 percent increase in CE SKUs and the addition of new brands, including Denon and Delphi. "We're now buying entire lines from vendors, we don't cherry-pick," he said, giving Amazon 10 times the selection of big-box retail stores.
Also supporting the e-tailer's growth are its brick-and-mortar retail partnerships, which last year expanded to include J&R Music World, and its online teaching tools that help educate consumers about products and technologies. Those tools include downloadable product manuals for 25,000 items that customers accessed two million times last year both before and after sales; vendor-linked user guides; and product reviews by customers, which themselves are rated for helpfulness.
Bezos also boasted that Amazon's early adopter audience tends to buy higher-end models, affording the company higher average selling prices (ASPs) than the industry as a whole. Indeed, Amazon enjoys a 42 percent price premium in PCs, a 49 percent premium in MP3 prices and a 60 percent premium over the industry ASP for photo printers, according to Amazon and NPD Group data.
Bezos said the company spent time tinkering with its free-shipping offer, which now requires a $25 minimum purchase, down from $75. Amazon is subsidizing the feature with funds that had been earmarked in past years for marketing and advertising.
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