Amazon Extends Its CE Beachhead

By Alan Wolf -- TWICE, 11/11/1999

Four months after adding electronics to its product mix, Amazon.com has doubled its CE assortment and spun off its software offerings into a separate online store.

Moreover, Amazon founder and CEO Jeff Bezos told TWICE that his company has made strides in securing authorization from electronics manufacturers to peddle their products, which was a point of contention when the CE store went live in July.

According to Christopher Payne, general manager of electronics for the Seattle-based e-tailer, Amazon has more than doubled its selection of electronics products and has improved its brand offerings since launching the CE store on July 13.

New additions include the ReplayTV Networks 2020 hard disk video recorder, an Amazon exclusive through November 15, plus a wide array of PC peripherals and other electronics accessories.

"Customers are frustrated when they buy a product at a store but can't find all of the ancillary items needed to make it sing," Payne said.

Despite the presence of peripherals, and the addition of a stand-alone software shop, Amazon still eschews PCs. "We have an interest in the category, and haven't ruled it out, but they're not in store for 1999," he said. Computers are available, however, through the company's new zShops area, where businesses and individuals can sell their wares directly to Amazon customers.

Another new, and potentially controversial addition to the CE section is a Sony store-within-a-store, which features what Payne describes as an "across the board" selection of Sony branded products. While the world's biggest electronics maker and the world's largest cyberstore are likely to partner in the near future, Amazon -- along with all other pure play e-tailers -- is still unauthorized to carry Sony products, making the branded shop a potential source of friction.

Amazon boss Bezos declined to discuss individual vendors, telling TWICE that "We carry an extensive assortment of electronics products, and manufacturer by manufacturer, we're finding people to be extremely cooperative."

Payne noted that the creation of the Sony sub-store, as with most features on Amazon's site, was "based on feedback from customers," but wouldn't address his relationship with Sony specifically. "Over the last six months," he said, "there's been a change in manufacturers' attitudes about the Internet. Manufacturers have become very excited about it and have become very impressed by what I think is the key point: customers want to buy online."

While Amazon has "a number of direct partnerships" with electronics suppliers, Payne is unfazed by manufacturers' efforts at selling their own products direct through cyberspace. "I think it's great," he said. "Although it's a very small part of the business today, it only increases awareness of buying electronics online. The more retailers and manufacturers sell these products over the Internet, the better off consumers will be."

"Besides," he said, "there's plenty of room here for everybody."

Bezos, Payne and other Amazon executives were in New York last week to announce the launch of four new cyber stores for software, video games, gifts and home improvement products, a new category for the company. Bezos said the software shop will offer "ten times the selection of a typical software store," while the video game section will address every platform and carry "basically every video game on the planet."

"We've done research," he laughed, "and all of our customers have computers. And they will probably want software."

Unlike other online software sellers like Beyond.com, which offer delivery via download, Amazon will sell only packaged products for the foreseeable future. "We decided not to do downloadable software," Bezos said. "The experience is not good enough yet. We do downloadable music, and will do the same for software eventually, but it's a few generations early for that."

Kirk Koenigsbauer, manager of the new software store, said he is sourcing his products through a number of distributors including Ingram Micro, Merisel and Tech Data, while more popular titles are being shipped to Amazon's six national distribution centers directly by publishers.

Koenigsbauer said he assembled his buying team from the ranks of such software sellers as Egghead and Staples, and that the launch of his store was timed to the holiday selling season, when the pace of software sales traditionally doubles.

"Software, along with books and music, is one of the top three gifts purchased online," he said.