With the firm belief that PC sales will migrate to the Internet from brick & mortar stores, Amazon.com opened Amazon Computers over the Labor Day weekend.
The e-commerce giant's newest standalone online store, found at www.amazon.com/computers, opened its virtual doors on September 1 with more than 100 PC and notebook SKUs from Apple, Hewlett-Packard, Compaq, IBM and Toshiba.
Jumping into PC sales during the worst sales period the category has ever experienced is daunting, but Amazon firmly believes that in the future consumers will buy their PCs online, said Richard Chin, general manager of the store.
"The share of PCs purchased on the web is now about 15 percent," he said, "but we expect 30 to 40 percent of these sales to be transacted on the web in the near future."
For the most part the PCs and notebooks are the only new products in Amazon's merchandise mix. Customers can already find a wide array of computer peripherals, digital cameras, software and handheld computers at the company's CE store. But to help stock the PC store and keep down confusion the products will not be shifted to the computer store, but offered in both, Chin said. Amazon is outsourcing fulfillment for most of the computer store purchases to distributor Ingram Micro, which already handles delivery for many products bought in the CE store, Chin said. To a lesser extent Circuit City will take some of the pressure with the deal it just struck giving Amazon customers the choice of picking up their purchases at a local Circuit City location. (See related story, which starts on p. 1.)
Amazon Computers breaks new ground in two areas for the retailer. A segment of the site is dedicated to selling used and refurbished PCs and notebooks, Chin said. Amazon has contracted with several companies to obtain product and handle quality control issues to assure these products are fully functional. A warranty from both Amazon and these outside firms will guarantee customer satisfaction with any such purchase, Chin said.
The opening of the computer store marks Amazon's entry into business-to-business sales. More than half of the 100 PC and notebook SKUs come from the vendor's commercial lines, Chin said. To encourage business of all sizes to try out this new service, Amazon will allow these orders to be handled with purchase orders instead of requiring a credit card number.
Amazon plans to attract customers using a mix of online technology and old fashioned, personalized customer service, Chin said.
Value, selection and sales help are the three tools the new store will use to pull customers away from conventional stores and direct sellers like Gateway and Dell, said Chin. The complicated nature of a computer sale has pushed Amazon to develop several new online and telephone-based customer service programs.
The first is the Buying Advisor. Using a series of multiple choice questions it will help novices pick out the computer that best fits their needs. The Configuration Finder is for more advanced consumer who want to find a PC with very specific capabilities, such as more RAM, faster processor or DVD-ROM drive. The last is the Accessories Finder, which matches compatible add-ons to the person's newly purchased or current computer. If the customer requires additional help he or she can call a toll free number and be assisted by a sales associate. Chin said the various manufacturers have trained these staffers in all aspects of the various products. In addition, they can take the person's order over the phone.
Possibly the highest hurdle facing Amazon is the shipping charge added to all purchases. This is expected to add $20 to $40 to the purchase of a notebook or computer, which could make a huge difference to the price sensitive PC customer.
Chin hopes to overcome this through on site promotions and making it easier for end users to redeem manufacturer rebates.