E-business darling Amazon.com has taken the next step along the road to becoming the Wal-Mart of on-line retailing. Having dominated bookselling on the Net (e-commerce think tank Jupiter Communications reportedly puts Amazon’s share of on-line book sales at 90%), the Seattle, Washington-based company began selling music in June, and most recently has branched out into movies. ‘We’ve found that people on the Net who buy books will buy CDs, and people who buy CDs will also buy movies,’ says Amazon spokesperson Bill Curry.
On November 17, Amazon.com introduced its video and DVD store with a start-up inventory of 60,000 VHS titles and 2,000 DVD selections. Like other video retailers operating on the Net, Amazon’s movie section features a search-and-browse function, extensive editorial-including staff and customer reviews for each movie, top-seller lists by genre and a raft of personalization perks (like e-mail notification of upcoming deals and releases)-all of which are designed to ensure repeat business.
Amazon.com is positioning itself to appeal to mainstream consumers who are currently buying movies through bricks-and-mortar stores, says Curry. To achieve that, it has entered into a number of marketing relationships with other companies doing business on the Net, inking deals with both MSN.com’s Shopping Channel and Netscape’s Shopping Center to become the official movie merchant for both portal pages, as well as a traffic-sharing agreement with on-line DVD rental store NetFlix.com. It is also signing hundreds of affiliate deals with consumers’ personal Web pages.
Another aspect of the strategy to attract the mainstream customer includes wooing parents by stocking a substantial volume of titles with kid appeal. Roughly 20% of Amazon’s movies fall within the category of kids & family, says Doug Thomas, a content editor at Amazon. In fact, kids & family is the only genre listed on the video page’s navigation bar that takes consumers directly to the category’s title listings. All videos, including kid and family movies, are being discounted at up to 30% below list price.
In terms of editorial content, Amazon has licensed all of the reviews from Leonard Maltin’s Movie and Video Guide 1999, and is maintaining a link to the Internet Movie Database (a resource for cinephiles or the curious masses, it contains info on nearly every film ever made), which Amazon purchased last April.
While the Net is already crowded with retailers selling videos and DVDs, many of whom boast larger inventories-Reel.com, VideoServe and BigStar.com all list in excess of 100,000 VHS titles-Curry is confident that Amazon’s brand strength as an established on-line retailer will help it win the virtual video wars, and cites an analogy to its dominance in on-line book retailing as proof.
‘In the third quarter of last year, Amazon.com acquired 1.5 million new customers-people who bought something on the Net for the first time. Over the same period, barnesandnoble.com, which everybody holds up as our competition, had a total 900,000 customers,’ says Curry. (barnesandnoble.com spokesperson Ben Boyd put the number at 950,000.) ‘Now, if you’re trying to grow a business, where are you going to go to get new customers,’ asks Curry? ‘You’re going to go to those people who have not yet shopped, as opposed to going after the barnesandnoble.com’s customer base, because it’s too small.’
Curry’s contention that on-line video purchases are about to balloon as a result of first-time consumers moving into the virtual marketplace is not without support. A study by Internet retailing research firm Forrester Research predicts on-line video sales will jump from US$151 million to US$1.3 billion by 2003. Amazon is showing more tempered optimism with toys, though. In November, it started offering consumers a range of dolls, plush, lunch boxes and educational games through its gift store. Amazon carried the toys for the holidays only, from November to January. Curry wouldn’t say if the retailer would commit to the category year-round, nor would he reveal what product the company would focus on next.
‘We have said in the past that our long-term vision was to be the leading destination for e-commerce. . . Exactly what those items will be? Film at eleven.’