In its second-largest acquisition, Amazon buys the company for $970 million.
Amazon.com, the magilla of e-retailing, wrote the book on what makes a Web site successful-clean organization, easy navigation, huge inventory and personal touches. And it’s still the one to watch. The store greets customers by name when they log on, and shoppers can build a sense of community by reading and writing reviews.
Amazon also scores high for marketing prowess. “It does a terrific job of recommendations and a good job of extending people to its other categories,” says James Vogtle, e-commerce research director at the Boston Consulting Group in Toronto. When Amazon launches something new, it sends an e-mail to its existing customer list, along with some kind of incentive for trying out the new category.
Jeff Bezos founded Amazon.com reasoning that there were too many book titles to fit inside a bricks-and-mortar store. Amazon currently offers more than 4.7 million books, CDs, videos, DVDs and video games, and it routinely captures twice the monthly traffic of other retail sites. What’s more, with its expansion into software, videos and toys and investments in other categories (Pets.com, Drugstore.com), the company is creating an online dynasty.
Still, there’s a difference between extending the brand and over-reaching, points out Will Ander, partner at McMillan/Doolittle in Chicago. “Amazon’s auctions,” he adds, “are weaker than eBay’s.”