June 26, 2003, 12:00 AM

Retailers taking risk selling on Amazon, AMR says

While they go after the huge customer base tied to Amazon.com, retailers placing online stores on Amazon run the risk of selling too close to their direct competitors, analyst Paula Rosenblum says.

Paul Demery

Managing Editor, B2B E-commerce

While e-retailers that link their sites to Amazon.com may leverage the Amazon brand and gain access to a huge new customer base, they run the risk of selling too close to their direct competitors, Paula Rosenblum, a retail analyst with AMR Research Inc., tells InternetRetailer.com. "Their assumption is that Amazon gives them a large number of different customers, but I think it`s a statement of defeat," she says. "If you`re a specialty retailer, why would you share a site with one of your direct competitors?"

Rosenblum notes that, unlike traditional brick-and-mortar malls built with multiple anchor stores, in the online world Amazon is effectively becoming a sole anchor. "That`s a sea change in retailing," she says. "And it`s because Amazon is such a strong brand."

But she warns that retailers should compare the cost of maintaining and expanding their own sites with the cost and risk of placing a store on Amazon. "You still have to get your images and product descriptions to Amazon anyway," she says. "You`re not saving a whole lot of infrastructure costs."

In the meantime, she adds, "the cost of creating and maintaining a web site have gone down tremendously."

 

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