In its second-largest acquisition, Amazon buys the company for $970 million.
Comprehensive coverage of the first Internet Retailer conference
A common theme among the more than 50 speakers in 33 sessions at Internet Retailer 2005 Conference & Exhibition was: Internet retailing has come of age and retailers who are to succeed online better get their processes and procedures in place before their competitors do. Internet Retailer 2005 hosted a sellout crowd of more than 1,100 attendees and 45 exhibitors at the Hyatt Regency Chicago June 6-8. The conference was aptly summed up by keynote speaker Tom Beckwith of Amazon, when he said: "This is not the retail we used to know." Following is complete coverage of the conference.
Day 1 Keynote: The future is collaboration
Unleashing the Retailing Power of the Web, Keynote Address
Tom Beckwith, vice president, Amazon Services Inc.
27% of units sold on Amazon`s platform last year were from other retailers, making third-party sales a key part of Amazon`s business. "Amazon`s best opportunity to grow is in working with our retail partners," said Tom Beckwith, vice president of Amazon Services Inc. and keynote speaker Day One of Internet Retailer 2005. In fact, retailer partnerships are such a fast-growing part of its business that Amazon separated its services business into a wholly-owned subsidiary this year, Beckwith noted.
The notion of two stores with competitive overlap existing side by side on one online platform owned by one of them is just one example of how the Internet is changing retailing, Beckwith said. "This is not the retail we used to know," he said.
Bombay.com operates on Amazon`s platform and maintains a presence in Amazon`s home store under the Merchants at Amazon program. Stacey Gross, director of Internet operations for The Bombay Co., joined Beckwith on stage and reported that the ability to access advanced functionality from the specialized technology developers with which Amazon has partnerships was key in Bombay`s decision to relaunch on Amazon`s platform last year.
When weighing the build or buy option for its most recent major site upgrade, Gross said Bombay looked from a technology and business perspective at hardware and software costs and other needs. "We got the plusses we were looking for and none of the negatives from Amazon," she said.
Both Gross and Beckwith addressed an audience question about whether Bombay had competitive concerns about operating its own store on Amazon as well as being part of the Merchants at Amazon program. Gross said Bombay receives "substantially more" traffic directly from the web than it does through Merchants at Amazon. "We`re not intimidated by any comparison portal," she said, adding that Merchants at Amazon participation is a good source of customer feedback.
Beckwith noted that building on success will require retailers to invest in capacities where they are strong and to augment weaknesses through partnerships with best of breed providers. "Both are attained through collaboration," he observed. "With that, we can unleash the retail power of the web."
The changing landscape of retailing
State of the Online Market: Where We Are, Where We`re Going
Dan Hess, senior vice president, comScore Networks Inc.
Mary Brett Whitfield, senior VP, Retail Forward Inc.
Online retailing is large, healthy and fast-growing. fueled by the emergence of a precision shopping machine--the multi-channel consumer, Dan Hess, senior vice president of comScore Networks, told the conference. "Last year, online retail totaled over $65 billion, up 26% over the prior year," Hess said. "That doesn`t include auctions and travel, which take the number well over $100 billion."
A trend contributing to the increase in online spending is the spread of broadband, Hess said. "While growth in the U.S. Internet population is slowing, there is continued rapid growth in broadband," he said. "More than 50% of users have broadband at home, and that is making it easier than ever to shop online, cross-shop online, find the best deal, the best product and the best retailer to deliver it."
Also contributing are a 66% increase in traffic to comparison shopping sites over the past two years and heavier consumer use of search engines, Hess said.
But online sales still represent less than 5% of total retail sales, said Mary Brett Whitfield, senior vice president of Retail Forward Inc. Many retailers now are looking to their web sites not just to generate revenues but to contribute to their companies` entire sales, Whitfield said. "Even though there`s a lot of action online, a lot of it is not about transactions," she said.
It`s hard to imagine any other development in recent history with more potential to change the retail landscape than the online retailing environment, Whitfield said. "Customers today have more access to information about products, prices and availability and quality than ever before, so it`s really revolutionized how they approach shopping," she said.
Why catalogers didn`t launch Amazon
Can the Web Expand the Market for Catalog Merchants?
Martin McClanan, president, Flax Art & Design
Catalogers must grasp the complexities of web-selling if they are to capitalize on their experience as direct merchants, Martin McClanan, president of Flax Art & Design, told attendees at the Internet Retailer Conference. "Why didn`t someone from the direct marketing world create Amazon?" asked McClanan, former CEO of RedEnvelope and consultant to Williams-Sonoma and other retailers. "It`s because of the way they run their business."
McClanan noted that many catalogers have successful web presences and multi-channel sales and have used the web to broaden their product offerings, increase sales and expand their customer bases. Using the web has also tripled the number of requests for catalogs and opened lucrative new markets such as corporate gift-giving programs, he added.
But many catalogers have missed out on the full potential that the web can bring to their operations. "Some web sites are just a replica of the catalog," McClanan said.
One reason some catalogers have not pushed ahead with web technology and innovative online shopping experiences is their traditional focus on circulation analysis, "instead of web analytics and all the ins and outs of the web," McClanan said. Catalogers need to take on new web technology and test how it affects customer activity, he added.