In its second-largest acquisition, Amazon buys the company for $970 million.
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For example, responding to consumer complaints about sizing, eBags developed a "laptop bag finder," that enables shoppers to find a properly sized bag by searching for their laptop model. It also offers loyalty points repeat shoppers can redeem for money off eBags.com purchases.
The retailer tailors its private-label product line to customers' preferences. He says private-label items are the best-rated items on eBags.com, and constitute the bulk of the retailer's revenue and profit. "It's not a generic product," Cobb says of the eBags Brand. "These are products that [can be] $200 pieces of luggage."
Specialty products are at the heart of the strategy of Puplife.com, a 10-year-old dog supplies retailer. President Eric Houtkooper says he can't compete item-by-item with Amazon, whose massive scale means it can operate on thinner margins. Nor can the e-retailer, which sells some 4,000 SKUs, match Amazon's selection.
Instead, Puplife.com focuses on a very specific niche—design-focused, fashionable tags and collars—and targets an attractive demographic: urban, college-educated and relatively affluent women who own dogs. Houtkooper hopes to lures those shoppers with arty, upscale and unique products. Likewise, he works to persuade the designers and manufacturers of these products of the value of selling through Puplife.com. Puplife.com focuses on operating the web site and attracting its target customers, while its suppliers drop-ship orders to consumers. "You don't have to compete with Amazon," Houtkooper says. "You can really make your own niche in the market if you are willing to do the work."
But that work doesn't figure to get any easier as Amazon keeps expanding into new categories and wooing web shoppers with more goodies.