Why Amazon’s future may be in service, not merchandise

Amazon.com Inc.’s deals to operate the web presences of bricks-and-mortar retailers are a good strategy that leverage Amazon’s strengths as an e-commerce powerhouse and lessen the company’s reliance on consumer spending, says consultant Duif Calvin, vice president in the retail practice of Scient Inc. “We’ll see more of Amazon shifting to a retailer-service model as a way for them to make money,” Calvin says.

Amazon this week strengthened its online deal with booksellers Borders Group Inc. by starting development of a pick-up-at-the-store option. “Anything that extends Amazon to a multi-channel environment is a good thing,” Calvin says.

Amazon also has deals to operate web sites for Target Corp., Circuit City Stores Inc. and Toys R Us Inc. “It makes sense because profit can come from referral fees; it doesn’t have to come from managing inventory,” she says. “That’s good because they don’t appear to be making a lot of money as a retailer.”

Noting that Amazon has deals in such major segments as toys, books, consumer electronics and mass discount merchandising, Calvin says the company may be looking for deals in other segments. “They should be trying to find leaders in each line of business,” she says.