Circuit City says good-bye to Amazon
Circuit City, citing the “small amount of sales” generated through Amazon.com, terminated its multi-year contract with Amazon Monday to concentrate on the growth occurring at its own redesigned web site.
CircuitCity.com said it no longer needed Amazon as a marketplace for reaching customers. “CircuitCity.com has grown tremendously since August 2001, when the [Amazon] contract was announced,” said Fiona Dias, president of Circuit City Direct. “We have been pleased with customer response to our own site and have elected to focus on growing the business through our own channel, rather than focusing on the small amount of sales the relationship with Amazon has generated.”
Starting Tuesday, shoppers will no longer be able to order Circuit City products through Amazon, Circuit City said.
Jim Okamura, a Chicago-based senior partner with retail consultants J.C. Williams Group, says most of the Amazon retail partners he works with are pleased with their arrangement with Amazon, but that Circuit City had apparently reached a point where it was more important for it to control its brand and grow internally rather than sell through a partner like Amazon. “There comes a time when controlling your own brand exceeds any traffic-driving effects that Amazon may bring,” he says.
CircuitCity.com, which relaunched in September in an effort to expand the number of products available online and to improve its customers’ online shopping experience, offers more than 1 million items, including consumer electronics, music, movies and downloadable digital content. It also offers through Circuit City stores in-store pickup of online orders.
Circuit City scored tops among consumer electronics sites in a recent consumer satisfaction study conducted by Keynote Systems, a company that monitors web site performance. Consumers ranked Circuit City as best in its category for site browsing, site search and customer support, Keynote said in the study, “Keynote Customer Experience Rankings for the Online Retail Industry.”
“Circuit City’s strong customer experience ranking directly correlated with better conversion and purchase impact rankings than its competitors,” Keynote said. Consumers in the study also cited Circuit City as offering “best-of-the-web” in-store pickup of online orders.
The study, which was based on research with 2,000 consumers as they interacted with retail web sites, ranked Amazon first overall for customer experience and cited it as having a “best-of-the-web” check-out process. It ranked Barnes & Noble second overall, followed by Circuit City, eBay and Lands’ End.
An Amazon spokeswoman declines to comment specifically on Circuit City’s decision, other than to note that the contract termination would not impact Amazon’s financial guidance for this year. She adds that Amazon’s electronics segment continues to grow, and that its Q4 electronics and other merchandise grew 53% year-over-year to $1.69 billion, with third-party sellers, including Target and J&R Electronics, accounting for 26% of unit sales.
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