Amazon not only sold $2.5 billion worth of goods, it introduced Prime members to new services. How should rivals compete in 2017?
CircuitCity.com joined the Amazon marketplace in 2001 to help kick off a more aggressive e-commerce strategy. But Circuit City’s presence on Amazon has played a lesser role since the consumer electronics retailer spruced up its online operations with a redesigned web site last September.
Amazon may be known as having the best overall e-commerce platform, and with its surging sales-up 31% in 2004, to $6.92 billion from $5.26 billion a year ago-the trend-setting e-retailer has taken many smaller merchants under its wing as Amazon boutiques to help launch their own sales trajectories.
But for some retailers the Amazon ride only goes so far. Circuit City Stores Inc.’s CircuitCity.com, for example, joined the Amazon marketplace in 2001 to help kick off a more aggressive e-commerce strategy, says Fiona Dias, president of Circuit City Direct. Although initially helpful, Circuit City’s presence on Amazon has played a lesser role since the consumer electronics retailer spruced up its online operations with a redesigned web site last September, she says.
“CircuitCity.com has grown tremendously since August 2001, when the Amazon contract was announced,” Dias says. “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.”
In taking more direct control of its e-commerce future, Circuit City redesigned its site to better leverage its strengths as a service-oriented merchant. Although its site’s earlier design was full of product information, it wasn’t organized well enough to provide for an easy shopping experience, Dias says.
But shoppers quickly took to the redesign, as noted in a recent customer satisfaction survey by Keynote Systems, a company that monitors web site performance. Circuit City scored tops among consumer electronics sites, as consumers ranked it as best in its category for site browsing, site search and customer support.
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 and that its consumer electronics segment continues to grow.
Jim Okamura, 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 larger partner. “There comes a time when controlling your own brand exceeds any traffic-driving effects that Amazon may bring,” he says.