- The Washington Times - Wednesday, July 6, 2005

SEATTLE - Soon after Amazon.com Inc. debuted 10 years ago, Jeff Bezos and his clutch of employees spent late summer nights packing books in a tiny warehouse, scrambling to ship a growing glut of orders.

Today, the man who has grown accustomed to being hailed the king of Internet commerce runs a global powerhouse that did nearly $7 billion in sales last year, dealing in everything from banjo cases to wild boar baby back ribs.

As more businesses expand their online operations, is the company that helped get it all started in danger of seeing its dominance eroded by the competitors it helped spawn?

Time will tell, but industry experts say Amazon is well positioned to maintain a firm grip on its title as the undisputed e-commerce leader.

“I think Amazon’s biggest challenge is itself. They’ve really raised the bar for the entire industry,” said Kurt Peters, editor of Internet Retailer, a monthly magazine that covers the business.



In the beginning, Mr. Bezos said he had no plans to sell anything but books online. But after it went live on July, 16, 1995, the business took off more quickly than anyone had anticipated, and before long customers started clamoring for more.

“We actually started to get e-mails from customers saying, ‘Would you consider selling music, because I’d really like to buy music this way, and DVDs, and electronics?” Mr. Bezos said in a recent interview.

Amazon has nearly 49 million active customers. They bought more electronics during last year’s holiday blitz than books — a first for the company.

With $6.92 billion in sales in 2004, Amazon ranked at the top of Internet Retailer’s annual top 400 list, well ahead of computer maker Dell Inc., which posted $3.25 billion in online business-to-consumer sales. Office Depot Inc., which has a partnership with Amazon, wasn’t far behind with $3.1 billion.

(EBay users sold $34.2 billion in merchandise through the online auction house in 2004, but the magazine doesn’t include it on the list because it’s essentially an online shopping bazaar, not a retailer.)

Scott Devitt, an analyst with the Baltimore investment firm Legg Mason Wood Walker, Inc. said he thinks comparison shopping sites such as shopping.com and shopzilla.com pose the biggest threat, because they can push prices lower than Amazon.

“But when you buy from a comparison shopping site, just like when you buy from EBay, you don’t know what you’re getting from the merchant,” Mr. Devitt said. Amazon has had a decade to build up trust that it will deliver orders on time and cheaply enough to keep customers coming back.

Amazon’s groundwork paved the way for competitors to follow, but Mr. Devitt says he thinks most retailers, especially brick-and-mortar shops, have a lot of catching up to do: “Amazon is always one step ahead.”

“Earth’s Biggest Selection” no doubt owes at least part of its name to the alliances it has forged with dozens of high-profile retailers, including Target Corp., Macy’s Inc., Nordstrom Inc and Toys R Us Inc.

“If there were a significant interruption to those, that could be a problem for Amazon,” said Richard Hastings, a retail analyst for the credit-ratings firm Bernard Sands.

To hold onto its spot as top dog, Mr. Hastings said Amazon will have to keep being nimble to fend off attackers at the flanks of its business such as EBay, online DVD rental Netflix Inc. and discount retailer Overstock.com Inc.

More than 900,000 third-party sellers now hawk their wares on Amazon, making up more than a quarter of last year’s overall sales — a sure sign that Amazon is getting serious about taking on EBay.

And last month the company started renting DVDs in Germany, six months after it got into the same business in the Britain.

Amazon hasn’t said when — or if — it might go head-to-head with Netflix, which took over Wal-Mart Stores Inc.’s DVD rental business in May after the world’s largest retailer conceded it couldn’t compete.

Analysts say Amazon has won over the masses with its vast selection, a brand name everyone knows, a site that’s easy to navigate and a reputation for reliability.

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