To fill most orders, the upstart merchant acquired the books swiftly from two large distributors. From Bezos's standpoint the system had the obvious advantage of saving his company the cost of maintaining inventory, enabling him to discount books as much as 40%.
In the fast-evolving world of on-line commerce, the day Bezos opened for business seems like light-years ago. Although Amazon.com still stocks only a fraction of the books it sells, its inventory has swelled to more than 1.4 million volumes housed in two giant warehouses.
Why is Amazon.com's game plan changing? The question is of utmost interest to the expanding universe of Web merchants, for whom Amazon.com represents a kind of acid test.
At least part of the answer is well known. Because of its jumbo sales, Amazon.com has the muscle to demand high discounts for bulk purchases directly from publishers. "Amazon can now control its own destiny and buy in on better prices," says Steve Lebow, chairman of Los Angeles-based venture-capital firm Global Retail Partners.
Bezos's strategy seems to be a preemptive strike against large book retailers who are developing Web sites of their own and who may have an edge over Amazon.com in shipping directly from their stores. "Bezos would need the flexibility to step up his own delivery service and not rely totally on third parties," observes Jay M. Tenenbaum, chairman of the trade association CommerceNet, which represents more than 500 on-line retailers. -- J.M.
Copycats: a sampler
Start-ups that are emulating Amazon.com
Company: Netgrocer.Com
Headquarters: New York City
Product: groceries
Company: Cooking.com
Headquarters: Pasadena, Calif.
Product: cookware and specialty foods
Company: Sportscape.com
Headquarters: Cambridge, Mass.
Product: sporting goods
Company: iPrint
Headquarters: Moffett Field, Calif.
Product: business cards, letterhead
Company: FreshFlowerSource
Headquarters: Rye, N.H.
Product: fresh flowers
Testing the Web's limits with Monet
Sure, books and cds sell on-line, but what about Monet paintings? That's the question Paul Tarnoff asked himself before he launched his Web store, ArtSelect LLC, in January 1998.
Tarnoff does not sell Monet originals but rather reproductions of such masterpieces as Picasso's Woman with a Hat and Monet's Le Jardin à Giverny. With a few clicks of a mouse, buyers can log on to his site, search his illustrated catalog of 1,000 prints, and choose from more than 180 frames, ranging from metal to fine wood, at prices well below those of frame shops. "You'd be amazed by what folks will buy on-line," says Tarnoff, who reports that his Company is growing at 250% a month. "If you're smart about marketing and merchandising, you can make almost any niche work."
Tarnoff's optimism is yet to be justified. His venture, based in Fairfield, Iowa, is one of many that's testing the limits of what products are conducive to cyberspace commerce. So far, it's well established that books, music, and computer products are eminently marketable on the Web. Last year those items alone made up almost half the $2.4 billion of consumer goods purchased on-line, according to Forrester Research Inc., based in Cambridge, Mass., which studies Internet business trends.
But what about other products? Paul Saffo, a director of the Institute for the Future, based in Menlo Park, Calif., envisions that goods inspiring a passion for highly detailed information among a scattered community of buyers are good bets on-line--for example, tackle for fly fishermen and optical devices for bird watchers. "The Web is a license for obsession," says Saffo. "It's still a place for people who want to know every little thing before they purchase." More generally, Saffo, who writes and speaks about new technologies, postulates a rule of thumb: what works by mail order will work on the Web. Even shoes and custom shirts aren't out of the question, as he sees it. He explains, "Perhaps you go into the store once, get measured or sized, and then you just reorder from the Web site."
What, then, might not sell on-line? Certain health-care products, including over-the-counter drugs, that a customer might prefer to buy only after an intimate or complex consultation with a pharmacist, predicts Maria LaTour Kadison, an on-line retail analyst at Forrester. She says that "people still seem to rely heavily on their local pharmacist for those items."
For those who want to bet on the distant future, Lauren Freedman, president of E-Tailing Group, an electronic-commerce consulting and development firm based in Chicago, recommends products for women. As more women gain access to the Internet (women are still a minority on-line, making up slightly less than 50% of the viewers), Freedman expects that the on-line market for women's products, particularly clothes and fashion basics such as panty hose and cosmetics, will explode. "If you want to get rich on the Web," says Freedman, "you have to start targeting women." -- J.M.
What people buy on-line
Consumers spent $2.4 billion in 1997 via the Internet for the following goods and services:
Computer products 35%
Travel 26%
Other 26%
Books & Music 7%
Gifts & Flowers 6%
Source: Forrester Research Inc., "On-Line Retail Strategy," April 1998
