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Amazon's Growing Universe

Amazon's Growing Universe
NOW
WHERE AMAZON HAS PLUNGED IN

BOOKS

OPPORTUNITY Already the No. 1 online bookseller, with $340 million worth of books sold in the first nine months of this year. That's big--but just a fraction of the $82 billion that will be sold around the world in 1998.

CHALLENGE Profit margins are low, even on line. Terra firma rivals, such as Barnes & Noble, are beefing up their online presence.
MUSIC OPPORTUNITY Sales reached $14.4 million in the first three months, outdistancing No.1 online music seller CDnow. There's room to grow: Music sales amounted to $38.1 billion worldwide last year. CHALLENGE CDnow and N2K, which recently announced they would merge, are already a potent force. On top of that, CDs carry even lower profit margins than books.
VIDEOS OPPORTUNITY Opened shop this month. Video sales, a $16 billion business worldwide, allow for potent cross-marketing with related books and CDs. CHALLENGE Quick shipments require vast inventory. The shipping delay may keep some buyers in stores.
SOON
WHERE AMAZON COULD DIVE NEXT
CONSUMER ELECTRONICS OPPORTUNITY It's a $76 billion market for products such as hand-held game machines, digital cameras, and portable CD players, which have higher average selling prices than books, CDs, and videos. CHALLENGE Sony Walkmen and walkie-talkies are not an obvious fit with books and CDs, discounting is rampant, and rapidly changing product models are tough to compare, even online.
GAMES OPPORTUNITY Gifts such as Pictionary and Scrabble are likely to appeal to book buyers, too. CHALLENGE Classics are easy to buy, especially for children's gifts, but buyers may take a pass on lesser-known games they can't see and touch.
TOYS OPPORTUNITY It's a sprawling, $22.6 billion market that offers many tie-ins to books and videos--and it's a natural for quick gifts. CHALLENGE Lack of established wholesale network means toys must be stocked. Dominant retailers, such as Toys 'R' Us, may lock up best terms.
FUTURE
WHERE AMAZON IS TESTING THE WATERS
SOFTWARE OPPORTUNITY Amazon already sells some computer games, and the $5 billion worldwide consumer market fits well with books and CDs. CHALLENGE Software requires lots of post-sale support, so linking with a partner may be more desirable.
HEALTH SUPPLIES OPPORTUNITY In talks to invest in startup Drugstore.com. Amazon could try to capture a small piece of the $120 billion market for medicines and drugstore products. CHALLENGE Products are nearly ubiquitous in physical stores, and they're often purchased for immediate need.
APPAREL OPPORTUNITY A $14.3 billion market by mail-order catalog, clothing sales are growing online. Amazon customers are comfortable buying without touching the merchandise. CHALLENGE This is a service-intensive business, and screen resolution can't match paper catalogs; probably best offered through a partner.
FLOWERS OPPORTUNITYThey're an easy sell for holidays and birthdays, and even a sliver of the $15 billion in U.S. sales would be a huge boost in revenues. CHALLENGE With floral networks and online providers such as 1-800-FLOWERS firmly established, this may be practical only through partnerships.
MAGAZINE SUBSCRIPTIONS OPPORTUNITY A staple in physical bookstores, they're an easy and logical addition to books. CHALLENGE Must take on already established clearinghouses.
TRAVEL ARRANGEMENTS OPPORTUNITY Travel includes high-ticket items and the potential for higher margins, plus the ability to sell related books and videos. CHALLENGE Requires scads of customer service, and online agencies are firmly established, so linking with a partner seems most likely.
DATA: INDUSTRY ASSOCIATIONS, RESEARCH GROUPS, BUSINESS WEEK



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Updated Dec. 3, 1998 by bwwebmaster
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