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Amazon's Growing Universe
| Amazon's Growing Universe | ||||
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NOW
WHERE AMAZON HAS PLUNGED IN |
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 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. |
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| 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. | ||
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SOON
WHERE AMAZON COULD DIVE NEXT |
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| 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. | ||
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FUTURE
WHERE AMAZON IS TESTING THE WATERS |
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| 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
Copyright 1998, by The McGraw-Hill Companies Inc. All rights reserved.
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