BUSINESSWEEK ONLINE : FEBRUARY 21, 2000 ISSUE
INFORMATION TECHNOLOGY Amazon's Plan to Stem Losses After six years of escalating losses, Amazon.com is finally focusing on that most elusive of dot-commodities: profits. Here's how it could get out of the red: -- Improve operational efficiency: On Jan. 28, Amazon laid off 2% of its staff whose job demands outpaced their skills. By streamlining processes in its distribution centers, Amazon expects to cut operational losses from 20% of sales now to 5% or less by yearend. -- Continue to expand product offerings to spur customers to spend more: The amount each of its customers spends is expected to rise from $116 today to $150 in 2002. -- Keep the cost of acquiring customers down: With its brand among the most recognized on the Web, Amazon will lessen its advertising and marketing spending from 25% of sales in 1999 to 13% of sales in 2002. As a result, its cost of acquiring each customer is expected to fall from an industry-leading $19, to $16 in 2002. -- Charge other e-tailers for exposure on its site: Amazon has signed six deals since last November that will net a total of $606.5 million at profit margins of 80% or more. -- Consider new revenue streams: It could focus on advertising revenue, providing Internet service for a monthly fee, offering memberships that include extra services, and providing logistics services to other e-tailers. DATA: AMAZON.COM, GOLDMAN, SACHS & CO., BW _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Suddenly, Amazon's Books Look Better CHART: Profits on the Horizon? TABLE: Amazon's Plan to Stem Losses ONLINE ORIGINAL: Jeff Bezos: There's No "Shift in the Model" INTERACT E-Mail to Business Week Online

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