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Amazon: Dominating eCommerce by Category and Acquisition

Posted on August 18, 2009 by Zach

Amazon has been in the news quite a bit lately, whether it’s the Kindle, the Zappos acquisition or the creation of their outdoors specialty section. Some topics get more press than others but I find the tactics Amazon is using to bolster their eCommerce presence very interesting (as if they needed too) and doing so at the category level. It's yet to be seen how Amazon will leverage or integrate Zappos even though they state it will remain a separate business but they now own Zappos, Endless and the shoes category on Amazon.com (that’s a lot of shoes). In the outdoors space they recently announced their new specialty outdoors section which is offering gear from a selection of top tier merchants. We have seen this before with toys and other categories of products as well. While Amazon is the largest eCommerce website, they now seem to be conquering through category and acquisition, creating destinations where they now attempt to rule with the best selection, price and customer service.

What I also believe is important to note is that many large eCommerce websites also have an Amazon store.  This gives Amazon two inherent advantages, the first being that they know what you are selling, at least on Amazon, and second of those SKU’s they have access to which ones are top sellers.  This data also applies to other etailers within the same verticals.  Along with SKU data collected from marketplace merchants Amazon also gains insight on what those businesses do in sales, growth, and customer service which they monitor rigorously.

Now whether Amazon uses this data or not, or to what extent they are using this data may yet to be seen but it means that they could start stocking the best SKU's, therefore circumventing merchants through exclusive manufacturer deals. They also have an idea of which businesses might be better partners or possible targets for acquisition.  Targets based on their account performance. I sure can't think of a better place I would rather be than in Amazon's shoes right now (excuse the pun).

Since it seems that eCommerce websites may be good targets for acquisition right now, I think the bigger questions might be “What is Amazon's master plan? How do they plan to dominate eCommerce and what are they or others looking for in an eCommerce acquisition? What businesses might fit that mold?”

 


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