expands to online travel store

By : |September 27, 2001 0

Scott Hillis

SEATTLE: Internet retailer Inc. on Wednesday opened an online
travel store featuring flight, hotel, car and cruise bookings provided by Web
travel partners like Expedia Inc.

The move is the latest step by Amazon to expand beyond its core books, music
and video business into more profitable services by using its online shopping
platform to sell goods from other companies.

Such a deal has been expected by analysts for some time, but the news failed
to make a splash with investors, who sent Amazon’s stock down more than 10 per
cent to a new year low of $6.35. "The company continues to expand its
services offerings and I think what I’m looking for is seeing an uptick in
growth in their core business," said WR Hambrecht analyst Kristine Koerber.

Amazon declined to give financial details of the new store, but under similar
deals the company collects a fee or percentage of each sale it books through its

Amazon’s US books, music and video segment, which made up 58 per cent of its
$668 million in sales last quarter, is barely growing, though its newer
businesses like electronics, tools and kitchen goods are stronger. Services
amounted to less than $39 million last quarter.

"They don’t make a ton of money off the services. It’s very profitable
but this not going to help the anemic core business," Koerber said.

Tumultuous travel time
The travel store appears as a new tab on Amazon’s main page, and the
Seattle-based company has partnered with several online travel sites, including
Expedia as its primary flight booking engine.

To keep up with current concerns about air transportation, triggered after
the Sept. 11 attacks on New York and the Pentagon, Amazon will use Expedia to
provide travelers with up-to-the-minute airport and airline updates and
information on check-in procedures.

Amazon said the attacks had not influenced the timing of the store’s launch,
which now comes amid turmoil in the travel industry as flight schedule cuts,
tighter security, and nervousness about air travel take a toll.

For instance, Expedia said last week that its bookings had plummeted after
the attacks.

"The decision really focused on customers and the fact that travel is
still a very big part of people’s lives," Amazon Vice President of Business
Development Owen Van Natta said in an interview. "Having these products
available to Amazon customers is something we saw as a real value-add to
them," Van Natta said.

Amazon’s other partners include Hotwire, which offers steeply discounted
tickets for buyers who don’t have strict departure time or airline preferences,
and National Leisure Group, which specializes in cruise packages, Amazon said.

Amazon said it would launch travel services in its United Kingdom operations
later this year.

Other recent Amazon service deals include a pact with retailer Target Corp.
to sell clothes, home furnishings and jewelry in its catalog. Another is a
partnership with Circuit City Stores to sell electronics on Amazon and let
Amazon customers pick up purchases at Circuit City outlets.

(C) Reuters Limited 2001.

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