RealTime IT News

For Sale on Amazon.com: E-Commerce Expertise

Amazon.com has launched a new consulting subsidiary that will offer e-commerce expertise to retailers looking to create or improve their online sales offerings.

Called Amazon Services, the division plans to extend Amazon.com's turnkey e-commerce platform to new online partner merchants, but in a way that lets the retailers control the design and content of their own Web sites.

Amazon.com said the group would also provide fulfillment and customer service operations as part of the range of services available for merchants that want to sell on the Amazon.com site.

With its revenue from high-margin marketing and promotional agreements falling, Amazon.com may find its best shot for growth in its technology, on which it invests more than $200 million per year. Vernon Keenan, an industry analyst and principal of Keenan Vision said Amazon.com is essentially "productizing a service" it already had going.

The move is an adjustment from Amazon.com's historical approach of outsourcing technology with third parties. In August 2000, Amazon.com offered its technology to toy retailer Toys-R-Us, which had tried and failed to build an e-commerce site on its own. Amazon.com's e-commerce technology is also used for online sales by Target, Borders and by online music retailer CDNow.com.

With the new services subsidiary, Amazon.com will be able to offer better customization and integration help to partner retailers.

Currently, Amazon Services doesn't appear to be facing much competition for its technology. Despite the growing volume of online sales, Keenan said there are few off-the-shelf e-commerce platforms similar to Amazon.com's offering.

"In e-commerce, the build formula is far more successful than the buy formula," he said. "E-commerce and online transactions in general are rife with exceptions, and that makes it hard to build a generic package." But Keenan said Amazon.com's high-volume technology has evolved and proven itself.

The tough part will be the human factor. The Amazon.com announcement did not mention the designation of a practice manager or the hiring of the business consultants and integrators necessary to handle the work. "The risk for Amazon.com," Keenan said, "is that building a consulting organization offers a whole different set of management challenges."