Shop Until You Bop

Amazon’s unexpected acquisition of a Midwestern clothing retailer has
left some analysts wondering how the purchase might fit into
Amazon’s overall scheme for world domination.

Others felt it was exactly the right move at exactly the right time.

Amazon has morphed from a bookseller into a vast online mall over the
past decade, now offering everything from cosmetics to power tools, but
until Monday had apparently been content to allow clothing retailers to set
up camp on Amazon.com. Now the online giant has its very own online retail
site.

The terms of the deal weren’t publicly announced, but Shopbop.com, a
women’s apparel and accessories retailer, will not be tucked safely and
securely under Amazon’s silicon roof. The site will continue to operate
independently, with its existing executive team.

“We’re incredibly happy to have Shopbop.com become part of the Amazon
family,” said Russ Grandinetti, vice president for Amazon’s apparel and
accessories, in a statement. “We look forward to introducing their
incredible brand and store to Amazon’s tens of millions of customers.”

Amazon owns Internet Movie Database, which also operates
independently, but information from the database boosts the offerings of
Amazon’s A9 search engine and facilitates the purchase of DVDs from
Amazon.com. On the surface, Shopbop would not add any value to Amazon’s
existing mix, despite the site’s strong offering of trendy designer brands
such as True Religion, Juicy Couture, Diesel, 7 for All Mankind and Marc
Jacobs.

Wall Street has been less than keen on Seattle-based Amazon recently; the
company’s disappointing fourth-quarter profit report sent shares of Amazon
down 15 cents to $39.11 last Thursday.

Over at the “Motley Fool”, the acquisition of Shopbop was described as
“odd” and “ill timed.”

“Although Internet retail is Amazon’s forte, I’m having a hard time
imagining how Shopbop.com might fit into its overall worldview,” wrote
the
Fool’s Alyce Lomax.

But Sucharita Mulpuroo, an analyst with Forrester Research, said
that the
move could be a smart one for Amazon.

“Amazon has had real trouble in the retail clothing space, because
none of
the big names wanted to sign with them,” said Mulpuroo. “This gives
them
some traction. If you don’t have brands in the apparel space, you don’t
have
much leverage in that category.”

In its fourth quarter report last week, Amazon revealed its
operating
expenses have been rising at a faster rate than its sales, due in part
to
increased postage rates (the company offers free shipping on some
items) and
investments in new technology.

Some investors hope that part of that technology expenditure will
become
the backbone of Amazon’s anticipated broader digital media offerings.
Trade
publication “Daily Variety” reported in January that Amazon was planning
to
sell digital downloads of movies. And last week, the “Wall Street Journal”
reported that Amazon will offer its own digital media player and a
subscription-based music service similar to Napster by the summer.

“Clearly, this is a business model that has a lot of traction,” said
Mulpuroo of Amazon’s reported push into digital downloads. “I
don’t
see what the downside is. They already have resonance with
the
consumer as a purveyor of music. It seems like a no-brainer.”

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