Amazons Disappearing Act?
In its push to reach profitability, Amazon.com could end up vanishing.
The e-tailing giant wants to become the back-end fulfillment center for brick-and-mortar retailers that are having a hard time making their dot-com businesses work. That means Amazon, once poised to become the worlds largest e-tailer of everything, could fade into the background as it fills orders for other brands.
Some analysts, such as Jonathan Cohen at Wit Capital, speculate that Amazon could disappear or be absorbed into another business.
Jeff Bezos, Amazons founder and CEO, said last week that the company wants to partner with traditional retailers with a strong physical presence to extend its electronic commerce platform into new areas.
The No. 1 Internet retailer and Borders Group, the second-largest U.S. bookseller, struck an agreement April 11 to revamp and relaunch Borders ailing e-commerce site. Financial terms of the deal were not disclosed.
The deal resembles one that Amazon struck with U.S. toy retailer Toys R Us last September. That pact boosted Toysrus.coms weak online presence and garnered praise from industry watchers who were concerned about Amazons ability to succeed in new product areas.
As part of the Borders agreement, Amazon will provide inventory, order fulfillment, site content and customer service for the site, which will still offer content unique to Borders.com, including store location and in-store event calendars. Amazon will also offer customers the option to buy books online and pick them up at a Borders store.
"This alliance allows Borders to offer our customers the convenience of an online shopping option with the added benefits that will emerge through our new association with Amazon.com, the worlds recognized e-commerce leader, Greg Josefowicz, president and CEO of Borders Group, said in a statement.
Other fulfillment deals could be in the works. Amazon has reportedly spoken with officials at Walmart.com and electronics retailer Best Buy.
Strong growth in Amazons electronics business has helped spur the companys revenue. Last week Amazon said it expects quarterly revenue of more than $695 million, while analysts had expected $669.6 million, according to research firm Thomson Financial/First Call.
Still Amazons critics said the companys $2.2 billion debt load is weighing it down. Thats why many analysts are speculating Amazon will ink more fulfillment partnerships with traditional retailers.
Yet, at least one analyst doesnt think Amazon can handle fulfillment on its own. Last week, Thomas Weisel analyst Sara DEathe said Amazon recently put out a "request for a quote to a large private outsourcing fulfillment, customer care and customer call center. The RFQ solicits a proposal to provide outsourcing services to Amazon, she said.
This may imply that Amazon "does not believe it can be efficient at fulfillment itself," DEathe said.