Originally created 08/05/98

Deal could make Amazon.com the Wal-Mart of Web



NEW YORK -- Amazon.com shook the Internet community on Tuesday by announcing two separate acquisitions that some suggested could turn the No. 1 electronic seller of books into the Wal-Mart of the Web, directing surfers to a shopping-cart full of household items.

While Amazon.com executives downplayed the suggestion, Wall Street was intrigued, sending the company's shares soaring on a day the stock market got pummeled.

Prompting the excitement among investors already passionate about Internet stocks was Amazon.com's announcement it planned to issue new stock to buy PlanetAll, a provider of online "address books," and Junglee Corp., which offers one-stop electronic shopping services.

Amazon.com executives insisted it was too early to say what types of products the company may diversify into or how long it would take to introduce them. The immediate goal, they said, was boosting loyalty among book customers by offering them more services when they come to Amazon.com's site.

The total purchase price of the businesses -- $280 million -- was a relatively large amount in the realm of Internet acquisitions.

PlanetAll, a privately held 40-employee company in Cambridge, Mass., provides a service that lets Web-site visitors compile an address book of names and other identifying information. What makes that unique is that the information can be automatically updated by the people in the lists. And Web surfers can request to be sent e-mails reminding them of birthdays or other important occasions they may need to buy presents for.

The Junglee acquisition could give Amazon.com the ability to sell a range of products reminiscent of a large electronic discount store -- far more varied than the specialized retailers currently dominating the Internet.

Junglee is a closely held firm based in Sunnyvale, Calif. that provides a one-stop comparison-shopping service to users of some of the most popular Web sites. For example, a visitor to the Yahoo! site browsing for, say, airline tickets can view competing information from several travel services.

Beyond beefing up the Amazon.com Web site, "the long-term vision is a person should be able to come to Amazon.com and find any product they may want to buy," said David Risher, senior vice president of marketing and product development at the Seattle, Wash.-based company.

That could have important implications for Amazon.com as it diversifies beyond books. Already, the company sells CDs and is getting into sales of videos. Risher says the Junglee technology could mean that Web site visitors could even check out books sold by Amazon.com's chief competitor, online bookseller Barnes & Nobles.

"With these acquisitions, it suggests what they are going to create is a much broader shopping portal," said Tim Bajarin, president of Creative Strategies Research International, a San Jose, Calif.-based consulting firm.

Amazon.com, which has yet to earn a dime since starting in 1995, has a far higher market value than other companies with similar sales. It has attracted a host of imitators trying to cheaply sell products across the Internet.

On Tuesday, word of the acquisitions sent Amazon.com shares briefly soaring more than 5 percent before easing somewhat, closing up $1.62´ at $109.87´ on the Nasdaq Stock Market.

Amazon.com's chief rival, Barnes & Nobles, opened its online business last year. Also last year, software seller Egghead closed its money-losing brick-and-mortar retail stores and renamed itself Egghead.com to focus completely on sales over the Internet.

Amazon.com's comparison with Wal-Mart, which sells practically everything from tricycles to pork chops, is hardly precise. Amazon.com plans to use technology from the two Internet companies to "personalize" the shopping experience on its Web site far more than cruising a warehouse-size variety store -- quite a feat since online shopping doesn't entail human contact.

"When people say the Wal-Mart of the Internet, I get a little uncomfortable. It also conjures up images in their mind of a kind of impersonal experience," Risher said.

"They are a lot more personal than a Wal-Mart is ever going to be," added Melissa Bane, an industry analyst with The Yankee Group research firm, based in Boston.

Amazon.com's ability to expand beyond its collection of 3 million books and CDs demonstrates one of the Internet's most alluring qualities.

On one hand, consumers are attracted to its tremendous convenience. They can shop when it's raining out, don't need to gas up or face grouchy sales clerks.

But even more important for business growth, the ability to automate human tasks, transfer data more efficiently and cut down on errors makes it easier to diversify into other products, such as Amazon.com's addition of compact discs to its merchandise mix, according to Mercer Management Consulting.

That could help Amazon.com, which reported $116 million in sales last quarter, finally become profitable by 2001, analysts say.