Amazon will pay $10 million for a 16.6 percent stake in Ashford in its latest move to become an Internet superstore, offering shoppers virtually anything in one online location. An announcement was expected Wednesday.
Amazon has yet to turn a profit, but the 4-year-old company has spent freely in the last 18 months to expand from books to music, videos, auctions, toys, electronics, home improvement goods, software and greeting cards.
It also has invested in online companies where it sees big growth opportunities, with stakes in drugstore.com, Pets.com and Web supermarket HomeGrocer.com.
With the Ashford alliance, Amazon is tapping the fast-expanding online luxury market. While sales of high-end goods on the Web are still quite small, there is huge demand for expensive clothing and accessories. Last year, luxury goods sales at traditional stores totaled $133 billion.
Starting Wednesday, shoppers will be able to link to Ashford's site from Amazon's home page. Amazon will also feature Ashford in some of its promotions, such as brochures found in Amazon delivery boxes.
Ashford will have access to Amazon's 13 million customers. The company plans to target those shoppers it feels are interested in buying high-end goods, said Ashford chief executive Kenny Kurtzman.
For instance, they are betting that an Amazon customer who is willing spend $2,000 on a Sony 36-inch television may also be game to buy a $3,500 Rolex watch or $7,100 Whitney Boin diamond necklace.
"This is a great deal for Ashford.com that will help them pull away from the pack of other luxury good retailers online," said Lisa Allen, senior analyst at online consulting firm Forrester Research.
Ashford, based in Houston, sells diamonds, watches, designer jewelry, fragrances, bath and body products, leather accessories, ties, scarves, sunglasses and fancy pens.