Amazon.Com - Expansion Into New Markets, 1999

EXPANSION INTO NEW MARKETS (1999)

In June 1999 Amazon.com formed an alliance with auction house Sotheby's Holdings Inc. to launch a joint auction site specializing in art, antiques, and collectibles. Amazon.com agreed to invest $45 million in Sotheby's. Amazon planned to host the site as part of its growing auction page, which offered 20 different categories of auctions. All of the property would be offered by Sotheby's and other dealers. In addition, the authenticity and condition of each item would be guaranteed. The site also planned to conduct online auctions in conjunction with live auctions from Sotheby's in New York. The site (www.sothebys.com Amazon.com) launched in November 1999.

By mid-1999, Amazon.com was valued at $22 billion, according to Newsweek. In two years its customer base had grown from 2 million to 11 million. Not only was Amazon the dominant bookseller, it had become the biggest music retailer on the Internet. The company also sold toys and consumer electronics. However, although Amazon was a flagship for e-commerce, it had yet to turn a profit. The company explained that revenue was being used to build the business, and that they eventually planned to offer anything and everything online.

For the 1999 holiday shopping season, Amazon.com added four new stores to its site: home improvement, software, video games, and gift ideas. It was part of the firm's strategy to offer a large selection of items across multiple product lines. Amazon.com had introduced online auctions in spring 1999, followed by its zShops marketplace, which let customers sell their own items for a set price or by auction.