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Amazon.com becomes a software vendor

Amazon.com becomes a software vendor

In the latest tweak to its ever-evolving business model, online retailer Amazon.com is hawking its own e-commerce technology — software, website developing and hosting — through a new subsidiary, Amazon Services.

Amazon Services grew out of partnerships with Toys ‘R’ Us and Target brands, both of which use Amazon’s technology to power their own websites in addition to selling on the Amazon site.

“We’re thinking about ourselves as a technology company and a technology platform,” Amazon.com’s vice-president of worldwide business development and services sales, Mark Stabingas, said. “The universe of opportunity is larger than if we just want to think about ourselves as a retail business.”

The sale of products by third parties on Amazon’s website is a fast-growing portion of the company’s business, accounting for 20 per cent of units sold in the second quarter of 2003 — compared with 14 per cent of units a year ago. Amazon gets a cut of those sales.

An e-commerce analyst and partner with FactPoint Group, Tim Clark, said the move made sense as a way for Amazon to recoup its IT investment. (Amazon reports it has spent on average $US242 million per year on IT since 2000.)

Stabingas would not say how much retailers would have to pay for Amazon’s technology and services, only that the company aimed to keep the initial investment costs low and earn its fees through its revenue-sharing arrangements. So every purchase ‘click’ for one of its merchant partners sounds a ‘clink’ for Amazon’s coffers.


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