Winnipeg Free Press - PRINT EDITION

Amazon stays the course

Customers remain loyal, despite public feud with suppliers

  • Print

NEW YORK -- Jeff Bezos is betting consumers are so hooked on Amazon.com's easy shopping and fast delivery they won't revolt, even as negotiations with suppliers make it harder to find some items on the site.

Amazon's chief executive officer is gambling on shoppers such as Paul Shi, 23, who signed up for the company's Prime fast-shipping service two years ago. Shi, a New York resident who buys products ranging from flip-flops to used books, said he's keeping his spending patterns the same, even as the company duels with Hachette Book Group and Walt Disney Co. over the terms of selling goods on the site.

"Do I think they can be less confrontational and work toward a better resolution? Sure, but at the end of the day, they're out to protect their bottom line, and it's just a negotiating tactic," Shi said. "I'm the consumer, and my job is to get the lowest price possible, even if it happens to be on Amazon."

Shi's actions illustrate why Bezos may have the upper hand as the Seattle-based company grapples with negative publicity from its disputes with media companies. Since May, Amazon's negotiations with Hachette over the cut of sales from e-books have spilled into the open, with the world's largest online retailer blocking some Hachette titles on the site. More recently, Amazon stopped pre-orders of Disney movies such as Captain America: The Winter Soldier in disc form.

Yet, even though some books and DVDs are now unavailable for pre-order on Amazon, the company's business has continued undented. Visitor traffic to the site was up almost seven per cent in June from a year earlier, third-party merchants' sales through Amazon's marketplace jumped more than 40 per cent in July and even book buyers aren't deterred, data compiled by Bloomberg reveals.

That's because Bezos over the years has locked in consumers with the Prime fast-shipping service, which gets a huge selection of items to people's doorsteps in less than two days. Customers also remain attracted to Amazon's low prices in general. All of that makes it easier for Bezos to retain his customer base -- and thus continue being tough on suppliers.

"At the end of the day, this is a company that has $100 billion in revenue," said Kerry Rice, an analyst at Needham & Co. "It might suffer some, but I think overall the effect will be negligible."

Brittany Turner, a spokeswoman at Amazon, declined to comment beyond a letter the company posted over the weekend. In the missive, Amazon appealed to readers to write to Hachette CEO Michael Pietsch with their thoughts on the dispute.

Amazon has been taking on vendors more publicly as it faces investor pressure to boost profits. The company's stock fell 9.7 per cent last month, the day after it reported its widest loss since 2012.

Amazon's entrenched position with consumers is evident as people keep visiting its website. Unique visitors in the U.S. to Amazon's site increased slightly more than half a percentage point to 159.6 million in June from May, when the disputes became public, ComScore reported. In total, visitor traffic to Amazon in June was up 6.9 per cent from the same month a year earlier, ComScore said.

Product orders on Amazon also remain strong, third-party sellers' sales show.

Transactions from third-party merchants who use Amazon's platform to sell their goods jumped 40.4 per cent in July from the year before, compared with June's 34.4 per cent and May's 28.1 per cent increases, say data from ChannelAdvisor, which helps e-commerce retailers access various distribution channels.

Even consumers who are aware of the Hachette spat, which prompted authors to run an ad in the New York Times in protest over the weekend, have stayed firm in their book-purchasing habits.

 

-- Bloomberg News

Republished from the Winnipeg Free Press print edition August 18, 2014 B7

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Steve Ashton comments on bid for NDP leadership

View more like this

Photo Store Gallery

  • Marc Gallant/Winnipeg Free Press. Gardening Column- Assiniboine Park English Garden. July 19, 2002.
  • Marc Gallant / Winnipeg Free Press.  Local/Weather Standup- Catching rays. Prairie Dog stretches out at Fort Whyte Centre. Fort Whyte has a Prairie Dog enclosure with aprox. 20 dogs young and old. 060607.

View More Gallery Photos

Poll

With the Canadian junior team off to such a great start, will you be watching the World junior hockey championship?

View Results

Ads by Google