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Questions about Amazon’s growth strategy

Marketplace Staff Jul 27, 2006
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Questions about Amazon’s growth strategy

Marketplace Staff Jul 27, 2006
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TEXT OF STORY

MARK AUSTIN THOMAS: Disappointing earnings led to a big drop in the value of shares for Amazon.com on Wednesday. Jason Paur says the company is focusing on keeping the loyalty of its customers.


JASON PAUR: Amazon’s second quarter earnings dropped nearly 60% over last year.

While sales were higher, the company spent more on expansion plans into online toy and grocery retailing. It also cut prices to maintain customer loyalty.

In the maturing online market, analyst Vikram Sehgal of Jupiter Research says, loyalty is key. He says the question is to determine what customers are looking for.

VIKRAM SEHGAL: Consumers increasingly have started expecting free shipping. Consumers increasingly look around 3 to 4 sites when they buy something. So that means increased competition, lower price pressures.

Though yesterday’s sell-off of Amazon stock raised eyebrows on Wall Street, some analysts expect Amazon to continue its growth strategy for the long term.

The question remains, though, whether investors are willing to wait.

In Seattle, I’m Jason Paur for Marketplace.

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