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Amazon Reliant on On-Demand to Grow Market Share

23 May, 2006 By: Jessica Wolf

Amazon.com, in its zeal to become the Earth's biggest store, will increasingly use media-on-demand services like Customflix and Booksurge, CEO Jeff Bezos said at a May 23 investor conference.

Amazon, which recently celebrated 10 years in business, acquired both of these providers as a way to increase product breadth, he said.

Customflix allows Amazon to deliver DVDs to shoppers from myriad suppliers without shelf-space issues or costly mass-production. Booksurge does the same for books, even servicing self-publishing authors.

Both play into Amazon's three-pronged goal to have the best selection, the quickest availability and the lowest prices possible, Bezos said.

On-demand offerings, which look the same to the consumer as any other kind of media, are especially helpful for long tail items, Bezos said.

He singled out Customflix-created DVD products like NBC Universal's “The Westminster Dog Show” and indie film The Red Spring as recent successes.

“I think we will see more and more product created instantly as we go forward,” Bezos said.

As for digital downloading, Bezos wouldn't directly address the issue. “We're not ready to talk about it,” he said.

But, Bezos admitted Amazon has a great partner in Imdb.com, should the company choose to tap that arm for potential video downloading.

“Imdb is one of the reasons our DVD store has been so successful,” Bezos said.

The e-commerce behemoth has 57 million active customers and will reach $10 billion in sales this year. That's in spite of the company passing up about $500 million annually in potential shipping revenue, thanks to the site's free shipping offer for orders more than $25 and its new Amazon Prime, the annual $79 all-you-can-ship membership club, Bezos said.

Amazon Prime is already proving worthwhile, turning the site's core customer base of DVD, CD and book buyers, into broader purchasers who now increasingly shop across the site's product offerings other than media, he said.

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