Amazon formally announces new Webstore (Vitamin C)

May 24, 2010

ChannelAdvisor ChannelAdvisor By ChannelAdvisor

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We had a bit of a scoop here in early March when we detailed what we were hearing about Amazon Webstore from retailers.  Today, Amazon has formally announced the offering and opened a full website at webstore.amazon.com with full details about the offering.   In this post we’ll cover some of the new information and speculate what the new webstore means for the e-commerce space.

Impressive launch customer list

For launch, Amazon webstore has a very impressive list including many name brands:

Pricing is revealed!

There has been a lot of speculation on the pricing of the store.  Amazon’s first store was very over priced at > 2% with an additional payment processing fee.  Amazon has revealed the pricing today and this graphic does a good job of summarizing things. Interestingly, the pricing depends on which Amazon services you use.  If you utilise both FBA and sell on Amazon, you get the biggest discount, with the least discount for someone that doesn’t use either amazon service.

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Note that these prices do not include payment processing which is tiered by sales volume and if the customer is registered with Amazon or not.  Payment processing ranges from 2.9% on the high end (well 5% for items < $10) to 1.9% on the low-end.

It’s interesting to see Amazon cut fees to the .7%-2% range and this range is well beyond what we were hearing prior to today’s ‘reveal’.

What is webstore and a real-world checkout example

When I mention this new store, many analysts and retailers have a hard time understanding what it is.  It is essentially a 100% stand alone store.  It’s not like Target.com where you know from the look and feel, and especially checkout, that this is an Amazon-cloned experience.  If you look at any of the sites I highlighted above, aside from this blog, you wouldn’t know they are Amazon-technology based stores.  

The only time you get a hint the store is affiliated with Amazon is at checkout (and some have even customised this to be less Amazon flavored). For example, here is a screen shot (click to enlarge) of a checkout from shoplift.com (an Amazon webstore).

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This is actually similar to any CheckoutByAmazon (CBA) integration, but with a little more flare around the bottom ‘safe.secure.reliable’ band at the bottom there.

 

Speculation on webstore impact on e-commerce ecosystem

In the last webstore post, we segmented out the e-commerce platform players into Enterprise software, enterprise services, cart software and SaaS solutions.

This offering clearly is in the SaaS solution camp, but seeing the launch sites and based on what we’re hearing, Amazon could actually be using this offering to go after more of the GSI (NASDAQ:GSIC) and Digital River (NASDAQ:DRIV) players.

Here’s some thoughts on what makes me lean that way:

  • Many of the launch partners are ‘manufacturers’ (or vendors in retailer-speak).  This is an area that is coming on-line in record numbers to establish a more direct relationship with consumers.
  • Both Digital River and GSI are chasing this market opportunity. Digital River is focused on Consumer Electronics (CE) vendors (like Creative Labs) and GSI has had success with apparel manufacturers (No big Amazon wins there….yet).
  • Amazon has created a more ‘Lego block‘ approach where the manufacturer can take down store, FBA, and selling on Amazon.
  • As the largest internet retailer, Amazon has a lot of leverage.  For most manufacturers, they are the largest online channel already.  Amazon could (if they want, no idea if they are doing this), leverage that buying arrangement in myriad ways to drive adoption of the platform.  This is a lever that neither GSI or DRIV have at their disposal.

The only chink in the armor with this strategy is that most online retailers have a healthy respect (a.k.a. fear) of Amazon and I’m not sure how many manufacturers are going to want Amazon knowing so much about their direct-to-consumer strategy and results.  However they do have a growing list of name brands that don’t seem to be concerned.

What do you think of the offering? Sound off in comments.

SeekingAlpha Disclosure – I am long Amazon and Google. eBay is an investor in ChannelAdvisor, where I am CEO.