Early Word on Amazon ‘Stores’:
"AS in other recent holiday seasons, Amazon.com Inc. this year has successfully peddled the staples - books, music and videos - of online gift shoppers. But how about those alligator tenderloins, Callaway drivers and Mikimoto pearls? Amazon.com is wrapping up its first holiday season in which it has featured such goods and others in distinct 'stores,' or categories. Since September it has opened four stores: gourmet food, sporting goods, jewelry and watches, and (just last week) health and personal care. Retailers who are participating in the new stores and analysts who have watched them closely said Amazon.com's sales in those categories had shown promise."

"We're hearing that sales are good, not great," said Carrie A. Johnson, an analyst with Forrester Research, a technology consulting firm. "But they're good enough, and that's the key for retailers who've spent a lot of time integrating with Amazon."

Amazon.com's new stores collect items from other merchants, occasionally alongside goods already sold by Amazon. For instance, the jewelry-and-watches store features items from Mondera, Fortunoff and Ross-Simons, with pearl necklaces and other goods stocked and sold by Amazon.com.

When customers make purchases on Amazon.com from another merchant, Amazon.com sends the order to the merchant, which then ships the items. In exchange for offering their goods to Amazon.com's shoppers - more than 15 million visitors a week during the holiday season, according to Media Metrix - merchants typically pay Amazon.com a commission of 7 percent to 15 percent on each sale, according to Forrester. If an item fails to satisfy a customer, it is the responsibility of the merchant that shipped the product to receive the customer service call.

Amazon.com's senior vice president for worldwide retail, Diego Piacentini, would not disclose sales goals for the new stores. But the merchants that have joined Amazon.com have high hopes, if not for sales directly from the partnership, then for increased awareness and acceptance of their goods among mainstream shoppers. The gourmet food category may stand to benefit most from Amazon.com's participation.

"Beyond the big names like Harry & David or Omaha Steaks, this category is incredibly fragmented by small mom-and-pop businesses," Ms. Johnson of Forrester said. "Now the small players have the opportunity to reach many more customers online, and customers can find all of them in one place."

http://www.nytimes.com/2003/12/22/technology/22ecom.html?pagewanted=all&position=