Amazon.com Will Buy Two Firms to Build Web Commerce
Amazon.com Inc., a top Internet shopping site, went on a buying spree of its own Tuesday. The Seattle-based company, the leading online bookseller and a darling of Wall Street, announced that it will acquire Junglee Corp. of Sunnyvale, Calif., a leading search tool for gathering information simultaneously from a range of online shopping sites, and PlanetAll, a Web-based calendar, address book and reminder service.
The acquisitions could increase traffic to Amazon.com’s Web site and push the company into new realms of Web commerce.
“Junglee is one of several players that have some real assets” to enable intelligent Web shopping, said David Alschuler, an analyst with the research firm Aberdeen Group in Boston.
Junglee, to be acquired for $180 million in Amazon.com stock, has developed a software tool that can search a range of Web-based databases quickly and efficiently. Working behind the scenes, invisible to the Web user, the software allows a single search for a consumer product on multiple Web sites at one time, making comparison shopping faster and more practical.
The technology is already used by a range of Web powerhouses, including Yahoo and America Online. Amazon.com will continue to market Junglee software to those companies and others, said David Risher, senior vice president.
Calling books “the first best product to sell online,” Risher added that the company now envisions its Web site eventually becoming a virtual personalized shopping mall.
“It would be a very valuable service to go to a place you trust” for a range of consumer products, Risher said. “Imagine a shopping area where you find exactly the merchants you want and exactly the products you want.”
Added Alschuler: “They’ve established themselves as the premier online sales channel for one product category,” and it’s a logical next step to move into other retail areas.
“Comparison shopping is not the only thing you can do with Junglee,” said James McQuivey, an analyst with Forrester Research in Boston. Amazon.com could link its music and book sales so that a buyer could look at all books and CDs related to, say, “West Side Story,” in a single search. The site could eventually fold in related videocassettes, ticket sales and other product lines.
“But I hope that they don’t want to become the big shopping center of the Web,” McQuivey said, predicting that such a move would dilute the Amazon.com brand.
Risher predicted that Amazon.com will become a broad-based retailer via a slow, gradual transition. But he ruled out the prospect of becoming a Web portal, competing with Netscape Communications Corp., Yahoo and Excite Inc., among others.
Portal sites combine search engines, online chat, news, e-mail, entertainment and consumer content in an effort to draw users into making the site their first and primary destination on the Web.
Only the most extreme shopaholics would want a consumer site as their main point of entry to the Web, said Risher. “Portals have a great business. It just isn’t our business.”
PlanetAll, based in Cambridge, Mass., and operated by a holding company, Sage Enterprises Inc., agreed to be purchased for $100 million in stock. The move will give Amazon.com a new population of 1.5 million Web-savvy consumers whom the retailer hopes will be drawn into online purchases.
PlanetAll’s free Web-based address book and reminder services are automatically updated and changed as each member’s personal contact information changes.
“It allows you to get connected with other people who share similar interests,” Risher said.
That concept dovetails with Amazon.com’s consumer-supplied review service, which drives many sales at the site, particularly for more obscure titles that have not been widely reviewed in the media.
McQuivey suggests that Amazon.com moved to take timely advantage of its sky-high stock valuation, which many analysts have found difficult to justify given the company’s comparatively low revenue. “Is this an effort to diversify before there is an Internet stock correction?” he asked.
Amazon.com shares gained $1.63 on Tuesday to close at $109.88 on Nasdaq.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
More Shop, No Drop
Amazon.com’s announced purchase of PlanetAll and Junglee lifted its stock on a day the Dow industrials fell 299.43 points.
Tuesday close: $109.88, up $1.63
Source: Bloomberg News
