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Dec. 4, 2006 – A look at Amazon’s market entry

A Fortune 500 company has taken an initial step into the powersports aftermarket arena with the introduction of online sales. But just how big of a presence Amazon.com will have in the industry remains uncertain.
For now, the Internet giant has motorcycle parts and accessories as one part of an online accessories store that’s mainly devoted to the automobile industry.
“One way we grow categories at Amazon.com is we focus on one thing, but then we start building complimentary businesses that we think over time can grow to be big on their own,” said Steve Frazier, vice president of automotive at Amazon.com.
“It would be very typical of Amazon to watch those businesses grow and then go in and put some time and energy (in those businesses) and start to provide more selection.”
So far, Amazon has a range of motorcycle products and brands on its auto online store. There are also a few ATV products on the site, but no other powersports items.
Supplying the site’s product is what Amazon refers to as “third-party sellers,” companies that have existing online businesses that use Amazon.com as a second retail outlet.
Frazier said Amazon does business in two ways: in a traditional retail method, where it buys product, warehouses it and then sells it, and with third-party sellers. In the latter approach, Amazon sets up an online “marketplace” for third-party sellers who must meet performance requirements and are subject to customer ratings, Frazier said.
So far, Amazon has limited the powersports parts and accessories business to the third-party system.
“We’ve been out actively talking to people who are online selling motorcycle products,” Frazier said. “Some of those guys are online and there’s more on the way.”
Frazier would not say who those future third-party sellers are or when Amazon would consider setting up a more traditional retail method for its powersports business.
Frazier did say Amazon decided to give motorcycles parts and accessories a bigger presence on the auto site after a few motorcycle sellers posted products this summer. After those initial postings, motorcycle part sales “really started to take off,” he said.
On Nov. 10, the online site showed more than 109,000 motorcycle parts and accessories for sale.
To market those products, Amazon.com will advertise on its online search engine as well as run the Amazon affiliate program, where industry Web sites can link to Amazon and earn commission by advertising and promoting the company’s online products.

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