NEWS AND COMMENTARY
August 30, 2000
Amazon Set to Launch French Site
Amazon is French for "Lose Money Fast" ... Weiss comments
PARIS - U.S. online retailer Amazon.com Inc. plans to launch a French site on Thursday, the Internet retailing giant said.
The French site, which will sell books, music and movies, is Amazon's fourth site, and the third launch in Europe after the U.K. and Germany in 1998. Amazon makes 23% of its sales outside the U.S., but the company hopes that proportion will rise to more than 50% in the long term.
Founder and Chief Executive Jeff Bezos said at a press conference Tuesday that the money pumped into French operations, to be located at www.amazon.fr, was a "significant investment."
Amazon will face heavy competition in the French market. Rivals include Pinault-Printemps-Redoute's Fnac.com, France Telecom SA's Alapage and BOL, a joint venture between Vivendi SA's Havas and Germany's Bertelsmann AG.
Mr. Bezos seemed unfazed by the competition. "We have to obsess about customers, not about competitors," he said. "No one has to lose for us to win." Online sales of books represent 0.3% to 0.5% of total book sales in France.
Amazon.com has yet to turn a profit. It has never made a dime. Now, it's extending that business model to France.
Amazon faces even more hurdles in France than it does in the U.S. In the U.S., the Amazon brand name is well known, the company was established before other competitors arrived online, and it has the ability to attract customers by undercutting prices found in stores.
In France, Amazon will have to comply with regulations that do not allow the company to set its own prices for goods -- no retailer can discount books more than 5% off the retail price. More importantly, France already has online retailers who have built up a loyal customer base. Making matters worse for Amazon, French regulations prohibit the company from advertising.
Also, the French press has not taken kindly to Amazon's venture. With headlines such as "Amazon Attacks French Market" and "Amazon to Start Cultural Products Battle on French Web Market," it doesn't look as if Amazon will get much branding help from the press.
Don't be surprised when the "significant investment" that Jeff Bezos pumped into this French venture causes Amazon's earnings to plummet and its stock to do the same.