Redeye VC

Josh Kopelman

Managing Director of First Round Capital.

espite being coastally challenged (currently living in Philadelphia), Josh has been an active entrepreneur and investor in the Internet industry since its commercialization. In 1992, while he was a student at the Wharton School of the University of Pennsylvania, Josh co-founded Infonautics Corporation – an Internet information company. In 1996, Infonautics went public on the NASDAQ stock exchange.

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Amazon ProductAds

If this post from ComparisonEngines.com is correct, Amazon is launching something big -- ProductAds.  Instead of trying to capture all ecommerce transactions on the Amazon.com platform or marketplace, Amazon is now referring transactions to other non-Amazon merchants.  Basically, Amazon.com is becoming a comparison shopping engine. 

Perhaps this is a result from Amazon's recognition that "the percentage of shoppers who started at Amazon has continued to fall, while the percentage of consumers who say they start shopping at a search portal has risen."   Given that ecommerce search represents a big portion of Google's Adwords revenue -- and almost 100% of eBay's revenue -- if this takes off, it could have a pretty big impact on the ecommerce world.   

Comments

George

Isn't there a danger to Amazon's brand by third-party merchants with less-then-stellar customer service? Most people have no clue about affiliates, all they'll see is Amazon's logo in the corner and URL in the address bar.

RAGZ

I've been researching e-commerce to the point of exhaustion over the past 6 months for my business, and I think most folks are missing the mark on Amazon's new service.

First, Amazon has been kicking ass and taking names recently, with a 40% yearly increase, or more, across the board: http://biz.yahoo.com/bw/080130/20080130006013.html
This comes at a time when the US economy is hurting most, telling us that when money is tight, consumers are bargain shopping on Amazon. This, by the way, agrees with almost every industry survey ever made.

Second, Amazon is facilitating bid-warfare a la Google Ad Words, on search results landing pages. Does that help their best friends, price-conscious shoppers, find their products at the best rates and their customary Amazon shopping format? I don't think so.

My conclusion: I think Amazon just made their first mistake, although easily recoverable. The first feedback from these new external advertisers is rolling in, in bits and bytes all over the web if you look, and they don't like the CPC return much. It's an ass-backwards way of competing with search engines, like Google. Amazon is a search engine, after all, and they have a superior product search for their customers. Why mess with what works so well? What they've misinterpreted, I think, is that customers are searching for more than just products to buy in search engines, something an industry report will not catch. Customers are looking to see if products listed with Amazon compare with the same products listed with other merchants, new product technologies available, expert opinions, finding product solutions they don't know exist to problems they face, and a host of unrelated reasons to use search engines not completely focused on internal inventory, prices, and reviews.

The net effect could actually dilute their brand a little bit by putting a related advertisement anywhere on an Amazon product search result page that a user may mistake as an Amazon listing. Wait until the user is blasted away to Nike or Dell's homepage. That is NOT why people shop at Amazon.

No, a better way to get folks to use Amazon more often as the starting point for all product related searches, would have been to include more external resources: consumer reports, specific product or brand related pages, etc.. That way the consumer wouldn't have to go somewhere else for information not expressly involved in the transaction.

-My two (and a page) cents
:)

anonymous

How long is this Ad model going to work in the dwindling economy? You may find this interesting.

http://jacobsmith.wordpress.com/2008/02/20/there-is-no-free-lunch/

louis vuitton damier

Isn't there a danger to Amazon's brand by third-party merchants with less-then-stellar customer service? Most people have no clue about affiliates, all they'll see is Amazon's logo in the corner and URL in the address bar.

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