Amazon to BN.com: Gotcha

Someday, in the afterlife, Napoleon Bonaparte, Douglas MacArthur and other military legends will gather around chief executive officer Jeff Bezos of Amazon.com (Nasdaq: AMZN) and congratulate Bezos on his battlefield tactics. For e-commerce has never known a more cunning general.

Actually, to call Amazon’s latest bait-and-switch move in offering and then canceling free shipping a brilliant offensive move would be an understatement. Amazon informed its customers of its free-shipping offer, waited a couple weeks and then let the world know that it was, of course, only a trial period all along.

Of course, during that “trial” period, main online book selling competitor Barnesandnoble.com (Nasdaq: BNBN) matched Amazon’s ante. And BN.com did what any aggressive competitor would do: It raised the stakes.

Trial and Error?

In BN.com’s press release — yes, Amazon even got BN.com to announce its intentions to offer free shipping to the world, making it that much harder to retreat or change course quietly — BN.com pointed out that it was not raising prices. The statement was a shot across the bow at Amazon, who customers say factored in shipping costs in re-stickeringmany items.

So what does Amazon do? It not only folded, but got up from the table, walked away and said it was only sitting in for a couple hands anyway. There, at the table, red-faced and swallowing hard, sits BN.com.

This is where the brilliance of the bait-and-switch is highlighted, where we learn just how cunning the battlefield maneuvers were.

Trapped, Like

BN.com is in a corner; it is going to have to shoot its way out. And no matter which direction it aims, there is going to be crossfire and, as the military now euphemistically calls it, collateral damage.

Escape Plan 1 for BN.com involves hunkering down in the corner and using the ammunition that Amazon provided. That is, keep the free shipping in place, hoping that the contrast with Amazon will lure enough new customers placing multiple book-and-music orders to make it worthwhile.

That’s fine. But the potential collateral damage here is to BN.com’s bottom line. It’s early in the third quarter yet, but those numbers will be closely watched later in the year. And given what we know about shipping costs eroding profits, this option could spell bad news with investors and analysts.

Following Footsteps

The other option is to try to beat a retreat along the same path that Amazon took. The only problem is that Amazon has mined the roadway with a public relations nightmare.

If they too leave the table, the people at BN.com will have to explain that they were only matching Amazon, an embarrassing admission. Plus, they have to tell their customers that they’re taking away something they sold as a bonus, a gift to them. They shall have to tread very lightly.

My guess is that BN.com will take a combination approach. Stick it out for a while, then announce at some logical point, say the end of the summer, that it’s going back to charging for shipping, maybe with some new wrinkle added in. A good solution? No, but it’s all that’s left.

Honest Mistakes

Of course, it’s possible that Amazon truly did intend its shipping freebie to be a test. It wouldn’t be the first one. Remember the customized pricing debacle? That was called a test as Amazon beat a retreat.

I didn’t believe it then and I don’t now. Amazon is too forward thinking, too focused to be caught at a loss like that. Maybe some other e-tailer, but not Amazon.

No, this was planned, I’m sure of it. And so far, it has worked to perfection. The war is far from over, but this battle goes to Bezos.

What do you think? Let’s talk about it.


Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


18 Comments

  • Whilst I don’t necessarily think that Napoleon would see Amazon’s tactic as great strategy, I believe that Amazon’s move was more deliberate than accident. Large corporations do make blunders, and some of them are fortuitous, but I believe that the “free shipping” offer was a very smart competitive move.

    We all have a choice in spending our dollars. The smarter companies attract them.

        • While i’m sure most of these articles are intended to try to spark ‘community’ at this site…

          the main reason AM azon dropped shipping was to accelerate sales revenues at the end of the quarter. and that’s why they dropped the free shipping, was because a new quarter started. they weren’t thinking of BN.com, they were trying to hit their quarter.

          nothing brilliant going on, just desperate moves by companies trying to make themselves viable from one quarter to the next…

          • I work for one of the two companies discussed in this article. Without going into the details, suffice to say that the reporter is way off base. This is truly an example of poor reporting and also a reason the media has an overall credibility problem with the reading public. Amazon has no reason to do what the writer is suggesting and BN is a leader in the industry, not a follower.

          • For someone who works for an online bookseller, “Scott S” has very little understanding of the publishing/journalism process.

            He says about the “Gotcha” article: “This is truly an example of poor reporting and also a reason the media has an overall credibility problem…”

            Hello? This is not even an example of “reporting” at all. The article was an opinion piece, so it is perfectly fine for the writer to offer his opinion about what might have happened and to discuss the ramifications. The article does not present his viewpoint as a piece of “news.” There’s a big difference.

          • Dopey article. The writer’s arguments for Bozo’s genius is — hate to repeat myself — dopey.

            Let’s see… Amazon.com hypes free P&H but they raise the product prices. What a brilliant move. Great PR from that little maneuver, I bet.

          • Sooner or later we as the public will be or are getting tried of these big corp; And

            there tactics giving shody products and services that promise every thing and give

            nothing and expect to be paid huge dollars for these so called new and improved

            services. IF they keep up with ( very poor ) so called service I will just as content to

            cancel the service with my cable provider and or sell this computer.

          • Sooner or later we as the public will be or are getting tired of these big corp; And

            their tactics giving shoddy products and services that promise everything and give

            nothing and expect to be paid huge dollars for these so-called new and improved

            services. IF they keep up with (very poor) so-called service I will be just as content to

            cancel the service with my cable provider and/or sell this computer.

  • This article about Bezos actually planning to trick BN into offering free shipping is not only ludicrous, it’s flat out stupid business. Bezos didn’t have any grand battle plan vs. BN.com — they were simply trying to convert more shopping carts into sales. It didn’t work, so they backed off. Your analyst’s imagination is running wild.

    Moreover, if anything, Amazon’s little “test” backfired in 2 ways — 1) it showed again that AMZN is willing to manipulate its customers to earn a sale; and 2) it increased the intensity of an already self-defeating price war. This was not “genius” or even intended as your author suggests. Instead, it was downright stupid — it’s going to cost Amazon customer goodwill and in turn sales and margin, as Amazon will now have to hear how BN.com is cheaper. All that said, Bezos is the strategic mastermind of one thing: causing a competitive death spiral that will ruin the industry segment for all players.

    Where do you get your analysts from?? High school? Did he talk to anyone before crafting these very creative assertions?? What a dope.

  • Personally I think AMAZON is just too clever. I hope they choke on their cleverness. After they destroyed BIBLIOFIND in May & my online bookselling effort, I have just been hoping someone gives them a good drubbing. They are soo greedy it’s going to make an anarchist out of me.

  • What is wrong with you all? Don’t you know that the Gotcha is with you, the Customer? If you buy from B&N OR Amazon you are paying up to 200% more for a book than if you were to order straight from the dealer or use a service like ABE or TomFolio????? B&N keeps the 200% for themselves, and Amazon charges the dealers an arm and a leg and then some for the privilege to post on their site. Wise up America. You want a deal? GO straight to the dealers.

  • In my case, it backfired on Amazon. I planned a big order for Sunday but noticed the free shipping was no longer offered and cut it way back to the $35 required to use the $10 off coupon I received. So I ended up with only $4 off my order after subtracting the shipping but Amazon lost another $80 worth of business that will now go to BN since they had lower prices on all the other books and shipping was about the same.

    Smart move Amazon.

  • Very silly article. When I read that BNBN was offering free shipping, I ordered my books that I had been waiting on for a good price from BNBN. I AM sure there are others doing the same. I will take avantage of this offer. I guess BNBN got more new customers with the offer. I go where it is cheaper, not to where it is more expensive. Amazon is more expensive so it will lose. And for the time being, I AM a BNBN customer. That’s at least 400 to 500 dollars a year business. Gotcha? Yes, BNBN got more customers.

  • Jeff Bezos….cunning!!!….brilliant!!…Heee Heee, Haaa Haaa… Stop you’re killing me!!

    Bezos is desperate to turn a “pro forma” profit by the end of the year, and it is showing. Sales growth has stalled, especially in the core books and music segment. No question this ill conceived promotion was meant to provide a short-term boost in revenues at the end of a typically slow quarter.

    What I fail to understand is why the author of this piece contends that BN.com will suffer more PR problems than Amazon has when it ends free shipping? Amazon garners much more media visibility than BN.com.

    Oh well. Short at 20..cover at 10.

  • I have to agree with the others who have responded to this article. The guy who wrote it seems as though he does not have a very clear understanding of basic business tactics. I went back and read the story again and came away from it wondering why the web site allowed this to be on here. It just sounds so silly.

  • It’s AM azing how the author assumed all this from his cubicle. No one at Amazon said they’d set up BN.com. In fact, it appears this was a PR disaster for AMZN since most customers were angered by the unannounced price increases.

    The author is obviously trying to turn something unnewsworthy into a story. Kind of sad the quality of “journalists” writing on the Internet today.

  • It seems to me that E-Commerce Times has not learned anything yet. Bezos has not made one cent of profit. Yet he is being compared to victorious generals!?!!? Stupid article.

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