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with Amazon’s selection and prices and recall in fear how the company hastened the fate of both independent booksellers and prominent electronics chains like Circuit City.
Like many small business owners, Ken Lombardi, the C.E.O. of his family’s 60-year-old Lombardi Sports in San Francisco, views Amazon as a source of some of his business troubles. Though his store has been hit hard by the recession and the expansion of a sporting goods chain, R.E.I., in the Bay Area, Mr. Lombardi says that it is Amazon that has helped depress profit margins and snagged sales for basics like silicone swim caps, undershirts and running shoes — which, he adds, Amazon can offer without California’s 8.25 percent sales tax.
“People used to come in to buy a pair of running shoes and we would sell them a shirt or a workout outfit. We’re losing that,” Mr. Lombardi, who was recently forced to lay off a quarter of his 75-member staff.
In response to the gathering storm, Mr. Lombardi has overhauled his store, shrinking space for lagging items like Crocs clogs — which are offered cheaply on Amazon. He has added space for newer, hotter-selling items like Sanuk sandals, which are for sale on Amazon at about the same price. He also recently commissioned a new Web site to replace the static old one, which had not changed much over the years
“All we can do is tell a story physically and let people touch and smell and feel the product, which they can’t do online,” Mr. Lombardi said, lamenting his store’s future. “I think we are doing everything we can.”
There may be other ways to beat Amazon at its own game. One strategy discussed by rivals and analysts is to focus on the high-end luxury brands in specific categories, like Ralph Lauren clothes, Chanel fragrances or Wilson Audio speakers. Those companies resist selling on Amazon, fearing the downward effect it has on prices.
In shoes, Nike is perhaps the best example. The shoe giant has steadfastly declined to allow Amazon and most other Web retailers to sell its sneakers, and only late last year allowed some shoes to be sold on Zappos.com, which unlike Amazon does not present itself as a discounter.
Now that Amazon has bought the shoe site, a person familiar with internal discussions at Nike, who was not authorized to speak about the matter publicly, said the company was rethinking its arrangement with Zappos. This may be some comfort to Ken Lombardi, who says Nike shoes are among his store’s top-selling products.
There are similar holdout brands in almost every product category, but Amazon says that number is steadily shrinking. As the number of shoppers using Amazon.com even for basic product research grows, “every year we are able to sign up more and more brands,” said Jon Witham, Amazon’s vice president of toys, sports and home improvement.
Whether Amazon can dominate its newest product categories is another question. In markets like consumer electronics, where Amazon increasingly prevails, products like HDTVs from different companies are usually made by the same Asian factories, with little technical difference between brands. Shoppers then look for the best price and most convenient delivery, which Amazon can offer.
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