Amazon Chief Goes on the Record


At the rate Amazon.com is adding new stores, it's giving Minnesota's famed Mall of America a run for its money.

Yesterday the online superstore added new cars to its roster via a partnership with Greenlight.com. The move was surprising, coming so soon after the death of Living.com, another high-ticket e-commerce play. The furniture site closed less than three months after it premiered as an Amazon partner.

It may be unlikely that a site known primarily for books and music will succeed in selling automobiles, but the Greenlight gambit puts Amazon (nasdaq: AMZN - news - people) at no risk.

For the privilege of partnering with the Web giant, the car site will pay out $15.25 million over two years, a nice chunk of change for little more than adding a link to its front page. Should car sales exceed a preset minimum, Amazon will also take a percentage of Greenlight's revenue, adding to the possible upside. And that's something the perennially unprofitable Amazon sorely needs.

Yesterday Chief Executive Jeff Bezos spoke with Forbes.com.

Forbes.com: Cars are a big purchase for consumers, but Amazon is struggling to establish itself beyond books and music with more expensive product categories. Why add cars?

Jeff Bezos: The fastest growing business in the history of Amazon--including books--is our electronics department, which has some of the [most expensive] things we sell. Our best sellers are DVD players, PDAs and digital cameras, and you can imagine what those price points are like.

How are sales in your other new categories?

We break our business into three segments: U.S. books, music and video; international sales in Germany and the U.K.; and then our early-stage businesses like electronics, tools, kitchen and toys. That early-stage segment is at a half-a-billion-dollar run rate and makes up almost a quarter of our revenues. So this myth that people are not buying Amazon's new product categories is just that, a myth.

Are there any products that are personal favorites?

I challenge you to read the customer reviews for the Oxo salad spinner that we sell in our kitchen department and to not buy that salad spinner. Trust me, you will never use paper towels to dry lettuce again.

To promote the big release of Harry Potter and the Goblet of Fire, Amazon gave free FedEx overnight shipping to the first 250,000 people to preorder the book. That cost your company a lot. Was it worth it?

We would do that Harry Potter promotion every week if we could. We lost money on every sale, but it's a small amount in the context of our revenues. That was actually one our most effective marketing programs ever.

What happened to Living.com?

In hindsight, we would have not done it at all. Clearly this one was a strikeout. The most likely reason for Living.com's failure was financing risk. A lot of companies that got started in 1998 and 1999 built aggressive business plans with high cost structures based on the [generous] capital markets as they existed at the time. They believed they would be able to do multiple rounds of financing, and that changed in April.

What's going to be your next breakout product category?

It has to be cars, of course.