Amazon Invests in Internet Mall for Catalogs

Amazon.com (Nasdaq: AMZN) took another step toward broadening its offerings Friday when it announced a US$5 million investment in Altura International, which operates the CatalogCity.com Web site.

Amazon said it issued 717,316 common shares worth $6.97 each to buy a stake in Monterey, California-based Altura, but did not say how much of Altura it would own.

CatalogCity describes itself as an "online mall for catalog shoppers" and features Internet access to mail-order favorites such as J.Crew, Hammacher Schlemmer and the Bombay Company. As part of the agreement, CatalogCity.com merchants will get a place on the Amazon site, and conversely, Amazon books, music, DVDs and videos will be available on the CatalogCity site.

Amazon's Evolution

Morningstar analyst David Kathman said the move is in keeping with Amazon's evolution into "a platform for other people to sell stuff," instead of a pure-play e-tailing company with all its own warehouses and delivery operations.

"What CatalogCity is doing is what Amazon is starting to get more into," Kathman told the E-Commerce Times.

While Amazon will continue to sell its own wares, he said, the company is also likely to keep looking for third-party ventures like the CatalogCity deal . "I would expect them to continue moving in that direction," he said.

Even the slogans of the two are alike, with Amazon saying that it has the "Earth's Biggest Selection" and CatalogCity.com saying that it offers "Easy Access to the World's Best Products."

Promises, Promises

Amazon has been moving to shore up its revenue heading into the fourth quarter, which includes the crucial holiday shopping season. The Internet old-timer has long been predicting an operating profit for the period ending in December of this year, even as it looks for sales to be flat to slightly above year-earlier levels.

The size of the CatalogCity investment is "not a huge amount in the big scheme of things," Kathman said.

Altura executive vice president Bruce Sellers told the E-Commerce Times that the Amazon investment is not material, amounting to a stake of less than 20 percent of the company. However, he said the agreement will help Altura by making its services available to Amazon's "millions" of customers. "It's a very good, cooperative, win-win solution, we think," he said.

Looking Glossy

Kathman said Amazon executives have a good chance of meeting their fourth-quarter goals, though "it's still not a sure thing."

The analyst pointed out that company officials "weren't making any guarantees" about profitability. "They were saying they were confident they could do it."

The investment in CatalogCity.com is the latest move by Amazon to link its fortunes with sellers working in glossy print. On October 30th, Amazon opened a magazine store on its site, saying it wanted to give shoppers another outlet for quick and easy holiday gifts. Most of the magazines are offered at discounts.