Plans by the world’s biggest online bookseller Amazon.com to saturate the Internet with a multimillion dollar advertising spend may prompt a profit-threatening marketing war with rivals, according to the UK’s leading online bookseller.
Amazon.com announced promotional tie-up deals with leading sites owners Excite, Yahoo! and the US’s leading online service provider, AOL, last week. The AOL deal alone involves Amazon.com committing a $19m (12m) promotional spend over three years to AOL. AOL will also receive a percentage of sales revenue introduced through its services.
But managing director of Oxford-based The Internet Bookshop Darryl Mattocks says Amazon.com’s aggressive marketing spend could provoke a profit-threatening battle with the US’ leading book retailer Barnes & Noble, which is cranking up its own efforts to become a major online retailer.
According to Mattocks: “Amazon.com is already discounting on price. Its plans do make you wonder what, after paying for online promotion and any sales revenue split, will be left? It’s profits that count.”
Mattocks insists The Internet Bookshop will not be threatened by Amazon.com’s move.
Anne Prendergast, European sales and marketing manager at Excite, says the deal will not initially involve heavy Amazon.com promotion on the search service’s UK and other localised European services.
US investors reacted positively to the three multimillion dollar promotional deals, as Amazon.com shares rose sharply despite continued losses at the company.