In two Significant moves in the online bookseller wars, Amazon.com has announced the opening of a new distribution center in Fernley, Nev., while computer giant Compaq has bought Shopping.com, a multipurpose cybermall that discounts books by as much as 50%.
Amazon.com's 322,560-sq.-ft. distribution center in Fernley is due to open in the first half of this year. By adding large amounts of space and by positioning itself closer to many cities of the West and Southwest, Amazon will cut delivery time by one day to such places as Los Angeles, San Francisco, San Diego, Ph nix and Houston. The center will also decrease Amazon's reliance on Ingram.
Amazon chose the location after a computer analysis yielded the Reno area as the best spot for a distribution center. Situated 30 miles east of Reno in the Nevada Pacific Industrial Park, the facility formerly belonged to Stanley Tools and was recently acquired by Panattoni Development of San Francisco. Amazon.com will lease the space.
With the warehouse, Amazon.com more than doubles its existing storage capacity. Its Seattle distribution center occupies 93,000 square feet, and the center in New Castle, Del., has 202,000 square feet. Like those centers, the Fernley outlet will stock books, CDs and videos. It will employ about 300 people.
Asked by PW if the move can be seen as a counterpunch to Barnes &Noble's purchase of Ingram, Amazon.com spokesman Bill Curry responded: "If you could see our Seattle distribution center, you would understand that we need the space, regardless of what any competitor is doing. You cannot do the level of business that we are doing without it."
Curry declined to comment on whether the opening reduces the likelihood that Amazon.com will partner with another wholesaler, such as Baker &Taylor, as some reports have speculated. (The Reno area is also home to a Baker &Taylor warehouse.)
Compaq has spent $220 million to buy Shopping.com, several miles south of Seattle, which sells two million goods and services, from books to wrenches to perfume to suitcases. At one time the company offered books at a 60% discount; now it offers selected titles at 50% off.
The computer giant plans a big Web push, including a potentially valuable link with the search engine AltaVista, also owned by Compaq, that could multiply traffic by 25 times, according to Compaq officials.
Launched over a year ago, Shopping.com is working toward a distributor-less world by having manufacturers drop-ship directly to customers. On the book front, said a company spokesman, Shopping.com presently uses undisclosed distributors for its 500,000 titles, though it is "talking to publishers." (PW has learned that Ingram is one of these distributors.) One independent bookseller even spoke of how he used Shopping.com as his own distributor, much in the way some independents have used the price clubs to buy deep-discounted titles in short supply.
While Shopping.com spokesperson Sanjay Sabnani stopped short of calling the discounted books loss leaders, he did say, "We are willing to be competitive on book prices in order to capture eyeballs" and to sell "higher-margin products such as vitamins and sporting goods." About 10% of the retailer's business is book-based, although Shopping.com director of merchandising Melissa Gehl told PW that books are "one of the top sellers in terms of volume." Sabnani added that Shopping.com was "excited to have a strong partner with deep pockets."
