If a user has a bad experience, some of that negative sentiment may rub off on Amazon. With each minority stake it takes, Amazon's operating and promotion budgets balloon. That's three times what eBay spent in all of 1998. But founder and chief executive Jeff Bezos is on record as wanting to lay the groundwork now that will allow the company to serve some of the 24 million households expected to shop online in coming years, up from 10 million in 1998, according to Forrester. It's all about branding.
Customers like to work with businesses they know, and trust is transferred as a company goes online.
Amazon's shares have slipped in recent weeks, during which Bezos has outlined plans for the coming year to add distribution centers, upgrade computer systems, seek additional expansion opportunities and continue advertising. Bezos said the company does intend to make a profit. Jim Lattin, associate professor of marketing at the Stanford Graduate School of Business, says the relationship with the customer gets stronger, not weaker, as the company grows. Some people may feel alienated as the company expands, he says, but it's more likely customers will appreciate Amazon's recommendations for CDs and videos and the opportunity to jump to auctions without filling out another personal profile. What remains uncertain is whether shoppers looking for a CD by Dogstar or a copy of Dog Day Afternoon are also in the market for dog food.