Amazon and Wal-Mart: Now, That's What We Call Clicks 'n' Bricks!

• Share

Amazon.com, in its continuing quest to turn a profit in the e-tailing game, has long been bent on transforming itself into the Wal-Mart of cyberspace, expanding from books to electronics to drugs to furniture to cars.

Now it's going after the real thing. According to Britain's Sunday Times, Amazon founder Jeff Bezos and Wal-Mart CEO Lee Scott are hammering out a bricks-and-clicks mesh of the titans. Amazon would get a marketing presence in Wal-Mart's stores, and Wal-Mart would get Amazon's expertise in e-tailing and inventory management.

Neither side would discuss the deal, reportedly due in six weeks or so. But at first blush — and at the risk of saying anything even remotely optimistic these days about the dot-com economy — it sounds like a nice fit.

Wal-Mart sat the dot-com boom out. The world's largest retailer didn't set up an e-tailing arm when everybody else did, instead applying New Economy technologies to its internal inventory/supply/ordering chains. It worked, and while the dot-coms dropped like flies, Wal-Mart had no massive investment to lose. (Its late entry, Walmart.com, was relaunched in November 2000 and isn't doing so well.)

A promise of profits

Amazon, whose stock popped Monday on the news, would get a big business partner with unparalleled reach who knows a thing or two about selling goods cheaply and still turning a profit — as well as a built-in "bricks" component to their business on somebody else's dime. Wal-Mart, meanwhile, would appear to be interested in kicking their in-house efficiencies up a notch, perhaps adding an Internet component to an inventory system that is still largely self-contained and based on electronics, not the Web.

Amazon, having posted a loss in each of its five years in existence, may not know much about making money, but Bezos has promised investors a "pro-forma" profit (excluding debt payments and the like) by the end of 2001. No one doubts his company's skill at the e-tailing game — it's the game itself that has the shaky business model — and by now, Bezos must have learned pretty much all there is to know about how to squeeze every available penny to the utmost.

In fact, we may be getting an early look at Amazon's next expansionist venture. Maybe it was meant to be a consulting business all along.