Amazon.com 2Q Profit Drops 58%
Seattle, Amazon.com Inc. said second-quarter earnings plunged nearly 58% as the on-line retailer focused on giving customers cheap or free shipping deals and spending to develop new technologies. The company also sliced its profit outlook for 2006. Investor reaction was swift, with a 12% drop in Amazon’s share price in late trade Tuesday. Despite the drop in income, sales rose 22%, which the company attributed to its focus on providing customers with things they want.
Amazon said its investment in such features as free shipping and a new toy store is the right strategy for long-term growth and customer loyalty. The company said it planned to invest heavily in its new toy strategy and will cut prices on many products to continue to attract customers and build loyalty.
Nike Builds On-line Community
Seattle, As a part of its World Cup strategy, footwear giant Nike set up a Web site where soccer fans continue to network beyond the tournament, according to Business Week. The centerpiece is Joga.com, a social networking site for soccer fans launched in February with Google. Members in 140 countries can blog, create fan communities around their favorite teams or players, organize pickup games, download videos and rant against the encroaching commercialism of the game. The marketing effort has gained consumers’ attention beyond top-down mass messages, the publication said.
The publication said that Nike was forced to be innovative after rival Adidas got a World Cup exclusive deal to broadcast ads in the United States. But by monitoring conversations on social networking sites and blogs, where people are shaping Nike’s brand, the sneaker giant knew this was an opportunity to try something different.
The Joga.com site is just one piece of a $100 million multilayered campaign known as Joga Bonito, which translates into “play beautiful” in Portuguese. Business Week noted that last fall, Nike started feeding video clips that spotlight Nike-sponsored soccer players onto popular video sharing sites, including YouTube and Google.
The publication also said that Nike reached its World Cup goal of signing up 1 million members by mid-July, when the tournament ended.
Read All About It: Establishing Multichannel Strategies
Retailers are finding that integrated multichannel strategies are much more complex and much more difficult to implement than earlier efforts to launch stand-alone e-commerce Web sites. The greatest challenge is often the dramatic business-transformation effort required. For the full article, “Going Direct by Establishing Retail Multichannel Capabilities,” visit the Guest Commentary section of chainstoreage.com.