from stockhouse ASHFORD-AMAZON DEAL looks like a good bet
December 3, 1999
StockHouse News Desk
By Jane Freedman
StockHouse Columnist
Ashford-Amazon Deal Looks Like A Good Bet
Miami, FL, December 3/SHfn/-- Surprise, surprise! Ashford.com [ASFD] is now becoming one of the
Nouveau Riche! On Wednesday, Amazon.com [AMZN] invested $10 million into the up-and-coming
luxury goods online retailer, Ashford.
Amazon has always appeared to be an Internet company that was acquiring pieces of other potentially
successful ones, more like becoming the conglomerate of Internet companies. Well, it certainly seems
like they did it again, and it appears they made an excellent choice. It couldn't be at a better time, with
Christmas season just beginning, and Amazon being the powerhouse of e-tailing buzzwords. Lisa Allen,
a senior analyst at Forrester Research, commented that the investment "is a great deal for Ashford to
help them pull away from the pack of other luxury goods online retailers". She further said "they would be
able to tap the Amazon promotional machine and its monster database and that Ashford will slice and
dice that Amazon database to bring to the top the most affluent customers".
Ashford has had a lot of press and hype, but not without merit. The stock
rose $4 ½ per share, or 25%, on the news. The deal couldn't have come
at a better time. Amazon has a 13 million-customer database. Ashford
offers top name products including diamonds, fragrances, watches,
sunglasses, bath and body products, pens -- all with special deals to
Amazon customers. At the same time, Ashford can buy more luxury
products online from other sites at lower prices. Ashford spent a big
amount of money marketing and selling last year. On the other hand, even
though Amazon has yet to be profitable, the four year old company is a
household name and is probably well on its way, with its good strategic
moves.
Amazon has expanded from selling music, videos, auctions, toys, electronics, home improvements,
software and greeting cards. Luxury items add to the idea of a classy mini-store on a conglomerate style,
with a combination of a "Bloomingdales", online. The Ashford addition is having Amazon make a strong
effort into the online luxury market that is growing leaps and bounds. The market may not have fallen into
place in an organized fashion yet, but, can anyone say that the market for Internet sites is well
organized? However, Amazon with Ashford has a better-than-expected chance, particularly with the
strong name of Amazon behind it. Did anyone believe that Sharper Image would have a shot when it first
arrived? Expensive clothing and accessories last year at the brick and mortar stores totaled $133 billion.
And Amazon sells Sony TVs for $3600, so we can't say price range is offbase.
This stake for Amazon has a good chance for the company to grow both vertically and horizontally.
Amazon has made numerous investments in online companies where it sees potential growth, some of
which include pharmacies, pet shops, and supermarkets. This new product category should add some
pizzazz- particularly well timed for the holiday season. Ashford does have other deals with American
Online [AOL] and Yahoo! [YHOO]- why not another marquee name to add to its usefulness for the
consumer? Anyway, this seems more befitting. Ashford has a ton of cash on its balance sheet. In the
Internet sector, execution of the best deals will be the key. This Amazon-Ashford combination looks like
a good bet.
• • •
Australia
Canada
Hong Kong
|
