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Amazon preps outlet store
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December 20, 2000: 2:09 p.m. ET
Site will showcase and sell range of discounted merchandise
By Staff Writer Richard Richtmyer
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NEW YORK (CNNfn) - Online retailing leader Amazon.com is setting up an online outlet store where it will sell overstocked and end-of-season items at a discount.
Currently in preview mode, the site, called Amazon.com Outlet, is expected to officially open on Dec. 28. It will carry products including books, toys, consumer electronics, DVDs, music, tools and hardware.
Shoppers will be able to pick up items at discounts of up to 60 percent.
The Seattle-based company sent an e-mail to customers Wednesday, alerting them to the opening of the outlet store, which will be one of over a dozen product sections on the main Amazon.com site.
The move comes during what is shaping up to be a sluggish holiday season for both traditional and online retailers. Recent surveys showed sales down 6.2 percent from last year, despite experts' predictions of a 3 to 4 percent increase.
Online toy seller eToys (ETYS: Research, Estimates) has been particularly hard hit by the slowdown, which caused the company last week to warn of weaker-than-expected quarterly financial results and tell investors it was on the verge of running out of cash.
But spokeswoman Emily Glassman said Amazon is pleased so far with the pace of sales it is seeing this holiday season. Since Nov. 2, the company has taken orders for more than 30 million units, she said.
The decision to establish the outlet store was made after the company received customer feedback asking for an easier way to find the best bargains across Amazon's various product lines, according to Glassman.
 "Currently, a customer would have to go into every tab to go into the bargain area from each store to see the best bargains across all our product lines," she said. "That's a lot of clicking and a lot of exploring. With the outlet, you can go to one place if you're a bargain hunter and see all of the best bargains at that time from across all the stores."
If Amazon had been looking at the outlet as a means to unload merchandise it had overstocked in anticipation of a stronger holiday season, it probably would have begun promoting it much sooner, noted SG Cowen analyst Scott Reamer.
"Clearly, they would want to do that within the quarter so that they don't have to write this stuff down," he said.
Instead, the move appears to be just another extension of the Amazon brand into another commerce genre, according to Reamer. "When you think about offline stores, there are premium stores, there are at-market stores and there are discount stores," he said. "And Amazon wants all three of those things."
As for Amazon's fourth-quarter financial results, Reamer said he expects the company to meet the current revenue expectations of between $1.05 billion and $1.1 billion. However, the cost at which that revenue will come remains unclear, he said.
"The question is, what incentives and what discounts have they needed to provide to get to that number and indeed just what is their operational efficiency?" Reamer said.
"On that score, the Street knows absolutely nothing," he added. "There's been an information vacuum around this stock because the company doesn't talk inter-quarter about anything that helps you understand the cost side of the equation."
Amazon (AMZN: Research, Estimates) shares were down $1.69, or 9.3 percent, in afternoon trade on the New York Stock Exchange Wednesday. That's more than 85 percent below their 12-month high of $113 reached last winter. 
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Amazon.com Outlet
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