Amazon buys 49% stake in Gear.com

Expanding marketer adds sporting goods

Electronic commerce

July 15, 1999|By BLOOMBERG NEWS

SEATTLE -- Amazon.com Inc., the largest Internet retailer, said yesterday that it has bought a 49 percent stake in Gear.com, an online seller of sporting goods at closeout prices, in another move to expand aggressively beyond its original book business.

Closely held Gear.com sells sporting goods such as Cannondale bicycling shoes, Woolrich outdoor clothing and golf clubs from Cleveland Golf at discounts of 20 percent to 90 percent.

Terms of the deal were not disclosed.

Amazon.com, which began by selling books online, is moving quickly to sell many types of goods, making it something like an online department store.

Tuesday, it added online toy and electronics stores to its Internet site. The company has also invested in Drugstore.com Inc., HomeGrocer.com Inc. and Pet.com Inc.

"This just continues Amazon's full-service theme of offering everything under the sun," said Alan Mak, an Argus Research analyst with a "buy" rating on the stock.

Shares of Amazon.com rose $8.875 in trading yesterday to close at $135.

Seattle-based Gear.com, founded by four investors, began selling products from its Web site in October, said Barry Devenney, a Gear.com spokesman. Amazon.com also is based in Seattle.

Gear.com's competitors in- clude Fogdog Sports' fogdog.com Web site, which sells sporting goods at full retail prices, and REI-Outlet.com, which sells climbing gear and other outdoor sporting goods at discount prices.

Gear.com differs from competitors by selling indoor and outdoor sporting goods at closeout prices, Devenney said.

By investing in other Internet retailers such as Gear.com, Amazon.com is getting more information about consumer behavior online and access to expertise in selling various kinds of goods, analysts said.

The companies Amazon.com has invested in "represent categories that Amazon thinks are going to be valuable long-term," said Derek L. Brown, an analyst with Volpe Brown Whelan & Co. He rates the stock a "strong buy."

If those companies become successful and expand, Amazon.com would have a clear path to acquiring them, Brown said.

Amazon.com's offerings also include music, videos and goods sold at auction.

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