SEATTLE - Shares of Amazon.com Inc. fell 4.8 percent yesterday on concern that the biggest Internet retailer's costs may rise as it fulfills orders this holiday season and expands the variety of products it sells.
Amazon.com dropped $1.50 to $30.06 in Nasdaq trading. The Seattle-based company's shares have lost 66 percent of their value the past year.
Chief Executive Officer Jeff Bezos said on CNBC that the company, which already sells books, electronics, music and videos, will continue to expand into different product areas. Investors are concerned that Amazon.com's costs will rise as it stocks and ships more goods during the fourth-quarter holiday season, analysts said.
"I'm nervous about how efficient their distribution centers are," said analyst Holly Guthrie at Janney Montgomery Scott, who downgraded the stock to "sell" from "hold" Friday. "I don't think this Christmas things will be up and running."
Amazon.com also is among Internet retailers that will face increasing competition this holiday season from the Web sites of Gap Inc., J. C. Penney Co. and other traditional chains.
Online sales in the November-December holiday shopping months will jump 66 percent to $11.6 billion from the like period last year, according to Internet research firm Jupiter Communications Inc.
While sales at Amazon.com and eBay Inc., the largest online auctioneer, will rise, the biggest increase in online customers will be at the traditional retailers' sites, analysts have said.
Amazon.com also has been hurt by concerns about the viability of business-to-consumer Web retailers, analysts said. Price- line.com Inc., which lets consumers name their price for hotel rooms, airplane tickets and other services, said last week that WebHouse Club, an affiliated company that sells gasoline and groceries on its Web site, is shutting down.
"Priceline.com's troubles have created an extra jitter," said Tom Wyman, an analyst at J. P. Morgan Securities.
The "negative" environment for Internet stocks also hasn't helped Amazon.com, which is considered a bellwether stock for Internet companies, he said.
Amazon.com has been adding products and categories to attract more customers. Last week, it started an online camera and photo store and formed an alliance with closely held Ofoto Inc., a Web-based photography service. In August, it added a car-buying service, allowing customers to research cars and arrange financing through Greenlight.com, a Web site backed in part by Amazon.com. The wider variety of products means that Amazon.com will have to hire additional merchants who know how much of each item to stock. Getting such a team together in a short time isn't easy, Guthrie said.
Some analysts believe that a broader product line is a good decision by Amazon.com. For instance, Amazon.com's consumer-electronics business was the company's second-largest category behind books by sales last month, Wyman said.
"Some people think the company's trying to do too much too quickly, but I disagree," Wyman said. "As Amazon.com adds categories, it adds them very thoughtfully. They're logical extensions of what they've built up."