Amazon.com Issues Statement Regarding Random Price Testing
SEATTLE--September 27, 2000— Amazon.com today issued the following statement regarding random price testing:
Some news reports over the last several weeks have incorrectly characterized a recent Amazon.com random price test as a test based on customer demographic information. These reports were incorrect and were not based on the facts.
Contrary to these reports, Amazon.com varied the discount levels on a totally random basis, not with respect to customer demographic information. The purpose of the test was to determine how much sales are affected by lower prices. In retrospect, this random testing was a mistake, and we regret it because it created uncertainty and complexity for our customers, and our job is to simplify shopping for customers. That is why, more than two weeks ago, in response to customer feedback, we changed our policy to protect customers should we ever do random price testing again (and currently we have no plans to do so). Now, if we ever do such a test again, we'll automatically give customers who purchased a test item the lowest test price for that item at the conclusion of the test period—thereby ensuring that all customers pay the lowest available price. Under this new policy, by Sept. 14, we had refunded to 6,896 customers an average of $3.10 as a result of the DVD random price test.
“We've never tested and we never will test prices based on customer demographics,” said Amazon.com founder and CEO Jeff Bezos. “What we did was a random price test, and even that was a mistake because it created uncertainty for customers rather than simplifying their lives. The policy we put in place two weeks ago removes that uncertainty.”
Some details about the DVD pricing test:
--68 DVD titles
--over a five-day period
--discount levels tested: 20% to 40%
--6,896 customers refunded an average of $3.10
Amazon.com (Amazon.com, Inc., and its subsidiaries) is the Internet's No. 1 music, No. 1 DVD and video, and No. 1 book retailer. Amazon.com (Nasdaq: AMZN) opened its virtual doors on the World Wide Web in July 1995 and today offers Earth's Biggest Selection, along with online auctions and free electronic greeting cards. Amazon.com seeks to be the world's most customer-centric company, where customers can find and discover anything they might want to buy online. Amazon.com lists more than 18 million unique items in categories including books, CDs, toys, electronics, videos, DVDs, tools and hardware, lawn and patio items, kitchen products, software, and video games. Through Amazon.com zShops, any business or individual can sell virtually anything to Amazon.com's more than 23 million customers, and with Amazon.com Payments, sellers can accept credit card transactions, avoiding the hassles of offline payments. The company also participates in sothebys.amazon.com, the leading auction site for guaranteed art, jewelry and collectibles, at www.sothebys.amazon.com.
Amazon.com operates three international Web sites: www.amazon.fr, www.amazon.co.uk and www.amazon.de. It also operates the Internet Movie Database (www.imdb.com), the Web's comprehensive and authoritative source of information on more than 220,000 movies and entertainment programs and 800,000 cast and crew members dating from the birth of film in 1892 to 2003.
Amazon Anywhere is the leader in mobile e-commerce, providing access from anywhere in the world to Amazon.com, Amazon.co.uk and Amazon.de on personal digital assistants (PDAs) and through handheld wireless Internet devices that use HDML or the Wireless Application Protocol.
Amazon.com has invested in leading Internet retailers that are improving the lives of customers by making shopping easier and more convenient: Greenlight.com, the only company that offers car buyers the control of auto purchasing online with ongoing service and support from local dealerships, at www.greenlight.com; drugstore.com, an online retail and information source for health, beauty, wellness, personal care and pharmacy, at www.drugstore.com; Pets.com, the online leader for pet products, expert information, and services, at www.pets.com; Gear.com, which offers brand-name sporting goods at prices from 20 to 90 percent off retail, at www.gear.com; Ashford.com, the leading Internet retailer of luxury and premium products and the Web's No. 1 retailer of watches and jewelry, at www.ashford.com; Audible, Inc., the leader in Internet-delivered spoken audio for PC-based listening or playback on AudibleReady portable digital audio devices, at www.audible.com; and eZiba.com, a leading online retailer of handcrafted products from around the world, at www.eziba.com.
Amazon.com also has a minority interest in NextCard, Inc., considered the industry's leading issuer of consumer credit on the Internet, at www.nextcard.com; and Kozmo.com, the world's leading “e-mmediate” Internet-to-door delivery service, at www.kozmo.com.
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve risks and uncertainties that include, among others, Amazon.com's limited operating history, anticipated losses, significant amount of indebtedness, unpredictability of future revenues, potential fluctuations in quarterly operating results, seasonality, consumer trends, competition, risk of distribution center expansion, risks related to fourth quarter performance, risks of system interruption, management of potential growth, inventory risks, risks related to auction and zShops services, risks related to fraud and Amazon.com Payments, and risks of new business areas, international expansion, business combinations, strategic alliances and the Amazon Commerce Network. More information about factors that potentially could affect Amazon.com's financial results is included in Amazon.com's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 1999, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000, and June 30, 2000.