of the new categories, for example automotive, may prove to be too confusing for customers.

The company may at some point need to reconsider its strategy of offering free

shipping to customers. It is a fair strategy since one could visit a more local retailer, and pay no costs. However, it is rumoured that shipping costs could be up to $500m, and such a high figure would undoubtedly erode profits. Opportunities.

The company is now increasingly cashing in on its credentials as an online retail

pioneer by selling its expertise to major store groups. For example, British retailer Marks and Spencer announced a joint venture with Amazon to sell its products and service online. Other recent collaborations have been with Target, Toys-R-Us and the NBA. Amazon's new Luxembourg-based division aims to provide tailored services to retailers as a technology service provider in Europe. There are also opportunities for Amazon to build collaborations with the public

sector. For example the company announced a deal with the British Library, London, in 2004. The benefit is that customers c an search for rare or antique books. The library's catalogue of published works is now on the Amazon website, meaning it has details of more than 2.5m books on the site.

In 2004 Amazon moved into the Chinese market, by buying china's biggest

online retailer, . The deal was reported to be worth around $75m

(£40m). has many similarities to its new owner, in that it retails books, movies, toys, and music at discounted prices.

Threats

All successful Internet businesses attract competition. Since Amazon sells the

same or similar products as high street retailers and other online businesses, it may become more and more difficult to differentiate the brand from its

competitors. Amazon does have it s brand. It also has a huge range of products. Otherwise, price competition could damage the business.

International competitors may also intrude upon Amazon as it expands. Those

domestic (US-based) rivals unable to compete with Amazon in the US, may entrench overseas and compete with them on foreign fronts. Joint ventures, strategic alliances and mergers could see Amazon losing its top position in some markets.

The products that Amazon sells tend to be bought as gifts, especially at

Christmas. This means that there is an element of seasonality to the business. However, by trading in overseas markets in different cultures such seasonality may not be enduring.