Amazon.com 2001 Annual Report Download - page 12

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Operating Segments
Commencing in January 2001, we organized our operations into four principal segments: U.S. Books, Music
and DVD/Video; U.S. Electronics, Tools and Kitchen; Services; and International. See Note 16 of “Notes to
Consolidated Financial Statements” included in Item 8 of Part II of this Form 10-K for additional information
regarding our segments.
U.S. Books, Music and DVD/Video Segment. This segment includes retail sales from www.amazon.com of
books, music and DVDs/video products and for magazine subscriptions. This segment also includes commissions
from sales of these products, new or used, through Amazon Marketplace and product revenues from stores
offering these products through our Syndicated Stores Program, such as www.borders.com.
The U.S. Books, Music and DVD/video segment had net sales of $1.69 billion, $1.70 billion, and
$1.31 billion in 2001, 2000, and 1999, respectively. In 2001, we added the “Look Inside the Book” feature,
which allows customers to view selected interior pages of thousands of books on our Web site. In addition, we
launched our magazine store, where customers can subscribe to more than 600 magazine titles, and our
e-documents store, where customers can purchase and download electronic documents.
U.S. Electronics, Tools and Kitchen Segment. This segment includes www.amazon.com retail sales of
electronics, computers, camera and photo items, software, computer and video games, cell phones and service,
tools and hardware, outdoor living items, kitchen and houseware products, toys and video games sold other than
through our strategic alliance with Toysrus.com, Inc., as well as catalog sales of toys, tools and hardware. This
segment also includes commissions from sales of these products, new or used, through Amazon Marketplace and
commissions or other amounts earned from offerings of these products by third-party sellers through our
[email protected] Program, such as our strategic alliance with Circuit City.
The U.S. Electronics, Tools and Kitchen segment had net sales of $547 million, $484 million, and
$151 million in 2001, 2000 and 1999, respectively. During 2001, we launched our computer store, and began our
offering of in-store pick-up through our strategic alliance with Circuit City.
Services Segment. This segment consists of commissions, fees and other amounts earned from our
business-to-business strategic alliances, including our Merchant Program and, to the extent product categories are
not also offered by us through our online retail stores, our [email protected] Program, as well as our
strategic alliance with America Online, Inc. This segment also includes Auctions, zShops and Payments, and
miscellaneous marketing and promotional agreements. Marketing responsibilities associated with successfully
promoting the expansion of our third-party seller and other service offerings are placed with our management
team leading this segment.
The Services segment had net sales of $225 million, $198 million, and $13 million in 2001, 2000 and 1999,
respectively. In 2001, we entered into numerous strategic alliances with such companies as America Online and
Target in the U.S., and Virgin Wines in the U.K. We also expanded our product offering under our Toysrus.com
strategic alliance to include Babiesrus.com and Imaginarium.com co-branded stores at www.amazon.com.In
addition, we entered into strategic alliances with Expedia, Hotwire and National Leisure Group to create our
travel store.
International Segment. This segment includes all retail sales of our four internationally-focused Web sites:
www.amazon.co.uk,www.amazon.de,www.amazon.fr and www.amazon.co.jp. These international sites share a
common Amazon experience, but are localized in terms of language, products, customer service and fulfillment.
This segment includes commissions and other amounts earned from offerings of these products by third party
sellers through our [email protected] Program, and product revenues from stores offering products
through our internationally-focused Syndicated Stores Program, such as www.waterstones.co.uk.
Net sales for the International segment (from all internationally-focused sites, including export sales to the
U.S.) were $661 million, $381 million, and $168 million in 2001, 2000, and 1999, respectively. In 2001,
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