Dot-com goldrush is over - says Amazon

The race to carve out a niche on the Net by collecting users at a loss is over, according to Joe Galli, chief operating officer for Amazon.com.

In an exclusive interview with silicon.com, Amazon's number two claimed business to consumer ecommerce is entering a new phase, with the dominant players in each market now established and unlikely to be ousted.

He said: "The situation where Internet start-ups could spend massive amounts to gain market share without worrying about profits are now over. We are moving into a period of consolidation of the existing players, with few new start-ups coming through."

He said Amazon would not be able to start-up in the current business environment: "If I founded Amazon now I would have to do it in a different way," he said.

He added that far from harming Amazon, the recent fall in Internet stocks has contributed to the maturing of the marketplace, which will help existing players. "Six months ago we had new competitors starting every day. Now investors are more discerning and they realise it is impossible to usurp the established online brands."

Industry commentators largely agreed with his comments. Dr Patrick Forth, vice president of the Boston Consulting Group, said: "In the book written about the Internet, chapter one has now been written and it was about 'land grab'. We are now back to traditional economics."

Analyst at Jupiter Communications, Olivier Beauvillain, said the market is now focused on consolidation, not new entrants. "There is definitely still a place for traditional bricks and mortar retailers to get into the market, but for new Internet-only start-ups, the game is largely over, especially in the US."

Paul Worthy, MD of dot-com incubator, Dcfor.com, also agreed. He said start-ups now have a much shorter time before they have to start making profits.

David Kneale, MD at Amazon competitor Waterstone's, told silicon.com: "Waterstone's is continually building market share and customer confidence in our online operation which forms part of our clicks and mortar strategy. We have an unbeatable combination of terrestrial and online presence."