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Amazon Debuts Travel Store Amid Category Slump

Though the travel industry is reeling, Amazon launched its travel store this week.

Billing Amazon.com/travel as “one-stop shopping,” the online retailer said customers will have access to flight, hotel, car rental and cruise bookings as well as vacation planning and travel advice. Partners include Expedia, which will offer booking services and travel information; Hotwire, which offers discounted travel; and National Leisure Group, which sells cruise vacations.

Travel books, language software, camping accessories and other travel-related products already offered on Amazon also will be available at the store.

“It's one place to find all these travel products, so customers don't have to go through Amazon's vast stores,” said Carrie Peters, a spokeswoman at Amazon.

The new store is one of many recent Amazon efforts to expand far beyond book and music sales. The e-tailer said last month it would launch a Target store, and recently inked a deal to sell Circuit City's electronics products, among other similar ventures.

“If Amazon wants to bill itself as the world's largest virtual store, travel is an area where you can certainly attract a lot of online consumer interest,” said Alan Alper, an analyst at Gomez, Waltham, MA.

Though air travel has decreased sharply since the Sept. 11 terrorist attacks, Amazon thinks the travel market will pick up.

“Travel is still a big part of people's lives, and maybe now, more than ever, people want to be with their families during the holidays,” Peters said.

Expedia's Travel Disruption Resource Center, which provides information on airport security measures and other issues sparked by the attacks, also will help Amazon customers make “informed, smart travel decisions” at this time, she said.

Though Amazon has planned the launch for “a long time,” Peters said, the timing is poor.

“They're jumping into a hurting industry because of Sept. 11 and the lack of demand in the travel industry,” said Ned Hickok, managing director for Greenfield Consulting Group, Westport, CT.

“Hopefully, they have some foresight, and the stomach, to weather what is going to be a difficult time,” Alper said.

Amazon also is entering a competitive market.

“It's really the most well-developed category online, so they definitely have a lot of challenges,” Hickok said. “Players are already staking out different positions, whether it be a discount model like Hotwire or priceline, or a convenience model like Expedia.”

“Pre-Sept. 11, travel was the largest-growing category online,” Alper said. “While Travelocity and Expedia had expected to be profitable in the third quarter, the fourth quarter is going to be tough for all these companies.”

In addition, consumers may not take to buying travel via Amazon.

“Online travel is a totally different purchase behavior,” Hickok said. “The number of times they visit before they buy is a lot more than when buying a book, and their customer service issues are a lot more than buying a book.”

Leisure travelers may take more quickly to the service than business travelers, who already have ingrained habits.

“It would be very hard for Amazon to carve out a share [of the business travel market],” Hickok said. “It sounds like an extra step: I have to go to Amazon, which takes me to Expedia.”

Amazon's United Kingdom subsidiary, Amazon.co.uk, will launch a travel store later this year, in partnership with Expedia.co.uk.

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