Amazon Buys Stake In Online Drugstore

Steven M. Zeitchik -- Publishers Weekly, 3/1/1999

Continuing to expand its product base, Amazon.com has announced the purchase of nearly half of drugstore. com, a licensed pharmaceutical retailer that will soon sell 15,000 health-care products via the Web.

According to Amazon, the Seattle e-retailer now owns about 46% of drugstore.com's shares. The two companies will engage in a "strategic alliance," which will include mutual links, but neither company will fulfill orders for the other. Amazon CEO Jeff Bezos will serve on drugstore.com's board of directors.

The move was made several months ago but was announced last Wednesday, on the eve of drugstore.com's launch. Commenting on the deal, Amazon spokesman Paul Capelli said, "Amazon.com wants to become a place where people can discover and purchase anything they want on the Internet. We're working towards that goal in a number of different ways -- by directly making products available and through partnerships."

The purchase seems to confirm what some booksellers have been saying for years: that in order to generate a profit, Amazon must begin selling high-margin products such as vitamins and other health-care items.

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