Opens Up to Online Car Buying

Expanding its scope to hawking automobiles, online megastore Inc. plans to branch into online car-buying services with Inc., the two firms announced today.

Seattle-based will feature's auto-retailing Web site as a tab on its home page at The tab, due to launch later this week, will link to, where consumers can configure and purchase a wide variety of vehicles online, officials said.

In addition to its core book business, began selling lawn furniture, pharmaceuticals and beauty aids online over the past year. Although the average age of those new businesses is nine months, CEO Jeff Bezos said the combined total revenue of those divisions was more than $500 million.

In January, bought a 5% stake, plus the rights to purchase up to 30% of Greenlight, an online car-shopping service in Livermore, Calif. In February, the two dot-coms struck a five-year deal, which required to pay $82.5 million in fees for marketing and promotional services.

This week, the two firms restructured that deal to a payment of $15.25 million by to over two years.

"The primary difference is that this is a two-year instead of a five-year [deal]," Bezos explained. "We gave up some things and got some things that we did not have previously." The new deal reflects tougher market conditions for dot-coms, Bezos said, and gives a lower strike price on warrants in

Jim Hall, an analyst at AutoPacific Inc. in Tustin, Calif., voiced doubts about the survival of online car brokers given newly launched initiatives by automakers, such as General Motors Corp., which launched a joint initiative with its dealers to sell vehicles over the Web last week, and the close of last week.

"[Online car brokers] are competing with manufacturers and a lot of other people out there, and just because you hop into the market doesn't mean that you are fit," he said. "They are going sideways against state franchise laws.

There aren't any state laws regulating book sales, but there are plenty when it comes to cars." partners with more than 1,500 dealers who fulfill orders that customers place online. The company also has a flexible business model, which Joel Manby, CEO of, said will keep his company from running afoul of local franchise laws and the ire of automakers, many of which prohibit their dealers from working with online car brokers.

"This is an industry where there are 50 different ways of doing things in 50 different states," said Manby. "Our business model will vary state by state." Founded last August, sells cars in 27 markets and plans to expand into the 100 top national markets by year's end. The new online retailing initiative comes on the heels of Greenlight's close of $39 million in third-round funding. Amazon contributed less than $5 million to the round.

Techno-Venture and Kleiner Perkins Caufield & Byers also contributed in the round.

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