Mega e-tailer Amazon.com told analysts on Tuesday that it will begin a new video cross-merchandising campaign as part of its effort to reach operating profitability by the end of this year.

Amazon CFO Warren Jenson said that Amazon should soon be operating in the black. "We are clearly driving to profitability," he said. "You can expect to see it first in the U.S., where our core businesses are."

"We're very bullish about our 2002 and 2003 growth prospects," added Amazon.com founder and CEO Jeff Bezos. "We absolutely are going to continue to innovate and enhance in our relationship with customers."

The retailer's new "Amazon Extra" program for VHS and DVD offers a discount to customers on a second title related to the one they've already selected for purchase.

For instance, an Amazon customer who chooses to buy the Gladiator DVD might receive an offer at the bottom of the screen for $5 off of the Spartacus disc. "This program will drive up the average order price, increase units sold per order and increase turns in inventory," said David Risher, VP of U.S. retail.

An Amazon survey of existing customers showed that the average customer spends more money on VHS and DVD than on other product offered on the site. The average customer spends 30% of his or her money on the site on VHS and DVD, followed by 27% on books and 20% on music. Further, the retailer said 39% of its net DVD sales are generated by themed areas, such as Amazon's Disney, James Bond and Cartoon Network boutiques.

Amazon executives also told analysts they plan further exploration of the digital distribution business, although they did not speak specifically of plans to stream or download video. The company will focus on online distribution of books and music, with an eye toward integrating these services with related consumer electronics sold on the site. "While in the short term there isn't a lot of revenue in this, we think that we want to be there when the payoff comes," Risher said. (source: Video Business)

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