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Amazon wants to you to buy, then sell what you buy on its site

Laura Pegoraro was really looking forward to reading The Corrections, Jonathan Franzen's award-winning novel about an ultra-dysfunctional family, when she bought it from Inc. in October 2001. Oprah Winfrey had selected it for her book club, and a month later it won the National Book Award. But Pegoraro hated it.

"I couldn't wait to get rid of it," she said.

Amazon was only too happy to help. The Internet retailer urged her to sell it. It even had a place to do so. On its Web site.

The company wasn't acting out of any sense of charity. When a used item is sold on Amazon, the company gets a commission.

"It's very clever," said Ken Cassar, an analyst at Jupiter Research. "Amazon makes a profit on the item when they sell it to you the first time. Then they pick up a fee when you sell it used."

That second sale is particularly sweet for Amazon because the company provides only the electronic platform for the transaction to take place. The deal is strictly between seller and buyer. Amazon incurs neither storage nor shipping costs but collects a 15 percent commission.

Sound familiar?

"Looks a lot like eBay to me," said Carrie Johnson, a retail analyst with Forrester Research.

EBay Inc. became enormously successful by providing an online platform for auctions between private parties, mostly for used goods, and making money through commissions.

Amazon officials insist that in planning its Sell Your Past Purchases program, eBay's name never came up. But eBay chief executive Meg Whitman thinks her company was at least an inspiration.

"I think it is certainly a reflection of how well we have done," she said.

Similarly, eBay has followed in Amazon's footsteps to broaden its appeal. In 2000, eBay introduced the Buy It Now option that allows customers to bypass the auction process by paying a fixed amount. EBay also has encouraged its sellers to put new goods up for sale.

"The line between Amazon and eBay is blurring," Cassar said.

Certainly, eBay's low-overhead approach has paid off. In 2002, the company collected $1.2-billion, almost all of it in fees. Out of that came a profit of $250-million.

On Amazon, most sales are of new items, much of which the company warehouses and ships itself. Sales in 2002 totaled $3.9-billion, but the company lost $149-million. Officials hope that offering used goods at low overhead will boost the bottom line.

"We know that some people buying a book might want the hardback, brand new," said Greg Hart, who oversees the selection and pricing of Amazon's book, CD and video merchandise. "Others don't mind getting a used paperback. Our goal was that no matter what they end up buying, they buy it on Amazon."

He would not discuss the company's profit on new or used items, but industry analysts have speculated that the margins are similar.

The Sell Your Past Purchases program, which was launched quietly last year, hasn't been promoted much by the company. Registered Amazon users find their way into it through a message at the bottom of their welcome pages that estimates how much money they could make by selling items they bought on the site.

Pegoraro's currently reads: "Laura Pegoraro, make $331.41. Sell your past purchases at today!"

Clicking through presents the user with a list of items from his or her past 25 Amazon orders. There is a suggested price for each and a button that beckons, "Sell yours here."

Paul Levinson, who works as a fundraiser for a Boston public radio station, took to heart the invitation to sell his past purchases. He loved many of the books he had bought on Amazon, but couldn't justify keeping so many of them.

Levinson said he likes the idea of giving books a second life by keeping them in circulation.

It also helps that Amazon has a description and picture of the item on its site and takes care of other logistics, including collecting the payment from the buyer and depositing it, minus commissions, into the seller's preregistered account. If Levinson were to sell his books on eBay, he would have to make those arrangements himself.

"It couldn't be simpler," he said. "Just a click. Once you get going, it's almost hard to stop."

For her part, Pegoraro still is waiting for someone to buy her copy of The Corrections, for which she paid $15.60. She first listed the book three months ago at $12.50 and has since dropped the price twice. It's now at $10, but there are 113 other used hardback copies of it for sale on Amazon, some at lower prices.

"I get a feeling I was not the only one who didn't like the book," Pegoraro said.