Marketplace sales at all-time high on Amazon

Amazon Marketplace sellers shipped more books, music and videos during the first three months of 2006 than in any other quarterly period so far. Third-party sales rose to 29 percent of Amazon's overall unit sales, compared to 22 percent in 2003.

Amazon chief executive Jeff Bezos said the rise in third-party sales proves that consumers have embraced Marketplace as a mecca for used and new books. "We've stretched the corners of how customers perceive us," Bezos said. "We've had success with two very, very different kinds of business models -- the retail business model, and the third-party business, which now is a significant percentage of our units."

Asked if he was concerned that eBay's new Express fixed-price marketplace would cut into Amazon's sales, Bezos said: "We do not, as a matter of practice, talk about other companies. But more generally, ... there are thousands of competitors in this space. These are very big markets, and there can be lots of winners."

Bezos said Amazon is still gaining market share in media sales of new and used books, DVDs and CDs, with first-quarter sales in this category up 15 percent, to $1.58 billion. But he admitted that free shipping offers have cut into profitability. Net income dropped 35 percent even though sales for the first quarter were up 20 percent.