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Non-Tech : Barnes & Noble (BKS)
BKS 6.4900.0%Aug 19 5:00 PM EST
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To: Crystal ball who wrote (1605)12/1/1999 12:31:00 PM
From: Chuzzlewit  Read Replies (4) of 1691
 
Crystal Ball,

You might find this analysis of AMZN of some interest:

Message 12145509

The principal reasons I think that companies like AMZN and BNBN cannot be profitable are:

1. The goods they sell are not fungible;

2. Consumer orders consist on single items (i.e., one copy of a few books or videos); this implies

3. Considerable man-hours expended in unpacking, shelving, and repacking;

4. Therefore, the only cost advantage is the replacement of expensive stores with inexpensive distribution centers;

5. Brand loyalty is an illusion. The internet allows rapid dissemination of pricing information, and consumers are price-sensitive. This implies much heavier outlays for advertising, web-site development, etc than the brick and mortar counterparts. But considering the heavy discounting of merchandise, it does not appear that the cost swap is sufficient to establish profitability.

The only difference between e-tailing and catalog sales is speed of delivery. But just as catalog sales were constrained by the consumers' need to examine some kinds of merchandise so e-commerce will be similarly constrained. I want to test drive a car before purchase.

Finally, a great advantage that brick and mortar has over e-commerce is impulse buying.

TTFN,
CTC
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