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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 222.50

-1.6%

3:59 PM EST

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To: Sarmad Y. Hermiz who wrote (42893)	2/27/1999 12:50:00 PM
From: Glenn D. Rudolph	of 164684

You're in retail. Please explain something. Never mind the price of amzn stock. Nearly every book Amazon sells can be found significantly cheaper at shopping.com. I ordered one from Shopping. It arrived in perfect condition and cost was $13 less than Amazon. There are some people on this thread who claim to buy HUNDREDS of books per year from Amazon. Does this make sense ? It only takes a few minutes to check out the other sites. And the darn book is the same. It is even delivered by the same UPS person. It isn't a restaurant meal where you might prefer the ambience or taste. Sarmad, This does make sense at the current time. It has become clear to me that it is "cool" to tell others you shop at Amazon.com. Also, it is cool to state one shops online but most people have not heard of shopping.com. One can compare this to buying jewelry at Tiffanys and paying a lot more for the same item. They want their friends to know they bought from Tiffanys. Saks is another good example in the clothing department. There is a difference between the "cool" to shop at Amazon and the cool to shop at Tiffanys or Saks. The clothing and jewelry is perceived to be better quality at these brand named stores. That is the image that both firms wish their clientel to perceive and that will continue likely for many more years. These stores even place their labels on their products. Amazon is much different. The Amazon shopper wants to be "cool" but the perception of a finer quality item is not there. The items in all categories are commodities. A book is a book as you have stated. We are going through a fad and yuppies love to be a part of a fad. This fad will wear off in a year or two and the same yuppies will be shopping wherever has the best value. Online shopping is somewhat new and that new becomes old in a hurry. I consider myself a good retailer. Notice I did not state a good investor as of late<G> I believe I understand marketing at the retail level well. People have an image of the store at which they shop and they believe others perceive that store with the same image. This is human nature although the perception may not be as close as some believe. This has more to do with the income bracket of the consumer. There are people in my market that would not come to my stores to buy a watch. Their perception is all the watches we sell would cost more than those at Kmart or Walmart. This is strictly a lower income consumer which is typically price conscious. There are the upper income consumer that would not shop at my store due to the fact we do not market ourselves as a guild store. It does not matter that we carry upper end merchandise. If we market towards the upper income (guild type store), then we will lose the middle income shopper which is what we target. In a non commodity item one cannot market to all income brackets under the same name. Large chains in my business know this and that is why Zales markets under two names and maybe more. The Zales store itself is geared towards the middle income buyer. They also market under the name of Baily, Banks and Bittle which is marketed towards the upper income. You will likely find both stores in a large regional shopping mall. These consumers are not image conscious when it comes to commodities. The upper income is not at all embarassed to go to Walmart to buy commodity items but they would not be caught dead there buying clothes. Also, the upper income person can afford to pay more for a commodity when it is "cool" to do so. The active people on SI are not middle income. Most fall at least into upper middle income and they will do what is perceived as cool. Amazon will lose their "cool" status and these same people that shop there will shop for price. No one any longer will care if they shopped at Amazon. They will click for the lowest price and no one will ask where they bought their book, CD, etc. You will see the more experienced brick and mortar stores then spend far more heavily to market on the net. They are aware that presently one is throwing a lot of money at a very small crossection of the buying public. The future of the size of retail e-commerce is still a bit cloudy. For now, those that spends hundreds of dollars at Amazon want you and everyone else to know they were "cool" and spent more. As time progresses, this will no longer appear cool. It will appear stupid. Amazon then will have a price war with stores such as shopping.com Glenn

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