Looks like I am far from being alone in my beliefs about the future of
E-Commerce and Etailing. You can almost substitute COOL for AMZN in
this article!-g-
"GUALALA, Calif. (CBS.MW) -- Zapman just loves those short-sighted
investors who drive the market this way and that with all the vision of Mr.
Magoo, but none of his wit.
Case in point: Amazon.com, currently trading at about half its April high of
221 1/4 following its warning of bigger than expected losses and a flurry of
negative press about its expansion plans, thin margins, staff additions,
growing competition, ad spending and uncertainty about e-commerce in
general.
Folks, it's early in the e-tailing world, way too early to sort out the winners
and the losers, and there will be plenty of both. However, from where I sit,
Amazon (AMZN: news, msgs) remains better positioned to take advantage
of the coming surge in e-commerce than any company on Earth. Zapman
gives Amazon his highest rating: five bolts.Here's Zapman's reply to the
urban myths holding the stock down: Myth: The future of e-commerce is
unknown.Commerce Secretary William Daley estimates e-commerce
will grow to about $1.4 trillion by 2003, or about one-sixth of
the current U.S. GDP.I'd have to say things look pretty bright for e-tailers
who're positioned for that kind of growth.
Myth: Amazon is adding too much warehouse space.Amazon needs large
warehouses all over the country to serve as fulfillment
centers for its 10 million customers. Its competitors, notably Barnes &
Noble (BKS: news, msgs), already have distribution centers. If Amazon has
surplus space, it will find many other e-tailers are willing to sublet at
premium rates, and perhaps even pay Amazon for help in fulfillment.Myth:
In the future, people will read books on portable computers.Wake me when
that happens. In the meantime, I'll be at the beach with a good paperback.
Books are cheap, portable, don't need batteries and
don't need to be downloaded. I've never seen one "crash."Myth: Publishers
will sell books directly like Dell sells computers.
Publishers know little about selling direct, much less e-tailing. The last thing
publishers want to do is to offend their brick-and-mortar retailers by
undercutting them in cyberspace. Publishers seek more sales channels, not
fewer. As for Dell (DELL:news, msgs), it has extensive experience in
selling
direct. But Compaq (CPQ: news, msgs) provides a better comparison to the
book world, and it's struggling with its direct e-tail model.Myth: More
workers, more overhead, less profit.So the ideal number of workers is one?
Sorry, but if you're in a low-margin business -- and e-tailing will be a
low-margin business -- you must focus on building volume. Nobody says
Safeway (SWY:news, msgs) has too many check-out clerks.Amazon's hiring
spree (growing to 3,000 from 2,000) reflects healthy, confident growth.
That's now one employee to more than 3,300 customers. Myth: Amazon
faces big, tough competitors.Bring 'em on, baby! Amazon's the big kid on
this block, with years of experience in e-tailing, a lean-and-mean
organizational structure, and none of the brick-and-mortar baggage weighing
down the newcomers. You think Wal-Mart is ready to take on Amazon in
books? Zapman will put five on the champ.If Zapman's being overly
optimistic, he isn't alone.Despite its recent warnings of sizeable losses,
Amazon still has an average rating of 1.7 from the 23 analysts surveyed by
First Call (A "1" is a "buy," a 5 is a "sell."). By comparison, Dell has a 2.2.
Don't look for Amazon to turn any quick profits. But if you're looking for the
company writing the book on e-tailing, even the near-sighted should be able
to see it's Amazon."
SOUND FAMILIAR? GOOD TRADING, LF. COOL is a strong Buy. |
