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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 226.19-1.8%Dec 12 9:30 AM EST
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To: Dwight E. Karlsen who wrote (71229)8/2/1999 7:28:00 AM
From: John May  Read Replies (4) of 164684
 
Re: Barrons article. I doubt "Wall Street analysts liken 'existing-customer' revenue comparisons to 'same-store-sales' figures." The comparison is illogical, and the contention is irresponsible.

"Same-store-sales" comparison measures revenue per unit produced by fixed capacity (a retail store in a fixed location) year-to-year. "Existing-customer" comparison measures revenue per consumer produced by ever expanding capacity (the Internet store) year-to-year.

New Internet shoppers tend to spend less that seasoned Internet shoppers. There is an understandable period of acclimation. There is also fear of credit card fraud. If the rate of new shoppers is increasing at a rapid rate, these new, smaller-ticket shoppers will naturally damp down the "existing customer" average.

In Amazon's case there is another reason to expect falling "existing-customer" sales average. Even discounting the ever-increasing Internet audience, Amazon is not a fixed store. It has expanded to add music, toys, videos, etc. This invites new, non-reading customers who may only be interested in music or videos. Even traditional retailers discount "store-to-store" sales comparisons for stores that have been expanded during the year. They know they're kidding themselves.

There is no Internet equivalent to "same-store-sales." If traditional retailers extrapolated Veverka's reasoning, they would stay away from the Internet, as they're smart enough to know that putting two stores in close proximity only leads to a decline in "same-store-sales."
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