Dave....
I agree, especially in lieu of history, not to
high expectations. However, I also think some
qualifications have to made made and questioned
asked regarding cd etailors and follow through.
Regarding other cd etailors, revenues of cdnow, amzn, ktel,
and many other etailors are presented in many of their
filings as "gross" revenues before backing out the costs
of these products. The real revenues are the net amounts
received
For example, in 1998 cdnow sold 51 mil but had costs
of 45mil. So their real revenues were only 6 mil.
(Btw. at the end of 1998 cdnow had been in business
only three years. And, I'd have to double check but
I think they exceeded net revnues of 1 mill. in their 2nd
yr. However, cdnow, has never had earning and actually
had huge losses before being bought out).
The advantage of such accounting is that it gives a clearer
indication of volume. Cdnow and amzn significantly
increased volume. Increased volume through an economy of
scale helps to reduce costs slightly. But the bigger
advantage of demonstrating increased volume has more to do
with the value of the website as advertizing space more so
than the revenue derived from direct sales.
Buy.com is actually selling below costs on many items to
generate traffic assuming the value of advertising space
on their internet website space will more than offset their
losses from sales.
Now as we all know revenues aren't earning. Increasing
revenues without containing costs doesn't make companies
any more viable. (Except maybe on the internet). CDNOW and
amzn spent and are spending way more on advertising in an
effort to establish their company names as the pre-eminent
providers of their items. This is called branding. Amazon
doesn't project now to have earnings until 2003 from what I
understand. Though if when you think of online books and
go to Amzn, this branding enhances the value of amzn as
both a "mall" (eg zshops) and helps to maintain amzn website advertsing space's value in a market diluted by
other competitors theoretically giving them multiple
revenue streams.
Tsig appearred to be reporting net revenues..
Now I don't in any way wish to place tsig's existing
commerce site in any such league as amzn. But by giving
examples though, I'd have to note that unlike cdnow ,
tsig "theoretically" is less dependent upon the direct sale
and derives as much or more revenue from the "card" sale.
The card sale also is an indication of the customer base.
In what hopefully will be future reports, a breakdown of
revenues from cd's and card sales would be illustrative.
At this early phase in the company's history, it would be
nice to see card sales far exceed cd sales for two reasons.
1. Card sales indicate a "repeat" customer and 2). Card
sales have higher margins. Unlike at cdnow the set of
eyeballs and cd purchaser has no reason other then
familiarity to come back and make another purchase. CDnow
spends a tremendous amount for returning eyeballs
Tsig would also benefit themselves by clearly
noting the amounts of contributions that were shared
through the profit sharing from card sales for both
marketing the card to other charities and demonstrating
Goodwill.
The indication of participation by schools is positive
obviously because its the first step. During the BR League
attempt it was never clear how many, if any, teams were
participating.
Now I think what is critical for tsig especially without a
distributor network, is what support they provide to the
schools selling the cards. Do the cards sell themselves?
No not really. The card isn't as explanatory as a chocolate
bar. There will be questions. Will tsig be able to answer
these questions? What is LL 's role? Will tsig be able to
process checks? These are critical to any success from
this program.
Something as mundane as check processing is intriguing in
light of what Sam told me about his experiences with the BR
League. If I'm not mistaken, Sam's team actually sold 400
cards but tsig couldn't process the checks! So Sam's teams
ultimately only sold 150 (I'm sure Sam will correct me if
I'm wrong). Unfortunately, Sam seemed to be about the only
team participating in the program. But then again Sam could
have been bs'ing me.
Hopefully both card and cd sales will increase
enough just to minimze the need for too much more dilutive financing.
Anyway, this is just an attempt to look forward, though
by no means do I suggest that there necessarily will
be anything to look forward to.
z
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