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

AMZN 233.22

+1.8%

Nov 28 9:30 AM EST

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To: hdl who wrote (118414)	2/23/2001 12:15:34 PM
From: Reilly Diefenbach	Read Replies (2) of 164684

<< the net will continue to expand exponetially. people will buy $billions more over the web. amzn will grow share. it will sell $billions and sales will grow very rapidly. people will buy thru amzn because it will provide the best price. it will be able to do so because it will be the low cost producer. >> Amazon produces nothing. Dell Computer is a low cost producer. They produce PCs, a commodity, at a cost that is lower than any of their competitors. They add value by taking in a truckload of components on one side of a building and spit out finished computers from the other side of the building a few hours later and nothing ever sits idle on a shelf. (No inventory) They maximize their profit by using a direct sales model, thereby avoiding the economic frictional losses that come from selling through the retail channel. They sell tens of millions of dollars of computers every day over the internet, and they have a model with which the internet is (I believe) their lowest cost way of selling. Since PCs are a commodity, most customers don't feel they have to see the product, to "try it out" before buying. Amazon does nothing to add value to that half-ton barbecue grill for which Glenn gave us the link the other day. Heaven knows how long the ones they have in their inventory have been there. Amazon bought it from the manufacturer or a wholesaler and is trying to sell it at some sort of retail price. Add two shipping costs to the price as opposed to only one for your brick-and-mortar retailer. Amazon can't do that and make a profit because most customers aren't going to buy a grill they can't play with first.

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