To All:
ONSL is the most simple company to research on.
Unlike, say, ORCL or NSM, where you don't know what is going
inside. Unlike Kmart, or Sears, where you can't estimate
their revenue or earnings, everything happening in ONSL you
can see. Then, one step further is to estimate their future
growth. This is slightly more difficult, but analogous task for
companies like ORCL and NSM are much more difficult that for this one.
Here, you can take into account supply and demand, estimate
the growth of demand in this type of products that ONSL sells,
and the growth rate of internet auction businesses.
So, take a calculator (or open a calculator and put at a corner of
your computer monitor), open www.onsale.com, and compute their
sales for the day. Assume that everything will be sold at a price
equal to or 30% exceeding the quoted prices, whatever you like.
Than calculate their revenue, which can run from 1% to 5% of their
sales, whatever you like. They have three sections: computer,
sports, and consumer electronics. It takes you about 40 minutes
if you want to finish this boring work, but you can save two thirds
of the time by computing the computer section only (by far
the most heavy one), and times three to get the whole (inflated)
number.
After this calculation you will be shocked to see that ONSALE
IS in fact a small business.
ONSALE is a small business and will remain a small business in whichever year you want: 2000, 3000, ....
Why?
Because it is very easy, let me repeat, it is very very easy to
make a business like ONSL. Buy a server, and organize in your garage,
put an attractive webpage, and advertise it, and you already
started a home based e-commerce business.
It is true that they are the pioneers
of e-commerce (one of the first), but this does not mean any
advantage for them. There are many online auctions nowadays which
are as popular as ONSL, visit www.ebay.com, www.firstauction.com,...
to mention just a few. The number of competitors grow very fast,
which will compete for relatively small source of supply of
discounted and used computer products.
I have more to say but I am tired of typing, so I post now as is.
William |
