Amazon will crash worse than net stock trading stocks!
Amazon will never earn a profit: the Barnes et al group will bury them. My model is united airlines vs. peoples: the only difference here is amazon came first, then barnes. amazon uses wholesalers: they are paying the wholesalers markup, barnes is not. barnes is spreading out the cost of their warehousing over all their business: amazon will never have this advantage. barnes can hold the cost of internet books below cost until hell freezes over and all their minor competitors are gone: check the "burn rate" (how long until all of your cash is gone at each). Worse still, all the major utilizers of book selling services likely already have computers and have already tried it out: if not, this tide will crest this year. think about it: if you didn't decide to buy a computer until they fell to $1,000: how good a customer will you be? besides, computer users are likely the group least likely to read books anyway. this group of recent computer buyers will likely not even want to pay $20 a month for access: if the average book buyer purchases once every three months for $55, saves 30%, or $16.5, he paid $60 for connection fees to do it (of course he might find other things of value there too). Many computers being purchased now will sit idle soon, unless the kids are using them or the dads are in the sex chat rooms. the worst news for amazon is the shopping service available on yahoo and others: enter what you want, and they search many sites, list the price, shipping charges and how long to ship: a link to the site is right there: now, what advantage does amazon have now? they are blowing all their cash on marketing: they are selling a commodity: the only estock traders who can charge a premium are a few biggies: schwab and fidelity made the news here: and likely this is becasue you have to send them your money: with books, you send your charge card number: if they dont ship, you call your card co. and reverse the charge! won't people switch sources for $1 in savings? the reason they are using the net is to save money and get fast delivery: barnes will win on average on delivery: when prices are at cost (or below) the huge profits are gone! forever: now, what is the value of amazon? they are wasting huge amounts of money on marketing, and these search engines are placing a premium on price and shipping speed: name will almost be meaningless: amazon should be working on lowering costs. I have a friend who put together a limited catalogue with credit card charging: it took one college kid 6 weeks and cost $5,000. with a scanner and the right program, a big merchant can be in the business in a week! the first time a repeat user of amazon has to reenter his charge card because the date of expiration changed (once every year or two), he will have to go and get his card to finish his purchase: this is the time he might decide to check out the competition: might as well: he has his card right there: might as well as shop! remember when videos came out and it looked like the end of theaters? have mail order catalogues ended retail stores? audio book club says their cost of new members on the net is double vs. what direct mail costs them. amazon is dealing with the same market, yet they are blowing their cash on getting net sites: the more expensive the site they buy, the better the shopping engine they are competing with. attorneys should get ready for a giant shareholder class action suit: this stock will be worthless in two years. |
