HJM:
Great story. Most interesting bearish points -- someone ought to TMF know.
<<<<While Amazon.com is touted as an Internet company, that doesn't accurately describe
how it functions. Customers place their orders on its Web site, but the books are sorted
by workers in distribution centers in South Seattle and New Castle, Delaware.
Trucks start pulling into the South Seattle facility at 5:30 a.m. and don't stop until late
afternoon. The company would not divulge how many books come through the
warehouse or even how many trucks arrive daily, citing competitive concerns.
Each book contains a bar code that is scanned by hand, and then placed on a
bookshelf. Later, the book is retrieved and matched with an order. The book is then
packaged, put in a large aluminum bin, and trucked to the post office. Generally, the
process takes two to three days from order to delivery.>>>
Does this sound like no real world costs?
<<<Most investors bet on a company's potential. For Amazon.com, that means it must
expand its offering from just books. In June, it began offering music CDs on its Web
site. Videos are next.
But providing a slew of items on the Internet isn't easy.
The people who buy CDs generally make less money than book buyers, and are
less likely to use credit cards, said Rick Ayre, Amazon.com's vice president and
executive editor. That's a marketing challenge with no easy solutions, he said.
Despite the booming stock and investor enthusiasm, Amazon.com is still a young
company with an uncertain future. Barnes & Noble and Borders are both
aggressively marketing their Web sites, and the competition will undoubtedly
become tougher. Finding enough programmers, writers and warehouse workers to
fuel its rapid growth is a constant challenge.
Given the vastness of the Internet, Amazon.com must also keep focused on doing a
few things well. The stratospheric stock price may prove a temporary distraction,
but company executives know the real danger may lie in trying to do too many
things at once. Without discipline and a clear vision, the plain wooden desks and
no-frills office become nothing more than a corporate gimmick.
"Not only do you have to avoid the bad ideas, but you have to avoid many of the
good ideas for reasons of focus," said Bezos.
"Ideas are important, but they are relatively easy. What's hard is taking that list of
hundred ideas and ranking them and picking the three that we're actually gonna do.>>>>
a. Three lines of business, not thirty.
b. Demographics of CD and Videos are different (different eductational level, use of credit card rates, computer penetration rates into the home, willingness to make on line credit card purchase) from books, and margins are lower. |
