>unclear that the book part of the business is profitable..
AOL had a brilliant re-vitalization strategy, build volume, build infrastructure, high sales, low investment. They developed a loyal group tied to them with their e-mail address and chat rooms.
AMZN has tried to copy the system. They are getting the volume, but how are they going to retain the loyalty? That's where the model flunks the tests. There's no hook, no high margin coffee shop, no gentle bookshop owner to confide in, no chat groups, no e-mail, no search engine. No hooks!
The financial model, ie. low assets, high early promotion costs, high turnover, low margins (more like a grocery), add more products, etc. is a great start from scratch business model. It's a classic startup model, really. AMZN is doing the loss leader thing! Sell milk at cost to drive the milkman out of business and then sell 'em candy! Or booze!
Have you watched one of the bell-weathers EBAY today? That's another one to avoid. |
