Amazon.com, Inc. (AMZN) Message Board

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

AMZN 247.74

-0.3%

11:49 AM EST

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To: Cosmo Daisey who wrote (33831)	1/9/1999 11:46:00 AM
From: Peter Bernhardt	Read Replies (1) of 164684

AMZN is using the AOL business model that has made them a blue chip internet stock. The model is keep investing in the company to get customers now and worry about profits later. This is a dangerous fallacy. The only thing AOL and AMZN have in common is the first letter of their ticker symbol. While it may be true that Amazon is wooing customers by selling product at a loss, there is absolutely no guarantee that those same customers will be repeat customers, let alone that Amazon can ever manage to sell product to those millions of customers at a profit. In AOL's business model, each customer provides a guaranteed subscriber fee every month. It is absurd to make the same assumption about an Amazon customer. Besides the fallacy of guaranteed revenue from a customer base, Amazon has yet to address the nagging problem of selling product at a loss. The company itself has admitted that fulfillment costs are variable and will only go up as sales increase. Where is the economy of scale? In other words, whereas AOL increases its profit margin as it builds its subscriber base, Amazon can only boast increased losses as it increases sales. - Peter B

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