Inuts - This bored b-school type fears basicly one thing
with respect to AMZN and the likes. Something that I heard in class.
If (or once) a business gets profitable, the extent to which you will be subject to competition is in inverse proportion to the investment required to enter that business.
AMZN, as of 09/30/98, reported hard of assets of about $40 million, and the spend about $40 million annually on 'product development'.
This is chump change to the large retailers. And the low cost to enter the business will attract newcomers.
Two things will happen here. One is that, after AMZN is finished spending all its mulah paving the way, profits will attract competition, and lots of it. Secondly, the competition will squeeze profits, causing massive consolidation in the industry.
Lots of crud has been spewed forth about "branding" and "customer base".
But there are plenty of potential entrants just waiting on the sidelines who have "branding" and "customer base" galore already.
Besides, in this new order, "branding" and "customer base" are very fickle things indeed. Largely driven by price.....and service. Just ask MD, right boyzzz?....and girlzzzz? (geez, glad I didn't forget about those lovely creatures!)
Christopher |
