Alomex, sorry to say that yours is not the "devil's advocate" view. Rather it is the lines that have been used by analysts lo these many months. Plus I question some of your statements, which appear to be simple wild guesses:
1. They went from no presence to number one in music sales in just a few months. This is ancient news, endlessly repeated in just about every analyst report since it happened in Sept '98.
2. People trust the Amazon name, and like shopping there.
Some may. Some evidently do. Though it is a fact that consumers are an extremely fickle bunch, and change their shopping habits frequently. Ask any retailer if this is so. I personally see no value in the "Amazon name", because all they offer as a VAR is a shopping experience, same as any retailer who sells goods manufactured by the companies with real brand names like Nike, Coca-Cola, Land's End, American Eagle Outfitters, P&G brands, Gillette, and yes Sears. All this talk of a retailer of other people's name-brand stuff is pure nonsense: Has anyone talked of Barnes & Noble as a "strong brand"? No. B&N offers a pleasureable shopping experience for those seeking books written by "name-brand" authors and more.
3. Amazon can keep on adding products to the mix they sell..
Yes, and try to compete with www.wal-mart.com which is already online with thousands of products, in fact every product that you can buy in the Wal*Mart physical store you can order off their web-site. And I might add that Wal*Mart already has the distribution network. Funny how the bulls fall silent when Wal*Mart is mentioned.
4. ..and people trust them. They do? Even after that Christmas gift failed to arrive ontime?
5. Plus they are now so large that most other web sites cannot compete on the basis of price. See comments on #3.
6. Amazon gets better prices from wholesalers and from shipping companies (FedEx, UPS). The same product at the same price in Amazon and in buy.com results in higher earnings (or less losses, if you are a bear :) for Amazon.
Now are you simply making guesses here, or do you have industry knowledge which backs this up with facts? As a retailer, Amazon is small compared to its bricks-and-mortar brethren. Since FedEx and UPS depend completely on business for their bread and butter, why would FedEx and UPS give Amazon a deal sweeter than other much larger retailers? Simply because of the euphoric stock price? I don't think so. Wal*Mart on the other hand is big enough that they may get some kind of volume discount from UPS or FedEx, but I sure don't know that. |
