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

AMZN 229.12

-0.2%

Nov 26 3:59 PM EST

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To: Glenn D. Rudolph who wrote (38388)	2/6/1999 3:02:00 PM
From: Lizzie Tudor	Read Replies (1) of 164684

I dont want to bore people too much with the gory details but I did some work on shipping in the ERP space. The problem with shipping right now is, the retailers have allowed the shippers to create an uncompetitive environment on a per-piece basis... because the way this business works currently is on a "contract" schedule, where one shipper bids on the entire business - and gets it. In addition the shippers have started moving up the supply chain by providing services which step in even before pick-release (these include bundling, and sometimes hub and spoke warehouses etc) and this kind of "locks in" the retailer with a certain shipper. This is all fine for the shippers but the end result is the retailers/consumers are paying too much for shipping imo. In the past this was an expense that wasnt really watched but is becoming much more relevant in the e-business world and I think these charges are going to come down (thats why I dont think FedEx is the great e-biz play everyone thinks it is). I was working with Power Computing last year and they wanted to fix shipping chgs. Shipping was a top 10 item on the bill of materials! They negotiated with Airborne and got good rates, but then - during a qtr end, Airborne raised their rates. Absolutely nothing power could do - Airborne has their wand reader installed at pick-release, + the ERP system had an interface to Airborne which was already developed - totally unacceptable. There is a startup company in the bay area that is sort of middleware between the 4 ERPs (Baan,Oracle,Sap and psft) that takes the pick-release goods from you trading partner universe and accepts bids from the shippers on the merchandise. Of course this works better with large lots - but this is the way things should be Whoops I said I wasnt going to bore anyone with details! Anyway my overall point is that shipping is like the medical profession before the HMOs came in - no one is watching the store for cost overruns. But its a hot area and new technology is going to get these excessive chgs under control. So, I wouldnt look at shipping expenses as a long term problem that e-business will never be able to overcome. Michelle

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