All excellent points, jb. Let's see...
You know, the danger of a business model like ONSL's will always come down to "unrealistic customer expectations." This limitation is built into both of ONSL's sales models. Nothing wrong with this, really. But people are eager for a "deal"; they tend to forget that there's no free lunch. They may not read carefully, they may not bid carefully, they may not be prepared for "gotchas."
If you want state-of-the-art stuff with great hand-holding, you shop elsewhere and you pay top dollar. If you know exactly what you want (or what you can live with), and you know what you're willing to pay and how to "game" it, ONSL is great. The key is, ONSL's strictly *self-service*, and people just forget that. Then, they want ONSL to "clean it up." Unrealistic, and customer service can't be asked to restore the full-service component for which the customer wasn't willing to pay. (In a sense, it's like online, discount brokerage.)
As to Tech Data, you may be correct, although I would have secured some exclusivity. Hopefully, Kaplan did. In any case, this new "atCost" concept is a compelling business proposition. It will fly because Tech Data gets a "front end" without really alienating its wholesale customers (mostly VARs and systems integrators who don't compete on price). Mainly, I see the competitive issues as stemming from the other big distributors: there's Ingram, Merisel, Synnex, and a bunch of others. If Kaplan's model flies, are they gonna sit around and watch? Don't think so. So stay tuned. As to the gross margin and profitability side, make no mistake, the concept unquestionably works. Key here is that it's cash in advance with an inventory investment of zero
As to YHOO, you're missing one thing, and it's really the reason I'm confident about ONSL. You're looking at part of a "kiretsu." Softbank, YHOO's largest shareholder with about 30 percent, is a principal in ONSL as well, and Softbank, along with CMGI, represents the best there is at this game. Softbank's involvement keeps ONSL's business moving globally and provides synergy with its many other holdings. And note, ONSL and YHOO already have a joint venture going that may give eBay a run for its money. At worst, this business can be #2 in its segment.
I've been watching ONSL for months and only went long on the recent weakness. It's made some mistakes (who hasn't?), but nothing fatal. It's learning how to execute. Wall Street doesn't particularly understand it, which is great. But ONSL has a great franchise and a loyal account base and will succeed. I'm particularly interested in how it exploits consumer electronics. This segment could become an AMZN-like market share grab. Are you awake, Circuit City?
Comments?
BAM
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