Bearded One,
Interesting posts. A couple of thoughts...
>>Amazon's value is only in its Web site and location of storage areas.
As has been shown, web site creation is relatively easy.
Creating a website is relatively easy. Creating a website at which people feel comfortable spending time and money is surprisingly difficult. Personally, I loathe Amazon's site, and anyway don't care much about "community" when I am shopping. Amazon's record strongly suggests that I am in the minority. People treat Amazon's site like programming, and, evidently, they like what they see.
>>Oh yes, and did I mention that bookstores are *profitable*? How is
Amazon going to profitably sell a book much cheaper than a
bookstore when you add shipping costs? Bookstores are efficient--
they ship hundreds of books to one location at a time, saving on
shipping costs.
First, the major bookstore chains, last time I checked, didn't generate any free cash flow. Leasing space, and furnishing it as comfortably as Barnes and Noble and Borders do, isn't cheap.
Second, the efficiency in shipping costs you refer to relies on extremely generous return policies on the part of book publishers. The big chains negotiate contracts which allow them to return around 40% of the books they order if they don't sell. (Given shipping costs, the "return" is usually effected by massive publisher-sponsored discounting; these are the "books near $5.00", etc.)Even with the shift from a no-inventory model, Amazon should be able to keep unsold books to a fraction of its offline competitors. As online book sales become a more significant part of the book market, offline chains will, IMO, have a much harder time getting the kinds of deals on returns they get now.
Third, some of the highest-margin sales for the "profitable" offline bookstores are promotional displays, preferred placing,etc. Online bookstores should be able to offer analogous services for lower prices, yet with higher margins.
>>But by expanding so
irresponsibly, they are demonstrating an intent to lose investor's
money in a wide variety of fields and stretch themselves too thin to
manage their losses.
This certainly bears watching. I am a little lost as to how auctions fit into the plan. I would like to see them expand their gift offerings, for example. |
