Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (69364)	7/24/1999 5:03:00 PM
From: Eric Wells	Read Replies (2) \| Respond to of 164684

>>Jeff Bezos may be leading Amazon.com offline. Interesting article - thanks for forwarding it. I hesitate to jump to the knee jerk response of "Amazon is becoming a bricks & mortar retailer" (although my current short position makes me inclined to do so). I do offer the following though: While having no access to any analysis that Amazon undoubtedly has undertaken in evaluating kiosks, there are a few things that stand out in my mind that makes me question the idea (question whether Amazon is actually considering it - and if so, the financial viability of the idea). I have to wonder how the kiosks will work and what function they might serve exactly. It would be great if they were automated - but I don't think the technology is there (I can imagine a customer punching up an order number and a box being spit out of a shoot), and I believe there are too many things to potentially go wrong with automated kiosks (automated machines can dispense money at banks, and are starting to dispense tickets at airports - but it's a different matter to dispense differently shaped packages to different individuals). So, I would assumed that a kiosk would have to be staffed with an Amazon employee. Now, I assume that the kiosks will serve as a sort of point of transit for customer packages - customer orders book, Amazon ships book to kiosk nearest customer, customer goes to kiosk to pick up book. The kiosks will therefore require space to store packages. The term "kiosk" implies a very small space - with limited storage - and if customers fail to pick up their packages on time, then there is certainly a risk of kiosk storage space running out as packages build up (imagine this at Christmas). Amazon will only be able to avoid this situation if they have backup storage space - a stockroom, if you will - near the kiosk. So Amazon will have to negotiate use of the stock room of whatever retailer they enter into partnership with. In this scenario, they will be sort of a "parasite" (if I can borrow a biologically analogous term) retailer within a retail store. I can only imagine that an existing retailer would be interested in such an arrangement (kiosk in store and use of storeroom) if Amazon were to share some of the profits and absorb some of the costs of the retail site. One might argue that these factors could further erode Amazon's margins - forcing them to raise prices. And then there is the question: "Does the use of a kiosk as a transit point for package delivery actually reduce the cost of shipping a package?" (as I assume this is the motivation behind the kiosk idea) I would argue that the answer to this is 'yes' only if Amazon keeps enough stock on hand (rather then shipping packages one by one as they are ordered). Keeping enough stock on hand, however, will require more storage space. Looking at all these factors, I don't see a kiosk as providing great financial benefits to Amazon - unless the kiosk is actually more than a kiosk - a kiosk with storeroom space that acts as a parasite on the retail outlet in which it is located. But the arrangement is not likely to be parasitic (where only the parasite wins) but rather a cost-and-profit-sharing partnership. And while I have done no formal analysis, it could be possibly argued that the kiosk economies will not be realized to their greatest advantage until Amazon opens it's own full-blown retail spaces. Isn't a kiosk within a existing retail outlet analogous to a retail shop within a shopping mall? It's all a matter of relative size. So, if the kiosk story is true - and if you buy my analysis, we could be looking at Amazon as a true bricks & mortar retailer. While established retailers are going from bricks & mortar to the web, Amazon is going the other way. And if they are one and the same, shouldn't their price multiples be the same as well? Again, - my words are subject to bias as I have a short position in AMZN. Thanks for the article. -Eric

To: Glenn D. Rudolph who wrote (69364)	7/25/1999 1:12:00 AM
From: Dwight E. Karlsen	Respond to of 164684

Amazon.com is looking for an in-store presence, as small as a kiosk, so customers can pick up and return items - although it has been rebuffed so far, says TheStreet.com. Well no kidding. After all the derision about the dinasaur "bricks and mortar" folks--the ones that don't "get it"--perhaps next Amazon will have the cajones to go crawl on their hands and knees to Barnes & Noble and beg them for a retail kiosk: In which case B&N would do well to laugh and kick them in the teeth. -GGG-