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To: wlheatmoon who wrote (67205)	10/7/1999 6:38:00 PM
From: eddie r gammon	Read Replies (1) \| Respond to of 86076

<<.an IPO off Williams,,energy..>> Hey Mike, if that company is run by the Texas oil man Clayton Williams, stay away from it. That is the dumbass that lost the Governors race to Ann (motorcycle) Richards (g) erg

To: wlheatmoon who wrote (67205)	10/7/1999 10:15:00 PM
From: John Pitera	Respond to of 86076

Mike, I have seen that spin off unfolding.... It's worth keeping an eye on. This guy's opinion of WebVan gets highlighted on TSCM: JXM and I have been talking about these stocks: chuckpjones posted October 07, 1999 05:26 PM ET [admin] -------------------------------------------------------------------------------- Dan Goncharoff makes some excellent points and raises some good questions in his posting. Yes, Webvan and all the other E-Grocers do have to hire a staff of drivers and acquire a fleet of trucks that B&M Grocers don't need. This does add substantial cost back in. In fact, next to the warehouse operating costs, in our own model it is the second largest cost. But this cost is more than offset by the savings in the reduction in merchandising cost, calculated as a reduction in head count. Dan also wondered how orders get rung up without cashiers. The beauty of American Grocer's model (Our company), like the Webvan and HomeGrocer model, is the checkout step is all done by computer, not by human clerks passing the goods over a scanner. This eliminates this cost component completely. The cost of the clerks, the cost of the grocery registers, and the cost of the checkout lanes as well. This also benefits the quality of produce due to one less time it sustains rough handling. Picking directly into delivery bags or totes as many of us are using, also eliminates the step of "Bagging" the items purchased. The fewer steps needed to handle the purchases, the greater the cost savings. I have to agree completely with Dan in his statement that WalMart is the wildcard to watch in this space, as they are a company that understands this marketplace and the value of a strong distribution channel. They understand it so well in fact, that WalMart is the second largest grocery retailer in the nation, second only to Kroger. Our bet is they will be a strong player in this space when they decide to move on it. But it is also our bet they would be most likely to enter the space with an acquisition, given the complexity of the operations. Many here have speculated on the response of the major B&M retailers when and if this marketplace is proven. While none of us underestimate the huge cashflow these retailers generate, don't be fooled into expecting them to make a strong immediate response. They have a vested interest in the status quo, in exactly the same way the print media has vs e-media like TheStreet.com. They also have very skinny margins to work with, making them reluctant to take chances that require as substantial an investment as this requires. Evidence the present situation Hannaford has with their HomeRuns service. The markets are not very forgiving of a large hit to earnings due to investing in a speculative future. At least not by existing B&M businesses. Investors in E-commerce companies do not make their investment based upon current period earnings as we all know. Investors in B&M companies are. I doubt seriously the two will ever meet. The other issue for well established supermarket chains is one of cannibalization of their existing market. For them to enter the fray in a big way today, it is a zero sum game. They are the existing market, so they would only take away from their existing sales. In as highly competitive a marketplace as the grocery industry, how could they ever justify the added costs, for no increase in top line revenue? As Peapod has proven all too well, the model of using an existing retail store as your warehouse simply does not work. Sucess in "Cracking the Nut" of profitability will never be done by adding costs to an existing B&M store. You must take every possible cost out when your current operations are running on such a thin margin. While our model differs in many respects to the model Webvan is using, they have done an excellent job of recognizing these basic tennants. So has HomeGrocer. The supermarket chains do an excellent job of cost management with their present model, but they lack the management expertise in the added complexities of the Net and a consumer direct delivery model. Mind you, if Safeway, Kroger, or Albertsons announce tomorrow they have agreed to acquire UPS and Ebay, I would be strongly tempted to throw in the towel and apply for a job. Absent a dramatic event like that, I will continue to play the "Crack the Nut" game.