To: Bill Wexler who wrote (5703 ) 12/25/1999 6:10:00 AM From: Dale Baker Read Replies (2) | Respond to of 10293
From the NY Times on online retailers: Analysts point to Costco as the general merchandise retailer to watch on the Web, because of its success in selling merchandise online that is not carried in its sprawling stores, including items like jukeboxes, pool tables and even diamond jewelry. Some may find it hard to imagine buying a $70,000 ring online from a warehouse store, but Costco seems to inspire an unusual level of trust in customers. "They are known for having good-quality items," said Michael J. Shea, an analyst at D. A. Davidson in Great Falls, Mont. "And you know you're getting the best deal." Not all analysts say Costco's online product strategy makes sense. Daniel T. Binder of Brown Brothers Harriman faulted the company Web site's limited selection. "The beauty of the Internet," he said, "is being able to offer a greater breadth of product, which they don't do." But like other retailers, Costco has found that the Internet presents a low-cost opportunity to promote its products and establish a bond with customers. For now, like many "click-and-mortar" retailers, Costco's revenues from the Internet are fairly insignificant: It expects just $60 million in online sales in the fiscal year ending in August, a pittance next to overall sales of $27.5 billion. And the portfolio managers who are buying the stock, including Ronald E. Elijah of the RS Value and Growth Fund, said that the company's fundamentals are the attraction, not its Internet performance. Analysts and investors, though, may have doubts about any large retailer that fails to have an e-commerce strategy, though. "We worry about the ones that don't understand it, that are holding out," Mr. Elijah said. "They're going to get challenged."