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

To: JayPC who wrote (89886)	1/5/2000 8:36:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

While I agree, that the markdown will not be a one time cost, It will be a smaller markdown, as Amazon goes up the learning curve on electronics and toys. This is likely true. As far as projecting inventory needs, when you first opened your business, how did you do it? I don't want to beat around the bush. The truth of the matter is I was undercapitalized when I first opened. I was never over inventoried. It is easier in my business since most products are available in a day if necessary. My early years at inventory managament was not good. They will have projection models and the projections should become more accurate over time. I agree with the accuracy will improve. I do not see it any more accurate than the projections of Sears, JC Penney, Wal-mart, etc. I do not believe it is really possible to predict the buying patterns of the consumer extremely closely. I am not faulting Amazon on their inventory plan. As you said, the business model is new. I am curious as to how Amazon plans on dealing with liquidating excess merchandise in certain categories. I know how it is done in brick and mortar stores. It is done more by impulse sales via customers there looking for something else and stumbling upon a closeout bargain. This is not true for all closeouts. Often, certain category groups are reduced and advertising is used to move large quantities. This is a lose lose sale for the brick and mortar store. By the time you figure the advertising and the gross margin cut, the liquidation is close to being done at a loss. The impulse liquidation is not as bad since no advertising expense in incurred. My question is how is Amazon going to execute in such a way as to equivalate an impulse liquidate method? One method I see that may work for them are specials via emails to existing customers. That is not expensive to Amazon. I can't say I know how the consumer will react. The "magic" right now is that Amazon is the biggest. I do agree however, what good is the magic if it doesn't make you any money? I'm willing to wait a few more years before reaching a verdict on the business plan. I am willing to wait too although I do not want a long position based on the current market cap. That is a personal decision. I was certain that the original plan from a few years ago would not work. I was sure inventory had to be carried and Amazon did an excellent job of raising the capital and putting in place distribution centers. No question, Bezos is innovative. I guess I am saying we have a new problem now that inventory is required. How is that going to work with online only? Maybe they will email coupons or set up a specific closeout department online. It will be interesting and I suspect trial and error will be necessary. I have become a very interested observer as the story unfolds. Glenn