To: spal who wrote (93390 ) 2/11/2000 2:28:00 PM From: Bearded One Read Replies (1) | Respond to
God, what a snow job!The turnaround started on Jan. 21, when Amazon announced the latest in a series of deals to rent some of its Web-site space to other e-tailers--in return for a stunning $606.5 million in cash. Then, on Feb. 2, it announced that its original books business is profitable--a sign that its core e-tailing model might just have legs after all. The kicker: Some analysts now think Amazon will be profitable in 2002, a year earlier than expected. Over the holidays, hundreds of administrative workers had to help out in distribution centers and customer service to keep up with demand, raising the specter of execution snafus as Amazon keeps growing. When you reach a certain critical mass of customers, you very quickly have a long line of people who want to associate with you.' In other words, people who give you boatloads of money for nothing more than a few square centimeters of your Web page. Gross margins fell by more than a third, to 13%, thanks largely to the inventory writedown Actually, the costs never were that much relative to traditional retailers, whose biggest expenses by far are building and staffing stores. Amazon's fixed assets, such as warehouses, for instance, on average produce double the sales of Wal-Mart Stores Inc. and Barnes & Noble stores As a result, Amazon's marketing cost to acquire a customer is only $19, less than any other e-tailer.
