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

To: Bearded One who wrote (95619)	3/6/2000 11:19:00 AM
From: dbblg	Read Replies (2) \| Respond to of 164687

hi Bearded One, I'm not long AMZN--and I'm really not that interested in it--but your post raised some interesting questions about online commerce which I wanted to explore. >>What advantage has Amazon's front-runner status given it other than the opportunity to lose more money than every other store combined? Not an insignificant opportunity. If they execute, they will have resolved the tension between "web as land grab" vs. "web as frictionless brutal price battlefield", and on Joe Q. Public's nickel at that. >>All the internet value-item stores have turned out to be mail-order firms in disguise, but will be less profitable. That depends on whether or not you believe--as your heroes at (offline) Barnes and Noble do--that demand for books and music is elastic to time and convenience, rather than price. Part of the rationale for book superstores was the realization that the target customers would gladly spend more money on books if they didn't find the experience of going to bookstores so frustrating. (Basically, customers had trouble remembering the author or title of the book they had heard or read about, and/or found the store didn't have a copy of what they wanted. A related problem was the difficulty in finding books "similar to" something they had read and liked. Independent booksellers could often provide advice like that, but they usually had limited space/selection.) In that context, the shopping experience at AMZN, where you have access to the collective choices of the customer base plus easy access to reviews, etc., starts to seem rather far removed from mail-order catalogs. >>People like to actually see the television set they're going to buy. FWIW, the market research on this suggests that they don't. (At least in the segment of the market that is buying mid-range stuff, i.e. brand names like Sony or Toshiba, but nothing over a thousand bucks.) The bigger problem is that people who don't have a problem paying 20 bucks for a book which can be had for 10% less a few mouse clicks away, balk at paying 600 bucks for something available elsewhere for 540. This effect isn't that sensitive to income level. I can see why AMZN would be tempted to get into electronics, as it is a follow-the-geek market in which the customer-review model is fairly powerful, but I don't think they can ever get past the price and shipping issues. My guess is they end up paring down the selection and/or partnering with someone offline.