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

To: Randy Ellingson who wrote (105229)	6/22/2000 6:58:00 PM
From: GST	Read Replies (1) \| Respond to of 164684

Randy: Good luck with AMZN. I think there are far better bets -- but then I still own a few gold shares so what do I know <g>

To: Randy Ellingson who wrote (105229)	6/22/2000 8:44:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

You paint a more grim picture than I would. With somewhere north of 10M customers with credit cards handy, they may just find a way to improve margins beyond where you'd expect them to be. With the increasing momentum of buyers coming online, Amazon's still got room to surprise on the side of profits. It may very well take them three years instead of one, so they could still become that $500B (but not in two years) company and yet have their stock price be lower two years from now. I'm keeping them for now, though my annualized return is now below 40%. Doh! Randy, I am long AMZN although with a very small position. This way I can buy DVDs from them and not feel guilty after I lost a bundle shorting the stock. My cost of my shares is $55. I own exactly 100 shares<G> Amazon by far has the best B2C e-commerce site. The content is excellent in that their descriptions of their products are the best, the easy ability to rate a product and check the ratings is great and their fulifllment is the finest in the industry. I can't say any firm comes close to Amazon's ability to sell and fulfill commodity type products. The reason for Amazon's terrific site with content and the ability to fulfill is simply they had access to more capital from the equity markets than any other B2C firm. They were/are able to market heavily, satisfy the customer, take chances that could lose a lot of money and still have remaining cash. They also were able to hire a great deal of people to create content and also good engineers for web design. My guess as to why Amazon had access to so much cash was their connections with KP. It was the cash which made Amazon have let's say 10 million credit cards on file. The problem going forward becomes more clear daily. On-line shopping in major dollars is limited to commodity type products meaning you do not need to see it to buy it. You will notice that Amazon's management was wise enough to add product lines that will sell on-line. The problem with this type of product line is margins. I do agree Amazon will be able to garner greater margins going forward as some of the undercapitalized B2Cs fold. However, they will never garner significant margins since that is the nature of a commodity product. I believe that my limited experience selling on-line is a good indication of what consumers are willing to purchase on-line and how they purchase it. My product line is typically a higher margin business compared to anything Amazon sells. However, the majority of my on-line sales end up being gift certificates that are given to the recipient to come into one of my stores and purchase the product there. They can take a closer look, try it on, etc. The lower margin items sell directly on-line for example a $100 birthstone ring. That is not where the money is. This being the case, I believe you will see the failure of Ashford.com, Bluenile.com, etc. although they both may attain large revenues by getting people to buy on-line without seeing by keeping margins very low on items that are typically much higher. A certified diamond becomes a commodity item due to the fact it is certified but people will not buy one on-line unless the price is really really low which removes the margin from the best margin product in the industry. This takes me back to Amazon. More people will shop on-line in the future but I do not believe it will be nearly as large as Forrester and others project. It will still be large. All the on-line shopping will be commodity type products. There will be hundreds of sites offering higher margin non commodity type products but people will go to those site for information, pricing, etc. but then go to the brick and mortar store to buy. Amazon is fighting two battles one is they are doing fulfillment which is something the customer does for free in a brick and mortar store. Amazon needs higher margins on commodity type products to make the same net profit as a brick and mortar store. Secondly, retailing is a very competitive business. There will always be someone chasing Amazon on-line if Amazon ever is able to sell these products at decent margins. The internet is a medium to exchange information more than anything. Its use for consumers will be mostly for information and pricing of products. It will offer convenience for commodity type items but the consumer is going to half to be willing to pay more for that convenience than they would in a brick and mortar store. Do you see that happening? Glenn

To: Randy Ellingson who wrote (105229)	6/22/2000 10:10:00 PM
From: Glenn D. Rudolph	Respond to of 164684

From The Street.com today: "Slowdown Crowd But there also may be more than marketing afoot: There's evidence that the high-growth phase of U.S. e-commerce growth is over. According to an online retail index released by the National Retail Federation and Forrester Research, overall spending in May rose just 2.4% from April, while sales of books, music and video products fell almost 13%. Henry Blodget, who follows Amazon.com for Merrill Lynch (he rates it a buy and the bank hasn't underwritten for the bookseller), says he's expecting sequential quarterly sales growth at the e-tailing behemoth to be flat to just mildly positive for the second and third quarters. Future sales growth for Amazon, eBay and priceline, the holy trinity of the e-tailing world, increasingly depends on new markets, such as international expansion, and new product lines. Add another wild card to the sales equation: There's still no telling what effect an economic slowdown will have on Internet companies. Most analysts say these companies are still acquiring new customers quickly enough to be protected from slower overall demand. But if companies are trying to cut costs, they may be in no position to aggressively court enough new customers to make up for slower spending by their existing customer base. And how will investors react to slower sales growth? That depends on a host of factors -- improvement in gross margins and customer-acquisition costs, forecasts of future profitability, the tone of a conference call. It would be ironic, though, if investors pressing for profits then turned around and punished e-tailers for achieving those at the expense of lower sales. Be careful what you wish for. It may come true. "