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

To: Bill Harmond who wrote (109685)	10/5/2000 11:01:12 PM
From: H James Morris	Read Replies (1) \| Respond to of 164684

>We now have a company that thas the best user interface and best (and plentiful) distribution capacity (and best service) in the world. Bill, please let Amazon.com go. Most of us don't care if Amazon makes it or not. What we do care about is your opinion on a much larger scale. My point is I choose not to think of you as just the Amzn bull. What I do think is your one hell of a great investor, and your track record can speak for itself.

To: Bill Harmond who wrote (109685)	10/5/2000 11:06:09 PM
From: Glenn D. Rudolph	Respond to of 164684

You do realize that Amazon increased fulfillment capacity (x labor) 15x last year, though they really needed 3x right away? You realize they told us in advance of that that they were deliberately overbuilding because it made best ROI sense? We now have a company that thas the best user interface and best (and plentiful) distribution capacity (and best service) in the world. William, My opinion is you give Amazon's management far more credit than they deserve. The trend and there is beginning to be proof is to believe the fulfillment process is a nightmare. Let's look at the recent analyst report: "+Amazon Shares Down 6% On Analyst's Skeptical Report 10/04 9:47 (DJ) Story 3330 (AMZN) Story 3869 =DJ Amazon Down -2: Analyst Sees Problem In Shipping Costs NEW YORK (Dow Jones)--Amazon.com Inc. (AMZN), the giant online retailer that has become the focus of acrimonious debate among bulls and bears, saw its stock take a hit Wednesday from an analyst's skeptical research report. The report, from Robertson Stephens e-commerce analyst Lauren Cooks Levitan, expresses doubt about whether Amazon's current business model will lead the company's finances into the black over the long haul. "Specifically, we wonder if product diversification efforts and an exhaustive assortment impair Amazon's ability to achieve the efficiency necessary to drive sustainable, long-term profitability." Amazon made a well-documented bet several years ago by spending large amounts of capital to expand its online retailing business from books to a wide variety of products, which now include lawn furniture, kitchen supplies and stereos. Bullish supporters have pointed to recent statements from Amazon that one of its newer businesses, electronics, is growing nicely. But Cooks Levitan wrote that expanding demand for different products may not be enough. By selling a wide range of products, Amazon is sometimes forced to split shipments to individual customers, the analyst noted. In doing so, the company continues to rack up burdensome shipping costs. In order to study how Amazon makes shipments, Cooks Levitan said her group has been placing orders for multiple products in different categories with the online retailer. "We believe one of the keys to Amazon reaching its shipping and fulfillment efficiency targets this holiday season and longer term is minimizing split shipments," Cooks Levitan wrote. "During our study, on shipping costs alone we estimate Amazon lost an average of $2.91 per order, representing a (minus) 29.6% shipping margin. ... We note that other fulfillment costs such as labor are nearly double for every split shipment as the pick, pack and ship process must be repeated for each shipment." Amazon shares recently changed hands at $33.06, down $2, or 5.7%. Volume was nearly 2.5 million shares, compared with average daily volume of 7.6 million shares. -By Ross Snel, Dow Jones Newswires, 201-938-5285 ross.snel@dowjones.com (END) DOW JONES NEWS 10-04-00 10:44 AM " The problem is two fold. One is the fact they have too much capacity and I agree that was planned. I believe it to be poor planning since split shipping was inevitable. A large increase in revenue will help but it will not remove the large problem of multiple handlings. As you can see so far, test are showing that multiple handlings are occurring. My opinion is this problem will increase with increased revenue. Not decrease. This is also going to be a problem in Europe. My premise has not changed. Amazon will have to be able to charge more for their products than their brick and mortar counterparts. I doubt that will occur and there is more efficiency for dual channel firms. Amazon has not failed yet meaning they have not filed for Chapter 11 or 7. My prediction of this problem which is documented here more than two years ago is proving itself. My opinion was and still is that Amazon should have had only two distribution centers. One on the east coast and one on the west coast. Amazon has too many distribution centers making inventorying very difficult when items are pciked and shipped one at a time direct to the consumer. This is not the case with mass merchant department stores since they ship truckloads from their distribution centers to their stores. Amazon likely followed the brick and mortar Wal-mart approach with the building of so many different distribution centers. This is the incorrect approach when product is shipped directly to the consumer. Let's just give that some though and re-visit it after Q4 which will show a definite increase in sales. Glenn