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

To: Glenn D. Rudolph who wrote (143607)	7/9/2002 11:19:21 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Buy.com founder Scott Blum is proving to be a thorn in the side of Amazon.com. In a full-page advertisement scheduled to run in The Wall Street Journal today, Blum encourages Amazon.com shoppers to switch allegiances in order to receive "lower prices, huge selection, award-winning customer service and free shipping!" The letter is the latest volley by Blum, who rebought Buy.com last year for $23 million and quickly began rebuilding the struggling online retailer. Now after several months of cutbacks, Blum's marketing strategy has become clear: knock Amazon.com off its online retailing pedestal. It's not personal. Purely business, Blum says. "The only thing we are out for is their customers," said Blum, adding that Amazon.com's 30 million shoppers is a "healthy database to attack." "There is nothing between me and Jeff (Bezos); I have a ton of respect for him," Blum said. "But do I want to finish second to him? No, I don't want to finish second to Jeff." Buy.com, which gained notoriety during the Internet boom for selling goods below cost, has instituted several policies in the past month that fly in the face of Amazon.com. Last month, a day after Amazon.com began free shipping on orders over $49, Buy.com announced free shipping on all orders regardless of price. A week later -- in a news release titled "Buy.com Starts Price War with Amazon.com" -- Buy.com began selling books at prices 10 percent below Amazon. Trying to woo customers away from established companies is nothing new in the retail world, where consumers have only so much disposable income to spend. Amazon.com spokeswoman Patty Smith said Amazon has always attempted to focus on the customer experience. She declined to comment on Buy.com's marketing tactics or whether they were having an effect on sales, saying only "we are not really focused on what our competitors are doing." Buy.com, based in Aliso Viejo, Calif., has a long way to go before it surpasses Amazon. While Amazon.com is the second-biggest online retailer with 31 million visitors, Buy.com doesn't even crack the top 50, according to comScore Media Metrix. Sales at Buy.com were $80 million in the first quarter, far below the Amazon.com's $847 million. But Blum -- who equates his rivalry with Amazon to the cola wars and the Wal-Mart-Kmart feud -- thinks there is room for his 5-year-old company to climb the ladder. "There is no one out there who is bulletproof," he said. "I think Amazon is eight or nine times bigger than us right now -- which is pretty big -- and I have a ton of respect for them. But I don't think they can't be beat." Unlike Amazon.com, Buy.com relies on third-party distributors to pack and ship books, electronics and other products. As a result, Buy.com -- which has about $5 million in cash -- operates with a staff of 125 people, compared with Amazon.com's more than 7,000 employees. Amazon.com allows third-party vendors to sell through an open marketplace on the Web site, a popular feature that accounts for nearly a quarter of U.S. orders. Still, the bulk of orders are processed at the company's distribution centers. Last year, Amazon.com spent $374 million on fulfillment costs. The year before, it was $415 million. Still, Smith said, the distribution centers are not a handicap. "It also means we have a greater inventory and greater selection," she said.

To: Glenn D. Rudolph who wrote (143607)	7/10/2002 9:08:51 AM
From: H James Morris	Read Replies (2) \| Respond to of 164684

<<SAN FRANCISCO -- Some of NexCard Inc.'s 800,000 customers may be surprised when they try to swipe their Visa cards Wednesday - federal regulators are closing all accounts as a result of the online credit card issuer's financial failure. The Federal Deposit Insurance Corp., the government agency that has been overseeing the business since regulators seized the accounts Feb. 7, waited until Tuesday to tell NextCard customers their credit cards would become worthless Wednesday. Regulators closed NextCard's banking subsidiary because of heavy loan losses. Many NextCard customers received the news of the account closures in e-mails sent Tuesday. Other customers won't find out until they receive letters later this week. That means some consumers might try to use their credit cards without knowing the accounts have been closed, said FDIC spokesman David Barr. The action also cuts customers off from many incentive programs their purchases had been building points toward. San Francisco-based NextCard told regulators their customers carry an average of three other credit cards, minimizing the chances that someone unaware of Wednesday's account closure won't have other financial options. About 300,000 of the affected consumers haven't used their NextCard accounts for the past 90 days, Barr said. "We tried to give as much warning as possible," Barr said. "It's been a real juggling act for us to keep these accounts active." Regulators had been trying to sell the accounts for more than four months. The FDIC struck a deal last week to sell about 200,000 NextCard accounts to Utah-based Merrick Bank for $126 million. Merrick Bank, a subsidiary of CardWorks Inc., will take over the 200,000 accounts by the end of September. With the decision to close the remaining 800,000 accounts, the taxpayer-backed FDIC expects to lose $300 million to $400 million on the failure of NextCard's bank. NextCard's accountholders will not be able to cash in bonus points they stockpiled with all of the incentive programs once available to them. The customers also won't receive any refunds for any annual fees they may have paid to use the cards. Like most credit card issuers, NextCard offered programs that rewarded accountholders with points based on how much they spent with their cards. The points are supposed to redeemed for merchandise. Online retailer Amazon.com, which owns an 8.1 percent stake in NextCard, provided one of the credit card company's most popular incentive programs. The FDIC advised NextCard accountholders that Amazon won't redeem the spending points, but Amazon said Tuesday evening it would honor the points. Amazon ended its co-branding agreement with NextCard shortly after regulators seized the credit card accounts, according to a Securities and Exchange Commission filing. "We don't want customers to worry. They will be able to redeem their accrued points with Amazon.com," said company spokeswoman Patty Smith. "We'll be in touch with customers over next several days on how that will work." The incentive programs can be canceled at any time under the conditions of NextCard's customer agreements, Barr said. All customers with closed accounts will be required to pay off their outstanding balances under the interest rates previously in effect. The FDIC didn't disclose the total loans outstanding in the closed accounts. NextCard's total loans outstanding during 2001 averaged $1.9 billion, including the 200,000 accounts being sold to Merrick Bank, according to SEC filings. Visa USA, whose brand appeared on all the affected cards, said it has arranged for two unnamed banks to contact affected customers during the next few weeks to offer balance transfers. Visa said it also is trying to accelerate the application process for customers looking to get new cards. Until now, NextCard's collapse primarily had burned investors and more than 800 employees who lost their jobs in the meltdown. NextCard raised $300 million from in an initial public offering and secondary offer of stock completed in 1999 at the height of the dot-com craze as it promised to revolutionize the credit card industry by approving customer applications online. The company's stock, which peaked at $53.12 in late 1999, was delisted from Nasdaq in March. Having lost $391 million since its inception, NextCard likely will file Chapter 11 bankruptcy, according to the company's last SEC filing in May. Company officials hadn't returned calls as of late Tuesday. seattlepi.nwsource.com