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

To: John May who wrote (4406)	5/17/1998 9:51:00 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

AMZN sells what is to BKS and BGP a low margin product, but AMZN's method of distribution is entirely different, so what may be low margin for others may not be so low for AMZN. The method of distribution is new and explosive - features that did not characterize Iomega's market. John, Actually, AMZN is less efficient in selling books than BGP and BKS. AMZN has gross margins of around 20% now whereas BKS and BGP are close to 30%. I am not sure where people get the idea that AMZN's business model is efficient. First off, I cannot find a business model. Secondly, AMZN sells most of their books through Ingrams which costs 7-8% more which accounts for the 7-8% lower gross margins of AMZN. The other 2% come from the fact that BGP and BKS can command a bit more margin within their brick and mortar stores. The key to success in retailing is proper capitalization that is placed into inventory. The second, is a well formulated business plan. The "analysts" that have mentioned how good a business model AMZN has, definitly do not know retail. The rise of AMZN stock is not as much a short squeeze as it is a bubble on all internet stocks although AMZN is a retailer. The market perceives them as an internet stock. AMZN can only survive with more capital that is not leveraged. More inventory from that capital. A plan regarding what gross revenues are necessary to become profitable. A real advertising budget that does not change daily. There is talk about AMZN selling other products with more margin. We know that cannot be music and video. There are no specifics mentioned. Does management not have a plan? I suspect they do not. I am still looking for something innovative here. Please inform me. Thank you. Glenn

To: John May who wrote (4406)	5/17/1998 10:18:00 AM
From: Craig Richards	Respond to of 164684

Here's a link to an article about how the internet will affect businesses, including a section by the Cendant chairman on marketing and selling over the web: techweb.com excerpt: Brand remains important, but only when the customer perceives value in it. What will count are quality, selection, customization, and price. "I've never seen a case in retail history where lower price doesn't gain huge market share," says Forbes. "It will be no different on the Internet." Looks like low margins will continue to dominate Internet retailing.