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

To: fedhead who wrote (8026)	6/29/1998 6:31:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164687

What about the fact that AMZN doesn't have to maintain the physical store like B&N and Borders have too. Anindo, What makes you think BKS and BGP are required to maintain physical stores? They will becuase they are profitable but they do not have too. Why do you think AMZN will sell more than BGP or BKS on the net? Analysts state being on the net first was an advantage. The net was not and is still not mainstream when AMZN was doing all this advertising. Is it not possible that BKS and BGP were much smarter by waiting until the net started to become mainstream? Doesn't that offset the higher cost Amazon incurs for its books. Far from it. Look at the gross margins and costs of sales between AMZN, BGP and BKS. Then look at operating expenses if AMZN gave enough information. They are a bit skimpy on the information they provide. I agree AMZN might be temporarily ahead of itself but its going to be a lot higher 5 years from now. AMZN is more likely to be non existant within 5 years. Look at the financials and the deep pocket competitors. Glenn

To: fedhead who wrote (8026)	6/30/1998 9:08:00 AM
From: JimieA	Read Replies (2) \| Respond to of 164687

"What about the fact that AMZN doesn't have to maintain the physical store like B&N and Borders have too. Doesn't that offset the higher cost Amazon incurs for its books." Absolutely! I ran some numbers based upon AMZN's , Barnes & Noble & Borders investment required in inventory and property vs. Sales generated. And here is what I discovered. AMZN BKS BGP Sales $87.4 $666.3 $545.3 Inventory 11.7 856.6 926.0 Property 9.8 479.9 390.9 Sales generated with a $100 investment $407.40 $49.86 $41.41 As you can see AMZN generates $407 of sales for every $100 invested. Compared to under $50 for both competitors. A significant advantage. GP % 22.1% 26.1% 25.6% Gross Profit generated with a $100 investment $90.09 $13.04 $10.62 Even with lower Gross Profit % generated for each sale. AMZN generates over $90 in Gross Margin compared with $13 & $10 for the competition. I think any reasonable person would rather generate $90 for every $100 invested compared to $13 or $10. Now the down side. AMZN spends over 32% of sales on operating costs. Therefore for $407 in sales they spend $132 in operating costs. To yield an average operating loss of about $42 for every $100 invested in Inventory & property. So it is obvious that they need to reduce the percent they spend on operating costs to generate an operating profit. But the business model they use does have some obvious advantages. Of course, I have been wrong before.