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

To: Rob S. who wrote (10366)	7/14/1998 7:41:00 PM
From: H. Lee Grove 2	Read Replies (4) \| Respond to of 164684

Rob, You know what would just devastate Amazon? If Barnes and Noble or Borders publically--in an interview with the CEO/CFO or an article--exposed the factual truth about margin expectations for instantaneous price comparison. The interview would go something like this: I: So, Mr. Barnes, you have recently made an earnest effort to develop a net prescence. Do you expect it to enhance your profitability, given the popular perception that "bricks and mortar" is quickly becoming an outdated mode of retailing? B: Well, MR. I., I'd like dispell a couple of myths here at the risk of upsetting some of our stockholders. But facts are facts. Fact one: The ability of a shopper to make instantaneous shopping comparisons using the nets shop bots--you are familiar with bots? <I nods cooly, obviously disturbed that he doesn't know what they are> B continues: As I was saying, the shop bots will result in the most extreme eradication of price ignorance and shopping inconvenience that any innovation to date has caused. It's instantaneous. You get the best price in the world--immediately. And your purchase is mailed to you within days. We expect the margins on this type of business to be--at the most--sufficient to allow a wash--no net loss, no net gain--on net sales. We are pursuing the net as a practical matter, just to insure that there is a level of competition that will insure that net prices have to remain near the lower edge of the price range that is created by no profit net enterprises and profitable bricks and mortar outlets. To put that another way, books purchased at book stores are, and always will be, more expensive than those purchased over the net--though, considering the shipping charges incurred by a net customer, the difference is almost negligible. Now since the net will allow a cheaper product, we must enter the fray to insure that it offers the cheapest--the net shopping bots will guarantee this. Thus, with a strong net presence, we can insure that a company such as Amazon, for insance, cannot raise their prices that incremental amounnt that would allow them to be profitable, yet still undersell our physical outlets, thus resulting in loss of revenues to us. Make no mistake about it, we have suffered loss of revenues due to Amazon's presence and others like it. But, by entering the net in a substantial way, we will essentially cause an equilibrium to be achieved at some revenue point, and thus we can again concentrate on our profitable physical locations, providing the atmosphere and experience that the cosumer has come to expect and demand. I: But, Mr. Barnes, there are people who say that there is an atmosphere on the net; they call it a community. And that price doesn't matter--give or take a couple of dollars. So people will shop with whatever e-tailor provides the best atmosphere and perks. B: Well,imagine your sitting with a group of friends at home one evening having a philosophical discussion--all of who are active net shoppers. One of the participants mentions a review by Fritjof Capra on the Steven Pinker book, The Language Instinct. Now a titillating conversation ensues during which each of the participants in the conversation is attempting to shine his intellectual apple. One person casually mentions that they bought the book through the access.com shop bot, finding it for $9.95 plus shipping and handling. And after so saying looks around the room, expecting others to offer their shopping experience. But, to his dismay, no one responds, and in fact someone quickly changes the subject, resuming the discussion with Pinker's Mentalese considerations. Why did no one respond? Well, they all paid more than the inquirer. Do you think they will do this next time? Absolutely not. They will be on the computer looking for access.com as soon as they return home. Life has always been about getting the best deal, spending wisely. People enjoy being smart shoppers. They even brag about it, as our fellow in the anecdote I just mentioned. The shop bots will guarantee minimum margins from net sales; there has never been anyting like it. As for in store sales, they will continue. Not much will change. Most people are still very social and enjoy shopping. And we will have marginally higher prices in the stores because we can. People will pay for not having to wait. The physical retail outlets have perks that will never be replicated on the net. Will we make less money due to the loss of revenues to the net? Absolutely. Will we dissappear? Absolutely not. The net is an evolution of sorts, but it won't displace real life. If it does, well have a lot more to worry about than profits. I: Thank you, Mr. Barnes B: Thank you. I enjoyed talking to you.