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

To: H James Morris who wrote (13570)	8/15/1998 5:25:00 PM
From: Glenn D. Rudolph	Respond to of 164685

Gross margins are shrinking: Gross profit is sales less the cost of sales, which consists of the cost of merchandise sold to customers, and outbound and inbound shipping costs. Gross profit increased in absolute dollars, reflecting the Company's increased sales volume. Gross margin increased as a result of improvements in product costs through improved supply chain management, as well as higher overall shipping margins, which together more than offset the impact of lower prices. The Company believes that offering its customers attractive prices is an essential component of its business strategy. Accordingly, the Company offers everyday discounts of up to 30% on more than 400,000 titles, with featured book and music titles discounted at 40% and certain "special value" editions discounted up to 89%. The Company may in the future expand or increase the discounts it offers to its customers and may otherwise alter its pricing structure and policies. The Company over time intends to expand its operations by promoting new or complementary products or sales formats and by expanding the breadth and depth of its product or service offerings. Gross margins attributable to new business areas may be lower than those associated with the Company's existing business activities. In particular, the Company has launched its new music store and music gross margin is lower than book gross margin. To the extent music becomes a larger portion of the Company's product mix, it is expected to have a proportionate impact on overall product gross margin.