Oh, the PR continues at such a wonderful rate.
The good news is that the 'Thing' has headed off a potential recession.
London, Nov. 18 (Bloomberg) -- Jeff Bezos hasn't amassed a personal fortune of more than $2 billion without knowing how to spot a trend.
In 1994, he left hedge fund managers D.E. Shaw & Co. to launch an Internet bookshop. Amazon.com Inc. now claims it's the largest retailer of non-computer products on the Net. With a market value of more than $7 billion, it's the darling of Wall Street, a company whose shares have risen from 9 shortly after going public in mid-1997 to about $148.
This year Bezos decided that Europe is where he wants to be. In April he bought the British Web-business Bookpages Ltd. and the German online bookseller Telebook. Both sites, renamed Amazon, are being paraded before the public with big advertising campaigns.
A slim 34-year-old wired with nervous energy, Bezos delivers sentences in neat, byte-sized chunks, interrupting himself with guffaws of manic laughter. In Europe he sees cyber-fortunes waiting to be made.
''The U.K. and Germany may turn out to be a better market for us than America,'' he says. ''My argument is that the postal service works a lot better here than it does in America. When something is posted here or in Germany, 90 percent of it arrives at its destination the next day.''
In Britain, if not in Germany, it's surprising that anyone should have a good word for the Royal Mail. To locals it ranks alongside England's cricket team and the weather as an object of common derision.
It might strike some as a laughable idea, agrees Bezos with one of his trademark guffaws. ''But I guess in every country, people have a go at the post service.''
New Frontier
On the surface, the confidence of the Amazon crew in its new European venture's prospects is unexpected. America is widely seen as the world's technological powerhouse, with Asia not far behind. Europe is viewed as a laggard, good at heritage and luxury industries, but lacking the entrepreneurial vigor and scientific spirit to create new technology-based companies.
Still, it's possible that in Europe, Bezos has discovered the new frontier of electronic commerce. A paradox of the Internet is that, to work commercially, the world's most modern form of communication needs to rely on an old form of communication -- the postal system.
Except for products that can be downloaded -- software, financial services, perhaps music -- after comparison-shopping products and prices on the Web, a consumer still depends on a delivery system (and ultimately a person) to bring the goods.
And, even if locals don't appreciate it, this is where Europe does well. It's a compact place, with high population densities that make it relatively easy to run an efficient and cheap postal system. Amazon may have a great range and terrific prices, but that's of little use if you can't get the book you want in a couple of days or if you must pay a hefty premium to get it shipped by express service. Quick, cheap distribution is the one thing cyber-commerce needs most.
Also in Europe's favor is rotten parking. It's still easy in America to drive to a shop or mall and buy something. In most European cities, you circle for hours before finding a parking spot, then walk for ten minutes in the rain. People who complain of a lack of bandwidth on the Net obviously never tried taking their car through an Italian or German or French city center on a Saturday morning. Net surfing is relaxing by comparison.
Internet Enthusiasts
In Europe, the technological base is still behind that of the U.S., but it's catching up. Of 148 million people connected to the Internet world-wide, according to researchers NUA Internet Surveys, 33.25 million are in Europe, compared with 70.5 million in the US. The same forecast sees 73 million Europeans, about 23 percent of the population, online by 2002.
Europeans already are proving enthusiastic Internet consumers. In the U.K., one million people bought something over the Web in the last six months, spending about $318 million, according to Amazon figures, with books providing the largest category. Market Tracking International estimates Europeans bought CDs worth $4 million over the Net last year, envisages $81 million next year and $904 million by 2004, most of it delivered by mail, not via modem.
So far that's small-time stuff, but it does indicate that consumers aren't frightened of using computers to buy things.
One consequence is that the American companies coming into Europe are going to face a lot of competition. Local retailers aren't going to surrender a market with that potential without a struggle. In the book market, for example, Germany's Bertelsmann AG, now the largest publisher in the world, is promising to put all its muscle behind its new Books Online venture.
All this competition turns the heat up on Amazon, which still hasn't posted a profit. Amazon pushed up sales more than four-fold to $153.7 million in the quarter ended Sept. 30, only to see its loss for the period widen to $24.7 million from $9.6 million.
More complex will be the impact on Europe's entrepreneurs. If the Old World does turn out to be a better marketplace for cyber-shops than America, it could in time prove a better breeding ground for new technology-based businesses as well. It's generally the case that where there's a lot of demand for a product, plenty of people are ready to supply it -- and stiffer competition tends to force all to sharpen their skills.
If, in the 21st century, Europe throws up a crop of successful cyber-entrepreneurs, it may be thanks to two 19th century creations, good postmen and narrow streets.
18:42:22 11/18/1998> |
