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To: Glenn D. Rudolph who wrote (27669)	11/22/1998 7:59:00 PM
From: peter michaelson	Respond to of 164684

Glenn: Perhaps I should have said lower, rather than low, capital expenditures for etail vs. bricks & mortar. My point was that lower capital investment enables a greater number of competitors, forcing margins down. I'm thinking now about catalog retailers. Aren't most e-tailers an improved version of catalog? No bricks and mortars, but the costs of producing and mailing the catalogs is very high. I'm not sure whether catalog retailers have substantially different margins from B&M, or whether one cost is replaced by another cost. I do know that prices tend to be similar, and discounting is less prevalent with catalogs than B&M retailers. How do internet retailers differ from catalog retailers? The e-tailers can have more up-to-date catalogs, and they have the hyper-link advantage, such as Amazon's leading the customer to another similar book, and providing reviews. The e-tailer 'catalog' is delivered at much lower cost than the c-tailers'. However, etailers must advertise more than c-tailers. Is anyone familiar with the basic economic drivers of the c-tailers of the world, such as CDW, Land's End, LL Bean? What makes one successful? What are typical margins? How do their cost structures compare with B&M-tailers? Why are e-tailing categories rising up now, when no c-tailing operation in that category rose up? Peter