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To: Tom D who wrote (28403)	11/28/1998 7:59:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

The internet is more than an efficient order-talking mechanism. Tom, Bear with this post because I see problems with online commerce down the road. It is surfacing now as online commerce has only grown a few hundred percent compared to last year. It is not a big deal yet. However, UPS, Fedex, Airborne Express and the US mail are having a problem that began last week. The added load of delivering one or two items to individual households is making their regular deliveries of merchandise to land based stores more difficult. UPS decided this week to make business deliveries first. Those deliveries are more profitable since there are maybe 20 packages to the same location and in the shopping malls, maybe thousands. Your comment that "The internet is more than an efficient order-talking mechanism. It allows the almost-complete replacement of sales people by computers. " leaves out distribution. The internet is a very inefficient method of distribution. Each individual ends up with their own Chaueffer (sp) to deliver their package. This is not the case in a land based retail operation. Also, each item or group of items needs a shipping box and that is a lot more expensive that a shopping bag. Finally, the customer does the fulfillment in book stores and stores like Kmart and Walmart amongs many others. There are problems to be addressed if and when this becomes large scale. We need automated fulfillment machines for all kinds of merchandise. It allows for lots of information about products to be given to interested customers almost instantly, at miniscule incremental cost. I see the internet as being tremendous at information dissemination. That does not mean it is well suited for retail commerce. Business to business will work due to scale for one shipment. It allows for lots of stores in densely populated high-rent districts to be replaced by a few fulfillment centers in the low-rent cornfields of Iowa and in toxic-waste sites in New Jersey and somewhere out west. </ik> The stroes are only there because the people are there and the people are only there due to the stores. Which came first? Bricks and mortar stores require sales people. The thesis about internet stores and land-based stores being mutually exclusive goes like this.......if (OK, in 5 to 8 years) land-based stores lose 10 % of their revenues to internet stores, can land-based stores survive? It is presumed that a 10% decline in revenues may not allow most land-based stores to trim costs much at all. If this 10% decline in revenues was formerly flowing down to the bottom line, the new bottom line implications are scary for land-based stores. Just because I write it, that doesn't make it true. But I think this is a big part of the investment thesis that bulls buy into. I agree with you that this is the investment thesis but it may be flawed. The other issue is the convenience of shopping from home whenever you get the impulse, in whatever state of dress and hygiene and sleep-deprivation and inebriation you happen to be in, without having to do something with children who get car-sick and really are not even tamed yet, etc. etc. (I know, I am projecting my own family which belongs on some other planet on the USA again. Sorry, HJ). This is a large plus with which I agree. The problem is it may come attached with a higher cost for the product. Many of the on-line retailers are not losing money just because they are growing. The fulfillment costs are exceeding gross margins. The fix can be greater gross margins which will make online purchases higher than brick and mortar and many are higher at present. The other fix is fulfillment automation or companation of both. That still leaves a problem with distribution. This was a quick post just to point possible hurdles that have to be handled for e-commerce to ever become significant. Glenn

To: Tom D who wrote (28403)	11/28/1998 9:53:00 PM
From: llamaphlegm	Read Replies (1) \| Respond to of 164684

Tom: <<< The internet is more than an efficient order-talking mechanism. It allows the almost-complete replacement of sales people by computers.It allows for lots of stores in densely populated high-rent districts to be replaced by a few fulfillment centers in the low-rent cornfields of Iowa and in toxic-waste sites in New Jersey and somewhere out west. It allows for lots of information about products to be given to interested customers almost instantly, at miniscule incremental cost.A large part of the costs with internet selling are fixed. If some company selling on the net can get very large, they can be more efficient than land-based stores. Bricks and mortar stores require sales people. The thesis about internet stores and land-based stores being mutually exclusive goes like this.......if (OK, in 5 to 8 years)land-based stores lose 10 % of their revenues to internet stores, can land-based stores survive? It is presumed that a 10% decline in revenues may not allow most land-based stores to trim costs much at all. If this 10% decline in revenues was formerly flowing down to the bottom line, the new bottom line implications are scary for land-based stores. >>> wow! first, you piss off all the residents of the toxic waste dumps. next, i don't get the thesis re: taking 10% of sales. that's fine. weaker companies or even just weaker brick and mortar sites go out of business. more likely, if internet only companies can only steal 10% of the real world sales, then they are all dead, because brick and mortar types, who will, btw, open up their own web sites, will just hack the internet companies to death, by offering their own, we'll beat any price any time gaurantee (since they can always negotiate cheaper prices than the internet only guys and their piddly 10% of the market) -- end of story ... the thesis seems to be pricing in more like 50% of the market -- we'll see. <<<Just because I write it, that doesn't make it true.>>> phew! <<<The other issue is the convenience of shopping from home whenever you get the impulse, in whatever state of dress and hygiene and sleep-deprivation and inebriation you happen to be in, without having to do something with children who get car-sick and really are not even tamed yet, etc. etc. (I know, I am projecting my own family which belongs on some other planet on the USA again. Sorry, HJ).>>> mail order, fax, LL Bean, Land's End etc. etc.