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

To: Glenn D. Rudolph who wrote (33344)	1/8/1999 2:13:00 PM
From: Rob S.	Respond to of 164684

An obvious attempt to justify the changes that are and will occur - a greater convenience of marketing products combined with Integrated supply-delivery chains and massive competition that will drive down margins and profits to razor thin levels. Yes this will force the both retailers and biz-to-biz practices. True that Amazon is ONE of the leaders in pursuing this unavoidable trend. But if Amazon is a leader in taking advantage of the Internet and recognizes the need to vertically integrate the supply and deliver chain, then Barnes & Noble is the vertically integrated supply chain company that is now aggressively pursuing Internet sales. This isn't a story about one or two competitors battling it out for market share. It is about the inevitable trend toward much, much greater competition, greater integration (reduction of the middle-man and TCP/IP driven EDI MRP systems) and a great reduction of margins. Even in this glory period of great growth and market leadership, a period BEFORE most retailers make major market pushes on the Internet; Amazon's margins have been impacted by the need to lower prices (see Joy Covey's recent comments). What, lower prices in a near virgin "sellers market"? Despite the early stage of development, what does that say about future pricing at a time when many more competitors will be scrambling for customer's attention? As IBM Research Institute and numerous other studies have concluded, the Internet will drive both huge market growth and ruthless competitive pricing pressures. We are now at the stage where mostly the huge market growth is being seen. This is the steep upward slope of the text-book "Market Development Bell Curve" in which pricing is not as important as in latter stages when sales start to decelerate and competitors, rather than simply trying to attract new customers who are entering the market, turn increasingly toward enticing competitor's customers away with freebies, lower prices and other enticements ('Register and Win a trip to Disneyland' all that stuff that costs more money). If you read between the lines of the article you will discover the truth: ALL commodity item retailers will be driven to do business on the Internet with the result being much lower margins and profits. Once established corporate America gets the Y2K issue off their slate of most important issues, the attention of MIS departments and corporate budgets will turn stupendously toward competition via the Internet. That pick up in activity will start to happen in the second half of '99. The assumptions some analysts and many investors have made about Amazon's future are not only short-sited but they miss the mark to the degree that they call the reason and credibility of the proponents (maybe sanity?) into question. Herd instinct isn't always a bad thing - there is comfort and often the most profit in going with the herd. But when the herd reaches the verge of the cliff and fails to heed the signs that the cliff is there, then "these are strange times indeed".