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

To: Peter Bernhardt who wrote (33837)	1/9/1999 5:41:00 PM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164684

While it may be true that Amazon is wooing customers by selling product at a loss, there is absolutely no guarantee that those same customers will be repeat customers, let alone that Amazon can ever manage to sell product to those millions of customers at a profit. In AOL's business model, each customer provides a guaranteed subscriber fee every month. It is absurd to make the same assumption about an Amazon customer. Peter, You are exactly on the mark with this comment. It takes a lot more work to change ISPs and the charge card is automatically debited each month. People have to go to AMZN to make a purchase for AMZN to realize anything from having that charge card on file. Besides the fallacy of guaranteed revenue from a customer base, Amazon has yet to address the nagging problem of selling product at a loss. The company itself has admitted that fulfillment costs are variable and will only go up as sales increase. Where is the economy of scale? In other words, whereas AOL increases its profit margin as it builds its subscriber base, Amazon can only boast increased losses as it increases sales. This is no longer speculation but proven fact. Fulfillment costs are variable and high and there is no more economy of scale to help. Thus, the price of the product most go up to increase gross margins or profitability is impossible. It is not just unlikely. It is impossible. The question is will people be willing to pay more for an item via mail order and also have to wait for it to arrive? Some will be not enough. Glenn