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

To: Yikes who wrote (35928)	1/21/1999 8:43:00 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 164684

Yikes (interesting name), I take a few issues with your post. Amazon doesn't build anything, it's just a middle man. It can only cut distribution costs. Whatever it sells, the consumer can go directly to the supplier for lower prices on their next purchase. I disagree here. Logistics is a huge % of cost of sales for a whole range of products. Example TVs - my guess is logistics account for 30% of the cost of your avg TV. First you have the the vendor to distributor, to regional distributor, finally retailer, at each hop incurring huge transportation costs + shortage every step of the way. There have been a number of research papers about this - it was Piper I think that estimated 30%, I actually think its higher. TVs are one example. Software companies have been trying to attack this distribution inefficiency forever with DRP solutions and the like (which sort of help). But the only real fix is elimination of the complex distribution network in favor of a virtual model (maybe involving drop shipping everything). Anyway my point is that there are at least as many economies of scale to be gained on the distribution side as the mfg side but you have to go through the pain of developing the process, and choosing the correct product mix that benefits from it. The fact is, Amazon is not profitable right now. And it may NEVER be profitable. No argument there... (well, I think they will be profitable in the future, where you may not I suppose), but I have held a number of stocks in the past that have not been profitable and have later turned profitable so I dont exclude an investment based on immediate profitability alone.