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

To: Lizzie Tudor who wrote (35932)	1/21/1999 9:46:00 PM
From: Yikes	Read Replies (1) \| Respond to of 164684

We need to separate consumer merchandise into two categories - ones you would buy over the Net, and the ones you would not. You mention television sets. To me, it doesn't make sense to buy a set from the Net that is larger than 17-20". The cost of shipping and the hassle of returns are the main barriers. I just can't imagine buying a big screen TV or expensive jewelry over the net, sight unseen. So for some products, the traditional distribution channel will always be necessary. This also includes a lot of household products - cleaning supplies, clothes hangers, food, etc. They are not worth the shipping cost to buy over the Net. That leaves a selective group of merchandise suitable for consumer e-commerce - items that cost $30 or more, with the proper weight/size suitable for shipping. But such merchandise have already been sold via mail-order for years. And many of such businesses have successfully transformed themselves to the net: www.crutchfield.com for TV (I just remembered ordering stereo from them in college, and not to my surprise, I discover they have a web site!), and too many web sites to mention that sell software - one may also order (and download) many titles directly from the company themselves. Is Amazon's distribution system really that much better than them? I agree with you that logistics is a huge percentage of cost of sales. But not all products are suitable for e-commerce. Which product mix can Amazon profit from is far from clear, given the proliferation of .com mania from retailers and mail-order houses. Remember, Amazon is NOT profitable with books alone, nor is it likely with CD's and videos. So how will it fare against, say Crutchfield, who has already a loyal customer base? This discussion began with the assertion that Amazon can repeat Dell's success. But beyond the better distribution, it also needs to find the magic product mix, which Dell has done. So until Amazon has identified the profitable product mix to sell, its expensive distribution system is worthless, or worse - selling items at a loss.