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Technology Stocks : OnSale Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Martin Milani who wrote (3585)	1/23/1999 8:09:00 AM
From: John Finley	Respond to of 4903

Re:>>Actually, %100 of products listed are truly At Cost, as audited by Price Waterhouse. << I think the question is then - how can other folks beat their price? ONSL's new website looks good. Lots of stuff listed in the AtCost section. I'm waiting for the Tech Data offerings. JF

To: Martin Milani who wrote (3585)	1/23/1999 11:40:00 AM
From: Brian H.	Respond to of 4903

Martin, Trust me, no company can buy at cost and sell at cost and stay in business long. There is one company that is close to that, and they are successful due to the sheer volume of product and incredible pricing models and inventory systems in place. That company is Wal-Mart, and they operate on margins in the %2 - %3 range, but look at the amount of sales they have to generate to be so successful. Even if ONSL could operate at 2% - 3% margins, they do not have the sales to support those margins, not even close. Wal-Mart has sales of around $120 Billion. Why do major resellers have to counter it. They would be crazy to even try to counter something that would cause them to lose money. ONSL even said they do not know if this NEW model will work. They did state that "We will have an idea in two months". Again, what I am really concerned with is by using this new model, we are now going from a projected +$.03 EPS for 1999 to a -$.90 EPS for 1999. That right there shows that they are in trouble and unable to make money with margin levels so low. I still am very disappointed that they didn't stick with what they knew best and try to build that "AUCTIONS". Now they are trying to play catch up in a segment of business they are not familiar with. (JMHO). Good Luck. Brian H.

To: Martin Milani who wrote (3585)	1/25/1999 12:55:00 PM
From: Don Wellington Jr.	Respond to of 4903

Yes, 100% of the products listed are at OnSale's cost. That is not the question. The atCost site is mirroring what Tech Data's catalogue offers to resellers as a distributor. Tech Data, because they inventory,process, and ship has a built-in margin from 15% to 25%. So, a Retailer buying directly from the manufacturer could purchase for 15-25% less than buying from atCost or Tech Data. The resulting retails could be less than atCost, but it is still OnSale's cost. For instance, warehouse clubs operate on 6% to 10% and buy directly from the manufacturers in huge volumes. the resulting sell price will traditionally be much lower than a computer distributor. However, OnSale's position is that because they have no additionally incremental overhead, for the atCost site, all the revenues from fees and adv. is gravy. I hope it proves true.