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

To: Brian K Crawford who wrote (44335)	3/7/1999 10:00:00 AM
From: Sarmad Y. Hermiz	Respond to of 164684

Brian, According to amzn 10-K for 1998, advertising expense was $60M, net operational loss (before interest and goodwill write down) was $61M.

To: Brian K Crawford who wrote (44335)	3/7/1999 10:43:00 AM
From: tonyt	Read Replies (2) \| Respond to of 164684

Comparison of AMZN to AOL is flawed. Once AOL has a user signed up it is much easier for them to retain that user than it is for AMZN. For a user to leave AOL they have to invest a fair amount of time finding another ISP, then they have to uninstall AOL, load the new software, etc. For a user to 'leave' AMZN, all they have to do is click on another web site. Does AMZN reward its customers (...other than with Mugs)? If a customer spends $XXX.XX in a certain period, do they get a discount on future purchases? If buy over XX books/cd's in a single visit, do I get a discount? I should as AMZN's cost is lower if I buy 10 books today instead of a book a day. If a users has bought only books, does AMZN try to get them to buy cd's by giving them a discount on their 1st CD purchase? Amazon does not appear to be doing anything to retain current users. Its only after they become 'inactive' that they do anything. Management appears to be wasting this 'valuable database of users' that they have.

To: Brian K Crawford who wrote (44335)	3/7/1999 11:02:00 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

It seems to me this situation and the bull/bear argument is nearly identical to the one that was raging in 1996 and 1997 about AOL. Aol then: No profits. Huge marketing expenditures. Marketing spending was 40% of revenues! AOL now: Marketing down to 15% of revenues (still pretty high) and growth still strong, and they "own the space" (for now). Brian, I am long AOL too. I understand your point. There is a difference that I believe to be significant. AOL was accumulating subscribers that had their credit card billed month without any action from the subscriber.Amazon will only receive revenue if the "customer" takes action to make a purchase. It takes action to stop AOL from charging their subscriber. The passive/active issue I believe has merit. This is from the 10Q. Keep in mind fulfillment expenses which means labor, etc are in this number: " Marketing and Sales 1998 % CHANGE 1997 % CHANGE 1996 -------- -------- ------- -------- ------ (IN THOUSANDS) Marketing and sales............. $133,023 229% $40,486 565% $6,090 Percentage of net sales......... 21.8% 27.4% 38.7% Marketing and sales expenses consist primarily of advertising, promotional and public relations expenditures, as well as payroll and related expenses for personnel engaged in marketing, selling and fulfillment activities. All fulfillment costs not included in cost of sales, including the cost of operating and staffing distribution centers and customer service, are included in marketing and sales. The Company expects its costs of fulfillment to increase based primarily on anticipated sales growth and its planned distribution network expansion. Marketing and sales expenses increased in 1998 and 1997 primarily due to increases in the Company's advertising and promotional expenditures, increased payroll and related costs associated with fulfilling customer demand and increased credit card fees resulting from higher sales. The increase in 1998 was also attributable to the entry into music and video sales and the launch of new stores in Germany and the United Kingdom. Marketing and sales expenses decreased as a percentage of net sales due to the significant increase in net sales. The Company intends to continue to pursue its aggressive branding and marketing campaign, which includes radio, television and print advertising and significant expenditures for online promotion and advertising relationships. In addition, the Company intends to increase investments in marketing, promotion and fulfillment activities related to its product, service and international expansion. As a result of the foregoing, the Company expects marketing and sales expenses to increase significantly in absolute dollars. " Glenn