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Microcap & Penny Stocks : Bid.com International (BIDS) -- Ignore unavailable to you. Want to Upgrade?

To: GoNorth who wrote (11481)	3/13/1999 2:18:00 PM
From: Denise D	Read Replies (2) \| Respond to of 37507

GoNorth, The following examples are based on assumptions of how the accounting would work in a retail business (where the Direct Cost is the "wholesale cost of goods"). If the Direct Cost of your local clothing store is 85% of Revenue, then of the remaining Gross Profit (15%): • Indirect Costs (13%) – Retail Space, Marketing/Advertising, Employee Salaries & Benefits, Supplies, Furniture, Computer Hardware/Software, Other • Net Profit¹ (2%). If the same clothing store were on the Internet, had no inventory, and run out of the home (simply connecting clothing manufacturers to consumers). Let's say the Direct Cost was 94%² of Revenue (allowing you to sell to your customers for less), then of the remainder: • Indirect Costs (4%) – Marketing/Advertising, Computer Hardware/Software, Other • Net Profit¹ (2%) ——————————————————— ¹Net Profit before taxes ²Notice I used the 6% Margin that you mentioned. Could it be possible that in Bid.Com's case, these Indirect Costs are greater than the Gross Profit due to start-up, especially marketing and advertising? I would have to assume that in the first years, a retail business is barely profitable, trying to get customers in the (virtual) door by offering lower prices, spending a lot on marketing and advertising, etc. I also have to think that the Gross Profit would depend on the final selling price of the goods. I presume the "minimum bid" would be the "wholesale" cost plus a minimum margin? and if the item has a lot of interest, would the amount over the minimum bid go to the original vendor, or Bid.Com? In the extremely competitive market for computers and related HW/SW, I think the margin is extremely low. I remember even 6 years back when I bought a computer from London Drugs and was shopping around, the local computer shop couldn't even get that same computer at cost for what London Drugs was selling it for. Presumably stores such as London Drugs were counting on you purchasing other items with higher margins to go with that computer, while making you feel like you were always getting the lowest price. I don't know. Maybe Bid.Com is using the same tactic, trying to get customer loyalty. GoNorth, please be nice in your response. I'm just an honest girl here offering her opinion, and I certainly welcome discussion. Denise.