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To: Lizzie Tudor who wrote (55066)	5/4/1999 12:54:00 PM
From: Greater Fool	Read Replies (1) \| Respond to of 164684

Interesting post. I do agree that shipping costs seem excessive. A couple of counterpoints: - The shipping industry enjoys tremendous barriers to entry. Not only would it take resources and time to develop the infrastructure that FedEx, UPS, and USPS have established, they are able to force switching costs onto their customers (the ERP tie-in you mentioned in your post). - Someone at Amazon stated that customers don't seem to mind the shipping costs, even though they may offset any other benefits of internet shopping such as the absence of sales tax. Of course, that's Amazon talking, hardly a neutral observer. I do know that my wife didn't seem to notice the shipping costs on books she bought online. What will drive shipper gross margins down? The only thing that can do that is competition or regulation, both of which USPS provides or has on its side. But on the whole, I just don't see that much new competition coming in to the business. It also seems to me that FedEx is in a position to drive costs down considerably. Better information systems could allow them to go to a much more distributed routing system. If costs come down that would of course allow higher margins.