August 19, 1999-San Francisco:
e-shoppers will decide to forgoe the internet in favor of
the real experience?
"More this year than not due
to jitters about Y2K uncertainties," states George
Rabuf of E-shopping Watch Ltd. Joining in, Hans Ufans
President of EyeNet Transactions LLC remarks, "We expect a
contraction instead of growth of e-shopping during the 4th
Quarter of 1999 because of the growing questions over
Y2K. 82.8% of a surveyed group of 847 e-shoppers
having made at least one product purchase online in the
past 45 days expressed concerns of ontime delivery,
out of stock merchandise, ability to return
merchandise easily, as well as billing
"However, our survey also points out that nearly all of the
surveyed group will begin to purchase products next year
after the 'Y2K Bug' is of no more concern.
afternoon before taking your short position.
Greenspan will give us the news around 2:00. Everybody
thinks he will raise it only 25 bases points and the
market will go up and this may happen.
But it has
been my experience that whenever the majority of
people think oneway usually the opposite happens(50
bases points or 0 bases points could move this market
Be ready to go long or short based
upon the general market action.
absolutely miniscule compared to the hundreds and
thousands of stores owned by the offline chains and
multiples times productive in terms of sales generated per
WMT will be about as big a "hit" in
general retail as their aptly chosen thirtheenth rate
books partner had on online book sales. Hardly a
trickle. Have you seen their site? (did you run a search
for 'tennis' as I told you?) Exactly a bare-bones
effort worthy of booksamillion.
If you're looking
for that marketing-challenged site to save your
short, Sonny, you'd better start looking elsewhere. That
ain't gonna cut it.
Amazon has until 2009 to
deal with the principle of bonds which will most
likely be forced to convert over the next year thus
requiring no cash payment by the company.
Oone can agree on
Two key points:
Leading catalogs do quite well
and co-exist along side the store-only model quite
well as the two require different skill sets.
even with its catalogue-like qualities eCommerce such
as Amazon can capture industry-wide about "5%-20% of
the $1.6 trillion U.S. retailing pie."
"stores have not dominated the catalog market, reflecting
the marketing and distribution challenges of the
* "This new
medium combines elements of a store, a catalog, a
magazine, an encyclopedia, a telephone with conference call
capability, radio, and television. Consequently, effective
online merchants must possess a skill-set featuring
direct marketing expertise and content development, a
far cry from the real estate, bulk distribution, and
store operation focus of traditional retailers. Stores
do not have a lock on retail distribution, despite
currently controlling 90% of the U.S. retail market,
followed by catalogues with a 7%-8% share. In fact, the
word "retailing" comes from the French word
"taillier," which means to cut into small pieces, the same
root as tailor, something that can be done quite
effectively by a direct marketer. Incidentally, stores have
not dominated the catalog market, reflecting the
marketing and distribution challenges of the
direct-to-consumer model, but many chains have justified their
absence based on the relatively small size and mature
nature of the catalog market..."
assortment advantage wielded by Internet retailers is no
different from that of any direct marketing operator,
including catalogs, which have reached a plateau of about
7% of overall retail sales. However, catalogs
containing pictures of every item in a given merchandise
category combined with incredibly detailed product
information could not be cost-effectively published, let
alone mailed to hundreds of millions of people around
the world on a daily basis...."
also provide this opportunity, and we have not seen
the majority of vendors wade into area of direct
marketing. while the Internet provides a far more compelling
* "...We expect the Internet to capture at least
two to three times the share of the retail market
that catalogs have garnered, or 15%-20% of the $1.6
trillion. U.S. retailing pie. We believe similar shares can
be captured outside of the U.S., although the
ramp-up will be much more gradual for reasons discussed
later in this report."
from the Goldman Sachs
Global Internet Retailing research report, June 1999
(For some other items of interest see post #146422 and
list/links for articles which appears at the end of that
of nonsense by Sonny. AMZN does not need to
change business model. It just needs to grow sales. 22%
gross margin is plenty. Once warehouses are built, the
expenses will be much lower, leading to profitablity.
Advertising bugdet will be lowered as well.
Nem, what do you mean web site is not costly to
You are referring to sites that people can buid from
ready-to use templates? It takes a small fortune to make a
You need teams of programmers.
build initially, but to create content, such as
reviews, recommendations, product information, and
presenting them often in an entertaining way (which is in
fact a key driver of sales and customer retention) and
to keep that content up-to-date and growing along
with your ever-expanding online offerings, can be
rather costly. Particularly at this early stage of
eCommerce. Gradually this will become a much lesser
expenditure as a percentage of sales as sales continue their
One of Amazon's considerable
expenditures at this time is to maintain a large editorial
staff, larger they say than any magazine or publishing
entity now in existence.
Most offline stores have
no experience in this area and will not provide an
adequate budget for such activities as they do not realize
the value of it having no substantial online
experience to speak of. Witness the poor quality in this
area on the bare-bones www.wal-mart.com
Quite similar to the likewise bare-bones
booksamillion.com site in many ways and we expect it to be just as
sparsely visited by online shoppers for this reason.