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2) <<Your 30%
number ....... applies to
very small transactions.>>
* You have
proved nothing by that statement. If someone can sell
enough of 1$ items at a 30% profit that is a heck of a
lot of money. The size of the transaction is doesn't
account for the quantity of items sold.
have still not explained your arbitrary 6% figure. You
said you filched it from eBay. That is about as
nonsensical as judging GM by fetching some number off of a
Chrysler homepage. Or using Compaq's margins in place of
Dell to judge Dell. Stop being ridiculous and admit
your number is purely arbitrary.
3) If you can
not describe the joint site with sotheby's then you
are not qualified to judge Kiggen's targets nor can
you then justify your statements about long term
outlook. Investors are responsible to assess
Their are published figures as to the size of the
dealer network under exclusive contract for the Internet
through Sotheby's. The number is in the thousands. That
you did not come across this fact or neglect to use
it as it would destroy your thesis also descredits
4) Yes there are more points you
evade. Your figure for subsequent quarters is extremely
low and yet you fail to explain you tiny growth rate.
Perhaps because thought you could sneak that one by
5) Please don't tell us about the market leaders.
BKS I believe was a market leader. Online Amazon has
passed them up a long time ago. Amazon easily and
rapidly surpassed the online leaders in video and music
Typical growth rates for Amazon when
it enters a NEW category run between 2.5 and 1.9
times previous quarter, on a quarter to quarter basis
over the first two years. This is based on Revenue
Which Nemmy was responding? - the math and logic
challenged one, I see. Yikes, where to begin?
Kiggen did in fact call for $35 million in auctions in
1999. He may have subsequently reduced this ridulous
number to $20 million, but it's still
2) 6% was an estimate for commission rate based on
EBAY's 1998 numbers. Based on what I've read today about
AMZN's "complex" rate structure, it sounds high. Your
30% number was deliberately misleading as it
apparently applies to very small transactions.
don't believe anyone can yet describe the Sotheby's
site and how much AMZN's share of the commissions is.
Sotheby's is the agent, after all, so presumably they would
get the bulk of the commissions.
were only three basic points in your post, not six.
I still believe the effect of AMZN Auctions will be
negligble. I have not seen anything that supports the
argument for $200-$260 million in revenue by 2003. EBAY is
the First Mover and Market Leader and they only did
$47 million last year. The space is much more crowded
now, with UBID and PCLN and others, so how is AMZN
going to go from a $2 million run rate to 100 times
that in four years?
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Regarding auctions estimates, I Am Also Taking
into consideration historic growth rates.
earlier posted his estimate for the initial quarter of
auctions of several hundred thousand which is in
with initial quarter (that is those publicly reported)
book revenues for 1996.
We know that for the
Internet in general, Amazon in particular, the first few
years of a new category can
growth at a rate between 200 to 300% from quarter to
quarter, as a quick glance at
the SEC filings will
Some will argue that there is all this
competition. However, the higer-end market Amazon is
(and Meg Whitman has even spoken to this in an
interview with Upside Magazine) seems to be
them of a specific advantageous niche. Also, I would
say that overcoming (by building that
similar 1996 base into a $1 billion category- well
almost) competition with decades of experience
between them like BGP and BKS for online market share was
a much tougher feat than with their
competition, which I acknowledge as strong, for auctions.
if we consider the 200-300% quarter to quarter
NEW CATEGORY growth such as Amazon experienced over
the first couple of years in the book
Your post contains the following inaccuracies or
1) Your post neglects to cover due diligence on this
2) Your 6% as you admit is an
arbitrary number. Up to (and over) 30% is possible combined
fee. Upon examination of the fee chart we can see that
there are several types of fees. Listing fees,
completion fees, additional charges for bold type, or
featured link etc.
3) You neglect to produce
estimates for the joint Sotheby's site. Which already has
thousands of dealers globally under signed agreements to
sell exclusively (online) through Sotheby's
4) The fee structure is complex and can not be
accurately assessed through your model of 'average' price.
Median prices may be more informative. Your comment on
average price displays your naivite and poor
understanding of the online auctions business.
structures for Amazon and eBay are not (nearly) identical,
yet you, by your own admission are basing your post
for Amazon wrongly on the eBay fee
6) Mr. Kiggen's expectation was for $20,000,000 over
the first few quarters and not the figure you
Hope you enjoyed your weekend. I took some time
off, as well, got out of town for a bit.
said, with the fee combinations (listing + commission
on a sale + optional listing features) it is
possilbe to see on some items fees of up to 30 or even
40%. So your 6% seemed a bit curious to me.
should understand that the fee structure is different at
Amazon vs. eBay.
Also, I would like to ask you
about your comment of "generous" for your $50 per item
This makes sense if we were applying a % to everything
on an equal basis. However, if you examine the
Amazon fee structure you will see that they can actually
profit more from fees charged to lower-ticket items,
depending on where that item falls in the fee structure
chart. On a percentage basis.
Why are you saying
that $50 is generous? You should be focusing more on
the fee I would think and not the item's
I look forward to your explanation.
My post showed that even by using generous
numbers, the revenues would be negligible. I see I have to
Action items = 32,000
= 100% every 2 weeks (generous - not all items are
Commissions = 6% (generous)
Average price = $50 (very
generous, EBAY averages $30).
These numbers work out
to a current run rate of $624,000 per quarter, or
roughly 0.2% of total revenues.
Just a bit shy of
Jamie Kiggen's $35,000,000 estimate for the year.