Dueling Fools
June 30, 1999

Amazing Amazon
The Bear Rebuttal
by Rick Aristotle Munarriz ([email protected])

My buddy Paul and I seem to have floored you with rhetorical questions. I'm asking "What if?" while he's pondering "Why not?" Before you counter with "Who cares?" I think I'd better get to some of my fellow Duelist's shortcomings.

I'm baffled when Paul points out how Amazon's size will ensure efficiencies in customer service. That's already not true. If you buy a book online from Barnes & Noble or Borders you have the option of returning it to your nearest physical store. If you buy from Amazon, you have to ship it back to Amazon. Unless you live a reasonably short drive away from Seattle. And don't get me started on how bigger companies provide superior customer service. That just hasn't been my experience on or off line.

Paul likens the company's acquisition strategy to Monopoly. I suggest Amazon be the thimble piece because it's going to get pricked sooner rather than later. If Paul thinks the best strategy is to just buy whatever property you land on, I'd like to challenge my chum to a game of the Parker Brothers classic. I've played with folks who load up on Baltic Avenue and the utilities only to go broke in the process. Gluttony without logic or direction is the guy who erupts at the all-night smorgasbord.

Am I supposed to believe that there is glory in the purchase of Pets.com so the company can proclaim that it is the largest online retailer in books, videos, music, and smoked pig ear dog treats? Allow me to take this one step further. If Bezos is so proficient at dominating new markets, why is he buying out companies like drugstore.com rather than growing them organically?

I'll tell you why. In books, movies, and music, Amazon has exhausted the same three areas that the offline superstores have capitalized on. Congrats. The hydra-headed e-store rests. But to suggest anything more is as pompous as it is naive. If eToys <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ETYS)") else Response.Write("(Nasdaq: ETYS)") end if %> were to begin selling books, would that spell the end of Amazon.com's dominance? Of course not.

Despite all this grasping, Amazon's sales growth continues to slow. Standard & Poor's expects revenues to rise just 140% this year. What? How can I make the words "just" and "140%" bedmates? 140% is pretty good, of course, but not to a company that grew sales 30-fold its first full year in service. So Amazon is buying up sites and offering auctions and online greeting cards. That begs the next question: Who isn't?

Finally, Paul amazes me at his ability to say that Amazon doesn't pay rent -- and with a straight face no less. Of course Amazon pays rent. How else do you think a distant company can feign a sense of community? It pays millions to the portals. It pays as much as 15% off the top to even the smallest of hobbyist sites through its Affiliates Program. So, of course Amazon pays for occupancy, and a lot more per sale than the bricks-and-mortar stores it was supposed to dominate. How else do you think they keep margins so low?

What if?

Don't ask -- you know the answer.

Next: Vote Results

Also Check Out the Duel Flashback: Toys "R" Us