3.6 KiB
| created_at | title | url | author | points | story_text | comment_text | num_comments | story_id | story_title | story_url | parent_id | created_at_i | _tags | objectID | year | |||
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| 2011-04-21T05:44:08.000Z | Thomas Friedman: Amazon.you (1999) | http://www.nytimes.com/1999/02/26/opinion/foreign-affairs-amazonyou.html?pagewanted=all&src=pm | cwan | 99 | 38 | 1303364648 |
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2469580 | 1999 |
The other accouterments were just as cheap: He pays an Internet service provider, ACES, $30 a month to house his very colorful Web site, and $30 a month to Americart to enable people to charge books on their credit cards over a secure server line. He pays his bank $50 a month to manage the credit card transactions, and has $40 a month printing costs, largely for his own monthly book newsletter.
''I have no employees,'' says Mr. Bowlin. ''My daughter does the accounting, I maintain the Web site and my wife does the shipping. Altogether, I only need to generate $150 a month in profits to cover all my expenses, and the rest is cream.''
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Once he was set up for business, Mr. Bowlin just spread the word among his neighbors, colleagues and friends that not only could he offer them everything Amazon.com did, but he could do it cheaper and make a profit from day one. He now has customers from 23 states and Canada. It is funny to go to his Web site and see it offering ''Millions Of Books At Great Prices,'' knowing that it is all being done out of his spare bedroom -- as a hobby!
Here's the deal: Amazon.com offers ''The Testament,'' by John Grisham, for 30 percent off retail ($19.57), plus $3.95 shipping and handling. Mr. Bowlin sells it for 35 percent off ($18.17) and $2.75 shipping and handling -- $2.60 less. How? Like Amazon, Mr. Bowlin buys ''The Testament'' from the wholesaler for 44 percent off retail, but since he has no overhead or advertising budget he can sell it for 35 percent off. He can deliver the book through the U.S. Postal Service within three days for only $1.63, so he makes $1.12 more on shipping for each sale. Total profit: $3.65 per book. Plus, says Mr. Bowlin, ''when you charge a book, I collect your money within a few days from Visa, but I don't have to pay my wholesaler for that book for 30 days, so I have a free loan which I earn interest on -- just like Amazon.''
Because his profit margins are razor-thin, Mr. Bowlin, like Amazon, needs repeat buyers. Amazon gets them by offering useful information about books. Mr. Bowlin does it by offering any government-certified nonprofit organization a donation of 10 percent of the purchase price of any book that any nonprofit or its members buy through him.
So the next time your broker tells you that this or that Internet retailing stock is actually worth some crazy multiples, just think for a moment about how many Lyle Bowlins there already are out there, and how many more there will be, to eat away at the profit margins of whatever Internet retailer you can imagine. It only costs them $150 a month and they can do it as a hobby!
Or think about it like this: For about the cost of one share of Amazon.com, you can be Amazon.com.