94 lines
3.6 KiB
Markdown
94 lines
3.6 KiB
Markdown
---
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created_at: '2011-04-21T05:44:08.000Z'
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title: 'Thomas Friedman: Amazon.you (1999)'
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url: http://www.nytimes.com/1999/02/26/opinion/foreign-affairs-amazonyou.html?pagewanted=all&src=pm
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author: cwan
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points: 99
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story_text: ''
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comment_text:
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num_comments: 38
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story_id:
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story_title:
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story_url:
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parent_id:
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created_at_i: 1303364648
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_tags:
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- story
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- author_cwan
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- story_2469580
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objectID: '2469580'
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year: 1999
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---
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The other accouterments were just as cheap: He pays an Internet service
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provider, ACES, $30 a month to house his very colorful Web site, and $30
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a month to Americart to enable people to charge books on their credit
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cards over a secure server line. He pays his bank $50 a month to manage
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the credit card transactions, and has $40 a month printing costs,
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largely for his own monthly book newsletter.
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''I have no employees,'' says Mr. Bowlin. ''My daughter does the
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accounting, I maintain the Web site and my wife does the shipping.
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Altogether, I only need to generate $150 a month in profits to cover all
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my expenses, and the rest is cream.''
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## Newsletter Sign Up
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[Continue reading the main story](#continues-post-newsletter)
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###
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[View all New York Times newsletters.](/newsletters)
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Once he was set up for business, Mr. Bowlin just spread the word among
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his neighbors, colleagues and friends that not only could he offer them
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everything Amazon.com did, but he could do it cheaper and make a profit
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from day one. He now has customers from 23 states and Canada. It is
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funny to go to his Web site and see it offering ''Millions Of Books At
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Great Prices,'' knowing that it is all being done out of his spare
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bedroom -- as a hobby\!
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Here's the deal: Amazon.com offers ''The Testament,'' by John Grisham,
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for 30 percent off retail ($19.57), plus $3.95 shipping and handling.
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Mr. Bowlin sells it for 35 percent off ($18.17) and $2.75 shipping and
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handling -- $2.60 less. How? Like Amazon, Mr. Bowlin buys ''The
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Testament'' from the wholesaler for 44 percent off retail, but since he
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has no overhead or advertising budget he can sell it for 35 percent off.
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He can deliver the book through the U.S. Postal Service within three
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days for only $1.63, so he makes $1.12 more on shipping for each sale.
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Total profit: $3.65 per book. Plus, says Mr. Bowlin, ''when you charge a
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book, I collect your money within a few days from Visa, but I don't have
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to pay my wholesaler for that book for 30 days, so I have a free loan
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which I earn interest on -- just like Amazon.''
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Because his profit margins are razor-thin, Mr. Bowlin, like Amazon,
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needs repeat buyers. Amazon gets them by offering useful information
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about books. Mr. Bowlin does it by offering any government-certified
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nonprofit organization a donation of 10 percent of the purchase price of
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any book that any nonprofit or its members buy through him.
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So the next time your broker tells you that this or that Internet
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retailing stock is actually worth some crazy multiples, just think for a
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moment about how many Lyle Bowlins there already are out there, and how
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many more there will be, to eat away at the profit margins of whatever
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Internet retailer you can imagine. It only costs them $150 a month and
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they can do it as a hobby\!
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Or think about it like this: For about the cost of one share of
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Amazon.com, you can be Amazon.com.
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[Continue reading the main story](#whats-next)
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