Jeff Barr in the news...

Gordon Mohr gojomo at usa.net
Fri Apr 25 08:06:49 PDT 2003


Adam Beberg writes:
> Speaking of Amazon, whenever I poke around there to pricecheck something, I
> ALWAYS find it 15-90% cheaper on their "Used & New".
> 
> Granted they are just saving me a trip to another site, but even if their
> listing fee is an absurd 10%, Amazon still has little to zero hope of
> maintaining margins even near what bricks and browse stores have.

You're using the wrong denominator. 

A 10% of product price listing fee might still be ten times Amazon's 
cost of providing the listing, resulting in 90% margins. See for example
EBay -- making 80%+ gross margins even though their per-item fees are
~5% or less of the product price. 

What bricks & browse stores can you name which make 80%+ gross margins?

You'll also see if you dig through Amazon's reports that they make higher
margins through their "Marketplace" sales than when they sell something 
directly. 

So you're drawing exactly the wrong lesson from the "Used & New" feature,
which actually serves to push Amazon's margins up in the EBay direction, 
rather than down in the Bricks & Mortar direction.

- Gordon



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