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JIT, August 22, 1999 :: Ben Turner's Soapbox

 

the soapbox @ benturner.com
archived soapbox: August 22, 1999
"JIT" [permalink]
    keywords: stock market, Amazon, internet
    soapbox #: 201
    written: August 22, 1999
    words: 1945

"JIT", an Essay

The main four Internet stocks are Yahoo! (YHOO), Amazon.com (AMZN), eBay (EBAY), and American OnLine (AOL). Let's forget that I wanted to buy AOL when it was cheap ($60-$70) and it dipped a bit below $80 and is now at $140 after only a couple months. Would I use AOL? Well, can it get me DSL or cable access faster?

Let's forget that I'm currently selling EBAY short, simply because I see no way it can justify its stock price with its financials and future potential.

As for YHOO, I'm fairly positive about it, but I won't invest in it. It's positioning itself well, in my opinion.

AMZN is the strange one for me. I don't know what to think of it. In the past, I've been against the stock, but for the web site.

I just used AMZN again last weekend after not buying anything for awhile. I had plenty of books to read (and I still do) and it's not like most music is hard to find these days if you know where to look. But whenever I come back to AMZN, I realize just how great a site it is to use.

Maybe I just have a newfound respect for it after the web design team I was a part of recently completed a huge database-driven site, DiningDepot.com. The project was hard for me. I'd never done a site like that before. It seriously changes the way you look at things. It changes things such that Amazon.com made what I spent months on look easy.

Also fresh on my mind was an article about shopping cart web sites and how best to design them...

I ordered three books (Contrarian Investing, Reminiscences of a Stock Operator, and A Debt to Pleasure) and three albums ("The Ultimately Empty Million Pounds" and "Hed Phone Sex" by Funki Porcini, and "Big Loada" by Squarepusher). For those shouting sacrilege that I actually bought an album, I qualify it by saying that these albums are not exactly easy to find...

The site design of Amazon.com is such that it's easy to move around and get to where you want to go and get the information you need for the products that interest you. I searched for artists and authors I liked, read the customer reviews (I only read the negative reviews -- they're much more revealing), and added the items to my shopping cart, all done in a minimal amount of scrolling and clicking. What's more, I looked at the lists of other products that customers also purchased when they bought whatever it was I was looking at. It at least gives you more ideas and more criteria to work with.

Finally I felt like I was done so I checked out. Of course, Amazon.com conveniently saves all my shipping and billing addresses, so it was basically just clicking through and confirming. I like that. It gives me a feeling of permanence at the site. I'm a regular. I'm in and out of the most boring aspect of it, the order screens, in no time. Plus, if I need to add profiles, I can do that too, and change them easily based on where I'm geographically located or whatever.

Amazon.com uses the USPS, which I trust more than UPS, strangely enough. It's much cheaper, too. UPS needs a swift kick in the ass. FedEx gives YOU a swift kick in the ass. USPS is nice.

My only real complaint with the whole process is that your shopping cart is not available on each screen as you go through the site. You have to go to the shopping cart section in order to see the list of stuff you have. As the article I posted the URL for above said, having a permanently visible shopping cart box helps the user out a lot.

So why exactly am I talking about Amazon.com of all things? I don't know. I just enjoy the experience a lot. I can't say that about many sites, honestly. I mean, shopping for computer components online isn't exactly the most user-friendly experience. Sometimes I wonder if they actually ever got my order until it miraculously ends up on my doorstep somehow. You know whoever works on the Amazon.com site makes serious loot keeping that thing easy to use.

It fucking makes a difference, and I know this both as a customer and as a designer. It's one of the hardest things to design a site that's easy-to-use, and I've always enjoyed using Amazon.com. I really wish more sites were like it.

I noticed this time that Amazon.com also has wish lists now, which lets you create a list of books and music and other items you want but haven't gotten yet. Obviously, this is useful for friends and family to go to Amazon.com and order the products for your birthday or Christmas or whatever. Works out great for Amazon.com, too.

Amazon.com, which I always thought should add to its logo some one-breasted Amazonian archer or something (amazai), decided earlier this year that it would take on the world by offering anything and everything. Comparisons were made to Wal-Mart, which then later announced it would start selling online (I wish I owned Wal-Mart...) too. Amazon.com started offering auctions, à la eBay, just as other sites like Yahoo! did. So it was taking on the big behemoth of auctions, along with the big behemoth of mammoth chain stores, and virtually anyone else who had the clout to take away Amazon.com's market share.

So I guess this is why I don't like AMZN as a stock... What the hey is it doing? It's painting a big target on its chest and playing away from its strengths, isn't it? I mean, if I want auctions, I'll go to eBay (which is under fire because Yahoo! has a rapidly-growing auction member base) and if I want general items, I'll go to Sam's or something. But when I want music and books, Amazon.com is the only place I go to.

I mean, where else is there? The bricks and mortar companies like WaldenBooks and B. Dalton? No... Barnes & Noble or Borders (the company at which big bad brat Cam works at and which has pussied out of the online competition)? No, I don't like their sites as much, and I'm already established at Amazon.com. They seem to use the same distributors as Amazon.com though, as the prices and selections are strangely identical...

Let me just say that I think Amazon.com could somehow embrace this idea: when I said I hadn't been to Amazon.com much for awhile, that wasn't true. I go to Amazon.com a LOT, but I hadn't been BUYING anything. What I use it for is for instant information, and it really is unparalleled in its usefulness there. Since I find a lot of random music tracks online, Amazon.com is where I go to figure out who made them, and what album they were on, when they were made, etc. If someone suggests a book or album to me, I go to Amazon.com to see what other people have to say about it, or listen to the tracks via RealPlayer (RealNetworks, RNWK, sucks major ass, by the way).

Perhaps Amazon.com could embrace this sort of usage. I'm not buying anything, but I AM spending time on the site reading lots of reviews and following links to related books/albums. Amazon.com could step up its advertising or something (yes yes, the only people to benefit from banners are the companies selling space for them). It could purchase whoever owns lyrics.ch, the former huge repository for song lyrics (sigh, I miss it so) so people like me would go there even more to see what the lyrics are to my favorite songs. Amazon.com could even start regular transactions between its customers and itself, so lyric sheet requests would cost like a nickel or something and it would instantly go on the user's tab... Sure, I'd prefer it were free, but obviously record labels aren't going to let a big company like Amazon.com post free lyrics. A nickel ain't so bad in that context.

Did you know Amazon.com as of today has no P/E ratio? It also has a $22 billion market capitalization or something disgusting like that. Amazon.com has no earnings because it chooses to defer positive earnings in favor of gaining market share. Never mind the fact that it attempts to gain market share by getting thrashed by companies that already reign in their own separate arenas... Amazon.com has a beta (risk factor) of 3, and while this doesn't even come close to eBay's beta of 6 and P/E of 6500, it's still ridiculously priced as a stock. People tout future growth as an incentive to invest now, but good heavens, considering the last reports for AMZN and EBAY already showed that expectation exceeded growth, I don't know. Perhaps the day of reckoning for these old Internet stocks is coming, to be replaced by the new contenders? Motley Fool loves both AMZN and EBAY, even though there was some negativity expressed towards eBay recently. As happy-cheery as they are, and as foolproof as their strategies seem to be, they DID used to own IOM (Iomega), which anyone who uses a computer will tell you released perhaps the trashiest computer product ever. Notoriously so...

What have I learned from all this? Well, basically, predicting the end of the froth in Net stocks is dumb and will never work (and of course, that's what I'm trying to do...but at least I've changed my current positions somewhat to include some undervalued infrastructure stocks), even if it is inevitable. But mainly, I think that sites like Amazon.com can be surpassed by new contenders if those contenders are smart, fast, and wily enough. There's certainly plenty of room for improvement. I see it myself, plain as day. Amazon.com ain't no AOL or Yahoo! when it comes to expanding. Who's going to capitalize? We need fresh blood...

But at least the new kids will have learned what parts are guaranteed to work: a flexible and easy-to-use web site helps a lot, as do the sorts of Just-In-Time systems companies like Amazon.com use to conduct their service. Also, value-adding features that make the customer feel more at home and loyal to a site don't hurt.

Maybe I'm already old-fashioned, but it seems to me, in my experience particularly, that a satisfied customer makes a successful company that makes an uptrending stock price. No shortcuts. After all, isn't that REALLY the main thing about the Internet? Sure, the 'Net makes companies more efficient and multinational, but none of that means shit if your customers leave for greener pastures.

It's easy to forget what you really DO know about a company (your own experiences with their products and services) when you start learning about the manipulated Wall Street aspect of it. Being a customer of a company gives you great insight into how the company's doing. Maybe I need to trust my own gut feeling on fundamentals instead of misapplying all this hocus pocus I've been learning. Nahhhhh...

I sure do love this shit. :)


 
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