Re: Loose Cannon: Humble Pie for a Doubting Thomas (DIRECT Newsline Jan. 28).
Don’t despair too much about your Amazon calls. It is reported that $16 million in fourth quarter revenue came from currency redemption…Euros. If that’s true, if you discount that amount, you have an $11 million loss.
But for the substantial amount of “bricks” that Amazon owns, and the Sept. 11 attack, which scared people out of the malls, things might have been different.
Bezos and company has been playing fast and loose with accounting practices since the beginning, e.g. charging fulfillment as a marketing expense.
You and I may end up looking like fools, but I think the greater fools are those who soon will rush to invest in Amazon stock. Go short.
Michael Nossaman
President
Varro Press
Shawnee Mission, KS
Sounds like you’re whining, at best.
At worst, you appear disappointed that Amazon reported solid results. And at midpoint, you ought to at least adopt a tone of hopeful regard that Amazon’s business model is turning the corner. Remember, Bezos has suggested that it would. No Enron here.
Juan Lulli
I like the fact that you’re willing to go out on the limb, and then not take yourself seriously when you’re off-base. Keep it up!
Jim Wheaton
Wheaton Consulting Group
Chapel Hill, NC
I like to look at dot coms through the lens of direct marketing and its time honored tools and techniques.
Amazon.com’s $14.00 per customer cost of acquisition is well in line with what many catalog and mail order marketers pay per customer through traditional channels. Most catalogs would love to have $134.00 average order for new customers.
I have to wonder, however, how Amazon.com calculates the cost of acquisition? They have so many sources of revenue. Direct marketers look at each mailing, each channel, each source individually. The unique cost of acquiring a customer is calculated for each. I’d like to see this onion peeled back a little for Amazon.com.
Let me give an example. Amazon.com claims 250,000 affiliate web sites. The cost of administering the program is minimal, as it is mainly managed by technology. There are some promotional expenses in developing all of those buttons that you see across the web that link back to Amazon web site.
Each site is paid an average of 5% of book sales. Assuming an average order size of $134.00, the cost to Amazon is $6.70 per order. If that is included in Amazon.com’s overall acquisition number, this would help to offset what must be some substantially higher acquisition costs. I’d like to see those broken down and learn what they are and how high they may be.
In my opinion, the real key to Amazon.com’s success will come from maintaining a high lifetime value of a customer. Is Amazon.com getting a second, third, fourth order from each customer? This is where the real growth in revenue should come from. Knowing the answer to this would help us to understand the trend and future for Amazon.com, assuming that they can keep their operating costs in line.
Ron Jacobs
President
Jacobs & Clevenger
Network
