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NEW YORK -- In another busy month of new initiatives, Amazon.com announced the upcomingdebut of a co-branded credit card, launched four new on-line stores and acquired a North Dakota-based tool and construction equipment cataloger for an undisclosed sum to complementone of its new offerings.

While it continues to push toward broader merchandise offerings, however, it pushes the prospect of profitability further into the future. At a midtown Manhattan press conference to unveil the new product offerings, Amazon founderand ceo Jeff Bezos admitted it will "take time for these new investments to pay off."

The four new stores are:

* Software, which has beenincorporated into the existing Consumer Electronics store, includes approximately 10,000 titles for educational, business andrecreational uses;

* Video Games, added as a sub-category to the Toys & Games store that was launched this past summer, offers approximately 1,000 game titles forSega, Nintendo and other home gaming systems;

* Gift Ideas, presented as a feature in the left-side vertical "Browse" box, allows shoppers to search for gifts from Amazon stores for loved ones based on therecipient's personality type, such as "The One Who Has It All" or the "Culture Vulture," among nine others;

* Home Improvement, the most ambitious of the newdepartments, offering a selection of 6,000 skus of tools and equipment for do-it-youselfers to professional builders.

Other new offerings include: DVD products, which are now partof the Video store; the "Pokemon Store"--another new sub-category being added to Amazon's Toys & Games store--where shoppers can find andbuy "anything Pokemon," store general manager Harrison Miller said. Amazon is the only exclusive pure play e-commerce site that sells Pokemon trading cardscreated by Wizards of the Coast, Miller said.

And the day after it rolled out its new stores, Amazon announced the early 2000 premiere of a co-brandedcredit card with NextCard. The five-year deal for the co-branded credit card is expected to generate about million in fees by tapping into Amazon's 13 million-customer database. Amazon hasalso obtained a warrant to acquire up to 4.4 million shares of NextCard common stock, a stake of approximately 9.9%.

The big question in the financial community is how long it will take for these investments to make thecompany profitable.

In October, investors were confounded when Amazon said it would triple its spendingfor marketing initiatives and increase its spending considerably to expand on its product offerings and business opportunities. While analysts feel comfortable about most of Amazon'snew initiatives because of their likeness to Amazon's original merchandising approach, the Home Improvement store is stirring the most uneasefor a number of reasons.

"Shareholders irritated with third quarter results will want to understand the Amazon vision," said Evie Dykema, Forrester Research analyst. "Are they tryingto be all things to all people? Or will they focus on defending their franchise with key customersgroups, as bricks-and-mortar one-stop shops such as Wal-Mart and Federated invest heavily on line?"

She suggested that instead of pursuing additional category expansion, Amazonshould focus on meeting the needs of specific lifestyle segments. "For them, these segments will fall within the overall umbrella of technology optimists notrequiring a bricks-and-mortar presence. If Amazon doesn't keep their shareholders happy, their stock price will plummet, hurting their ability to expand into new categories in thefuture."

Jupiter Communications analyst Melissa Shoris concerned that Home Improvement products like the ones Amazon is selling--from hammers to hard hats to power drills to 500-lb. table saws--do not fall into the same price point areas as Amazon's other offerings.

"It just doesn't fit withAmazon's current product portfolio," Shor said. "It's much more research intensive; it requires a different level of front-end customer service inthat you'd need to check the weight ofnails and not just what the hottest book of the month is."

According to Jupiter research, home improvement sales on line are thus far "very insignificant, basically at zero," Shor explained.Next year, Jupiter projects it will rise to million, which Shor said is "nothing huge;" by 2003 on-line home improvement sales are expected to reach million.

"It's abrand-new category," Shor said. "The most major player in the category, Home Depot, is not even e-commerce enabled yet. But if anything, Amazon willhelp build awareness on line in the category."

On Amazon's behalf,Shor did state that Amazon's recent acquisition of Tool Crib of the North in Grand Forks, N.D., the tool andequipment cataloger, is "the right approach because they don't have to piecemeal it together." At least for the time being, Amazon will use the Tool Crib of the North's distribution center plus twoof its own six fulfillment sites nationwide to process and ship out customers' orders for any of the new store's 6,000 offerings. In its first moveoutside e-commerce, Amazon also plans to continue Tool Crib's catalogbusiness.

Home Depot, which currently operates a Web site featuring strictly product information, is said to be launching its own e-commerce site sometime next spring, strategically the timeof year when most sales activity in the category occurs mainly because of favorable weather conditions in most parts of the country.

The only other retaileron line in the home improvement category that could create serious competition this holiday for Amazon is Sears, analysts agreed.

"Inthe '70s and '80s when Sears became big, it lost its focus," said Robert Antall, executive vp at the consulting firm LakeWest Group. "[Sears chairman andceo Arthur] Martinez focused it on theapparel business, and the store did well there for a while. But the home improvement area on line is still very new. There seems tobe still no big distinction [between Sears' and Amazon's offerings]. Whether someone can become the Sears of the Internet in this category is yet to be seen. The jury for that is still out."

To lure potential customers to its Home Improvement online business, Amazon is attempting to take some of the hassle out of dealing with larger items.If customers want to return a larger item such as a table saw, they can either e-mail orcall Amazon and the company will authorize a return with a call ticket andhave UPS pick it up at no charge.

"We do absorb that return cost," group product manager Rich Matthews told DSN. "But the larger ticket items are typically highly considered purchases, sowe consider that an advantage and less of a risk for us."

In addition, Amazon is offering attractive shipping and handling rates for HomeImprovement store orders: a flat .95 per order. Whether a shopper buys a bag of nailsor a bulky generator, he will pay the same .95 shipping and handling cost across the board. Bezos said the policy will run for an "indefinite" term and won't end after Christmas.

Ernst & Young recently conducted a study on on-line customers' preferences, and 51% of those surveyed said that shipping cost were too highin 1998.

"This .95 offer is definitely a good response to whatcustomers are saying they want, so by doing this Amazon is clearly trying to buy customer loyalty," said Tom Reynolds, Ernst & Young national practice leader for retailand consumer products consulting. "But from a business perspective, I don't know how long this kind of model could be sustained. Amazon'scall for a long time has been that they will soon break even, and that's yet to be seen. But there seems to beno indication that the market will stop rewarding them."