THIS DOESN"T ADD VALUE TO GDP.
We all realize there's an extremely small sliver of people in the
world who currently "don't like to shop" and are willing to pay for
it. There's an extremely large number of people who care about nickel
differences in a gallon of gas, but still buy Evian. The combined
cross-products of population x expected-efficiency gain is, in your
scenario, a fraction of the $12B, which is in turn a fraction of a
fraction of the retail economy, which is just one sector.
Greg, to you or me, a Billion dollars is Real Money. But it sure as
hell ain't in the macroeconomic picture, and it won't build anyone an
industry anytime soon.
Too often I'm hearing about e-commerce at the margins: from shaving a
few bucks off of bulk plastic purchases, to slapping a 20% markup on
wine for recommendations & gift wrapping. No: the real value is in
enabling more plastic stuff to be made -- say, libraries of part
designs and smaller-volume manufacturers coming on line -- or in
selling more wine -- the US drinks 1/8th of Europe's per-capita. If
you can *grow* the market -- and manage to become more than a content
sensation driven by advertising, the new Popular Mechanics of
plasticworking, or Wine Spectator, then you *might* become an
But notice that now you're in an old-line value-creating business,
not some magical side-effect of the Internet.
I'm frustrated by the number of zero-sum games out there. Every last
damn e-tailing plan, from sendwine to fogdog to etoys to drugstore
(to cite a single sheet of the WSJ yesterday) is in a battle to wrest
sales away from p-tailers.
It's like being in a mail-order mania back when zip codes and
barcoding caused a 'revolution' in junk mail delivery, post
USPS-privatization. None of these plans show signs of *expanding* the
market for anything. Amazon, for one, claims to be increasing the
size of the book trade, but I'd still insist the jury is out: reading
materials are still a luxury good for most of the public (remember,
an average of a single hardback per person per year per American!) --
and above trend-growth may just be boom times speaking.
And if they DO get substantial sales to move over, other crushing
effects come into play. Analysts everywhere -- the most recent I saw
was Gurley, who pumped AMZN at IPO -- love the fact it's
cash-positive by dint of reversing the float. WHY IN HELL WILL BOOK
DISTRIBUTORS CONTINUE TO ACCEPT NET-30 INVOICES? Just demand payment
on delivery, and Amazon's model -- in so many of its sectors -- is
further in the toilet!
eBay: show me a single category of sales that adding to net GDP, that
wouldn't have happened otherwise, and are now happening in
*substantial* volume? I'm not saying auctions will go away, just that
they *don't matter*.
Reducing the amount of time it takes to bake a pizza --now you're
talking productivity gains :-)
[the quartz-lamp FlashBake has long been able to bake a pizza in 90
seconds, but absolute gains never overwhelm cost-of-capital and pure
human inertia. Pizza joints don't have the cash, don't like cooking
with light, and don't think an extra ten minutes is losing them