Contents ... National Enquirer Edition
"How I Drove Levi Offline"

E-commerce Firms See Red... OK, I’m exaggerating a bit. I didn't really drive Levi offline. But I did buy Levis and Dockers from Levi Straus within the past few months. And Levi just announced that it will halt online sales of Levis and Dockers after Christmas because, according to a Levi spokesman, "during the past year, it became clear that the cost of running a truly world-class e-commerce business is unaffordable right now as we look at competing priorities." (San Francisco Chronicle, Oct 29, 1999). ... You connect the dots.

Amazon.com, a publicly traded company just reported a higher than expected third quarter loss of $197 million on sales of $356 million, at least partially due to the expenditure of $300 million this year to build seven automated warehouses. Surprisingly, Amazon indicated that it expected its book business to become profitable in the fourth quarter, which led the NYT to write: "Analysts seized on that prediction -- the first ever in which Amazon used the word 'profit' -- as some consolation to investors who are wearying of ever widening losses." (Oct 28, 1999)

Webvan, the Internet grocery store, has recently filed an amended prospectus for its initial public offering after its original attempt was aborted because some financial projections by Goldman Sachs became publicly available. According to the WSJ (Oct 18, 1999), these forecasts showed revenues of $11.9 million in 1999, $120 million in 2000 and $518.2 million in 2001 with losses of $73.8 million in 1999, $154.3 million in 2000 and $302 million in 2001. And the article delicately concluded: "Even though institutional investors base many of their decisions on such projections, Webvan asserted in its amended prospectus that 'you should not rely on these projections.'" ... You gotta smile because much of this red ink is flowing into real estate, not only for warehousing but also for office rents for Webvan's marketing and technology services. Hey, virtual commerce is good for real commerce.

--Peter