116 ShowMetheMoney
stantly an drapi dly evolves. Amazon.com starte das a bookseller but
quickly expanded into a wide range of product lines such as toys,
electronics, home improvement, an deven a joint venture with Soth-
eby’s auction house. It attracts an average of as many as 12 million
unique monthly visitors to its site.
Amazon.com buys inventory from suppliers on a just-in-time ba-
sis, thus minimizing its inventory an dwarehousing costs, an dtakes
orders on its state-of-the-art Web site for shipping by its warehouse
teams. Whatever one thinks of this business model, it depends en-
tirely on the continuing success an dproliferation of the Internet as
an important way of doing consumer shopping.
While so far so good, the Internet’s brief history makes fore-
casting the future of Amazon.com an dother e-businesses more dif-
ficult for most people than it is to forecast the future of companies
such as GE and even Microsoft. Indeed, it is also difficult because
Amazon.com has never generate da profit. The book business is ma-
ture, slow-growing, an dfiercely competitive an dhas low profit mar-
gins; Amazon.com’s expansion into other businesses poses huge
start-up costs that will deepen those losses further in the short run,
though they may come roaring back in the form of huge profits in
the future.
Amazon.com’s growing diversity of businesses can fragment
managerial attention (much as your diversified portfolio can distract
you). If well managed, though, they could be as successful a group
as GE’s varie dlot. Despite the uncertainties, Amazon.com’s business
is intriguing. Those with the ability to learn more about it an dan
aptitude for understanding it would be foolish not to look a little
harder.
DECISION MAKING
Assessing information about a business an dits in dustry an drelate d
industries enables you to make rational judgments about the prob-
able payoffs versus the probable losses. Anything less is simply a toss
of the dice. Conservative decision makers take the position that no
option shoul dbe pursue dwithout a high level of positive evi dence
an dinformation. To put a number on it, they might argue that you
must have a degree of confidence in your judgment of, say, 90% (you
are 90% sure of the outcome an d10% unsure).
Less conservative people believe that the level of evidence re-