This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Digital Skeptic: 'Amazon Dot-Org' as Vulnerable as Anyone Else

Stocks in this article: AMZN

"So you come to trust the markets to tell you what companies are or are not worth," he said. "The numbers are the numbers."

I pointed out that said numbers for Amazon are now hard for me understand: price-to-earnings ratios of roughly 3,600 times earnings and net margins that make T-bills look rich. Shapiro walked this skeptic through the history of selling technology to customers, with the lesson that what works one minute may simply does not work the next.

"Retailers come and go," he said.

Whatever works is what works
Shapiro pointed out that original discounters such as E.J. Korvette essentially invented selling at a lower retail price by leveraging the buying power of its many stores to sell below the manufacturer's suggested retail price, even as showroom merchandiser and catalog showroom fads brought many brands into one store.

"Or take Circuit City," Shapiro said. "That was a revolution when it started, this big box store of nothing but electronics. But faster than anybody realized -- even me -- markets figured out that it was not well run."

Shapiro was clear that he believes Amazon provides a top-quality experience and he is excited by the investments he sees the company making. He was also clear that he is neutral about the value of the company. But to him, the new line in retailing is no longer about how the Web competes with bricks-and-mortar stores or even for mobile selling.

"Randy Fry is the chairman of CEA now," he said "And my understanding is Fry's Electronics does well in stores and on the Web."

To Shapiro, the important distinction in retailing these days is about how much active support the seller gives to customers as they shop.

It's not the Web, it's the level of assistance
To Shapiro the story is how smart retailers are getting clever about leveraging whatever platform is at hand -- the Web or the phone or face-to-face -- to support the consumer purchase process. Some, including the Wal-Marts (WMT) of the world, prefer to let the customer do the heavy lifting. Others, such as Bang & Olufsen, bet charging to give support will pay.

"It is now all about assisted versus unassisted selling," he said.

So where does Amazon fit into this emerging assisted/unassisted spectrum?

"Only the market will tell," he said.

As Shapiro walked me out of his office, back to the show floor din, I tried one last time to get him to share my fears of a consumer tech world where a critical market organ was entering valuation territory I'd never seen before. He would not budge.

"It's just part of the process," he shrugged. "I can't help but be optimistic."

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs