tag:blogger.com,1999:blog-16596192.post5475143557076182807..comments2008-04-05T21:52:50.407-07:00Thomas Aquinashttp://www.blogger.com/profile/15804830439308912945agentroark@gmail.comBlogger2125tag:blogger.com,1999:blog-16596192.post-40950833782216555082008-04-05T21:50:00.000-07:002008-04-05T21:50:00.000-07:00I have been seriously looking at Overstock recently and I would agree with George that Overstock doesn't have a moat. If you really want to stretch the definition then maybe it has a tiny moat but I personally wouldn't bank on it. The only thing that resembles a moat is possibly their expertise in sourcing overstocked/discounted/excess/etc inventory.<BR/><BR/>Having said that, I think it is unreasonable to expect a smal company like OSTK to have a moat. Yes, Warren Buffett looks for a moat and certainly having a moat is a big thing, but it isn't as common for small companies. For example, when Amazon was the size of Overstock, I would argue that it didn't have a moat either (in fact, it was worse for Amazon back then because there were far more online retailers and investors were throwing huge amounts of money on capital investments by their competitors).<BR/>---------<BR/><BR/>On another note, to answer George's question about why Amazon won't do what overstock is doing, well, my guess is that they wouldn't want to cannibalize their full-priced item sales. If you have excess inventory items priced cheaper than full-priced items, buyers will go for the cheaper one.<BR/><BR/>This is likely why (physical) bookstores rarely sell used and new books in the same store. A lot of the "normal" book stores sell the new, fully priced, book and rarely carry used books. Conversely, if you ever walk into a used book store, they rarely have new books. <BR/><BR/>The same thing happens in clothing, where factory outlet stores are often branded seperately and kept far away from the regular stores.<BR/><BR/><BR/>Having said all that, I see Ebay competing with overstock. I don't quite see the same branding problems with Ebay.Sivaram Velauthapillaihttp://www.blogger.com/profile/06361276466660862882noreply@blogger.comtag:blogger.com,1999:blog-16596192.post-67665231222241925652008-03-30T20:35:00.000-07:002008-03-30T20:35:00.000-07:00Why couldn't Amazon do the same thing as Overstock and undercut the Overstock prices? Amazon's used items section and aStore already appear to be doing that.<BR/><BR/>As for eBay, it's not the manufacturers selling on eBay, it's eBay PowerSellers buying from companies with surplus goods and odd lots. These PowerSellers then do all the work of listing items on eBay and dealing with customer service. Mike, I really recommend that you research this further. I know your family likes Overstock, but be careful on this one. Online business is hyper competitive.Georgehttp://www.blogger.com/profile/13592313908014923842noreply@blogger.com