I agree with the article, but Amazon is more monopsony than monopoly. AMZN is like Walmart--they're the buyer producers must sell to in order to get to the consumer. They control access to the market. And as we've seen with Walmart, monopsony power can be very destructive to producers.
So why not make a competing company? Just tell people that if they shop from you, they won't get the excellent speed, service and low prices they've come to expect from Amazon, but that they will benefit in other ways, somehow.
If you can't explain what those benefits are well enough to convince people to freely choose to buy from your company instead, you are not helping to make the world a better place. If you advocate running to the government to get them to smack down others who are more successful, you're just limiting choice, and that makes you part of the problem. (Assuming that you agree that the point of technology is to make lives easier, longer, more enjoyable, etc.)
Notice what Jobs did with regarding the Microsoft antitrust lawsuit stuff. He was very careful not to let all that groupthink pile on and rule his mind. Instead of joining in with all that sour grapes stuff, he focused on creating the future instead.
If the company achieved their success via externality of various costs that their competitor is unable or unwilling to, then you'd have an unfair market. This is where govt needs to step in.
if walmart is allowed to pay such a low wage to their workers that they have to be on food stamps, is it still "fair" to society? They surely gain more customers that way, but at the cost of tax payers - mum and dad corner stores or small groceries that don't pay such low wages can't compete.
"Last year, Amazon captured nearly $1 of every $2 Americans spent online. As recently as 2015, most people looking to buy something online started at a search engine. Today, a majority go straight to Amazon."
You know all those scifi movies where corporations in the future are the government in space and have giant armies and space ships? Well at this rate I am betting one of those solar empires will have "Amazon" on its flag.
In all seriousness though, people need to take the rise of companies like amazon and really think hard what we are loosing by enabling them to take over our lives. This is not a rant against corporations though, or even Amazon or the great people that work there, but its more about what we as a society allow.
> people need to take the rise of companies like amazon and really think hard
Consumers don't think, they consume. Much like zombies. If you want consciousness in the system that has to come from gasp government. But that would be against what we all stand for. And it will continue to win until there is some major paradigm change. It has nothing to do with any choices, and everything to do with consumer and corporate behavior.
>Consumers don't think, they consume. Much like zombies.
Nearly every part of that statement is false.
>If you want consciousness in the system that has to come from gasp government.
So, the masses are too stupid to know where to buy toilet-paper, but they are intelligent enough to elect the right politicians whom will enforce the right regulations?
I avoid the cognitive dissonance of consumption by explicitly not thinking of the environmental and societal impact my purchases make. What is false about the statement, "consumer's don't think, they consume"?
Well there is thinking and then there is thinking. Consumers on the mass consumer level, my self included, think about how we can get the most benefit from the limited amount of resources that we have. So how can I get good shit for the cheapest price. I am not concerned for instance about the global effect of my consumption or even local. That's how consumers in general think on the mass scale. Now you can say that this is not all consumers, but that doesn't really change the effects of their actions. Sure there are wealthy sub-genre of consumers that might think local. But that's not he mass of them.
For a corporation like Amazon or Walmart to survive they only need the masses. The small minority of conscious consumers don't affect them... and even if they do, it's not as if lots of conscious consumers don't buy from Amazon and Walmart anyway, despite the fact that they might disagree with their business practices or business philosophy. Consumers in general in America and Europe don't care that much about these things... and even if they do massive corporations can buy other corporations and sell to them through that brand while still furthering their own business philosophy, business practices: example Whole Foods.
IMO, that statement doesn't become "false" by the existence of an amputee or someone wheelchair-bound.
Similarly, I believe the "consumers..." thought has relevance and information content even With awareness that there exists a particularly thoughtful consumer.
There is a vast difference between a person and groups of people. If there was only one thing to ever get upset about then sure crowds would resemble people.
The problem is everything has issues when you look close enough so you can only meaningful think about a tiny fraction of these isssues at a time. Net result Exxon did not even need to change it's name after the Exxon Valdez oil spill. BP, paid a fine and then moved on after causeing 10's of billions in dammages without any real consumer backlash. In part because which oil company are you going to turn to?
People spend more time on each of their consumer decisions than evaluating each of the items on a political candidate's platform (despite consumer decisions far outnumbering platform positions). Handing the economy over to government is eliminating individual agency and practically all semblance of accountability.
I remember hearing about a fictional story about a mediocre backwater planet called YourNameHere. No company had ever purchased the planet or planetary naming rights because it's a rather dull planet. Now, corporate-named planets litter the known galaxy. There is literally no planet, asteroid, or moon without a name on it. Planet Starbucks, the Amazon System, the Microsoft Belt.
Somebody on YourNameHere gets wise to this. Suddenly, they have something worth a lot of money -- being the last place in the known galaxy without a corporate name on it, worthless backwater mediocrity be damned.
One thing that still makes me wonder, is what's the structure behind the rise a separate silos (amazon = online) that depletes energy from other silos (physical stores) to then .. reimplement them because they were useful.
To be honest though, as far as companies go, one that claims to be radically focused on the customer isn't the worst kind of company to become a sci-fi overlord.
"Consider a turkey that is fed every day. Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race 'looking out for its best interests,' as a politician would say."
One fascinating niche are online retailers which fill market voids Amazon deliberately creates out of corporate policy. For instance in the US one can readily purchase firearms and ammunition through the internet. Due to various legal formalities, Amazon won't touch that particular market segment. Visiting sites like www.sgammo.com, www.palmettostatearmory.com, or www.midwayusa.com, is like stepping into an uncanny PHP laden alternate reality where Amazon never existed. This federation of specialized retailers offers a glimpse into what the online shopping experience _could_ have become, if it weren't for Amazon's hegemony.
It doesn't sound that great, to be honest. None of those tiny institutions could ever reach the same amount of consumer trust that Amazon has engendered with its customer service/experience.
Agreed, it's one of those "be careful what you wish for" scenarios. A bunch of smaller retailers with disjointed UX and idiosyncratic service policies is the alternative to a giant monolith such as Amazon.
Or, you know, we could work together to build a standard protocol so anyone could start an online retailing site and interop with any other online marketplace.
Lack of cooperation builds these monopolies like Google and Amazon.
If I recall correctly, US telcos couldn't even agree on which mobile payment system to use, because every company wanted to partner with someone and get a larger piece of the pie. Now it seems the only mobile payment system anyone actually uses is Apple Pay.
That anecdote aside, I agree it would be awesome if such a standard existed. I just don't see it working out since retail is such a cut throat business and everyone will be looking to undercut their competitors.
Remember, competition is good for the consumer and bad for companies.
> It doesn't sound that great, to be honest. None of those tiny institutions could ever reach the same amount of consumer trust that Amazon has engendered with its customer service/experience.
You are paying for that trust.
For instance, right now, Amazon is charging $69.00 for a shoe we sell for $62.25 (including the item we list on their site, including shipping, etc.)
This is universally true for every item Amazon has cut us out on. It defaults to "Ships and Sold from Amazon.com" despite the fact they are the higher price.
Personally, at this point, I'd rather buy from smaller retailers. If you ever look outside of Amazon for "niche" items you'll start to notice Amazon stops being cheaper. Try looking at some of the clothing brands, the Guns&Ammo dystopia is unique to their industry. :P
To be honest, I'm surprised their valuation is what it is given I genuinely don't see how they can raise prices more than they have. Charging an extra 10% over your competitors is really already pushing the envelope as far as can be done.
I think comparing online clothing retailers to firearms retailers is a bit of an apples to oranges comparison. Everyone needs clothing, firearms not so much... Because of this clothing retailers have a much larger client base to draw from, and thus there's more money pumped into their sites. Firearms are a niche good, so the base they draw from is much smaller. Many other niche goods have effectively been absorbed into the Amazon monolith. If Amazon (or equivalent) were to not exist, many of these goods would have their own small niche retailers. These small retailers would have minimal capital, cue PHP hell.
> I think comparing online clothing retailers to firearms retailers is a bit of an apples to oranges comparison. Everyone needs clothing, firearms not so much... Because of this clothing retailers have a much larger client base to draw from, and thus there's more money pumped into their sites. Firearms are a niche good, so the base they draw from is much smaller. Many other niche goods have effectively been absorbed into the Amazon monolith. If Amazon (or equivalent) were to not exist, many of these goods would have their own small niche retailers. These small retailers would have minimal capital, cue PHP hell.
The clothing I'm talking about is pretty niche as well. It isn't everyday clothes/shoes.
I'm guessing over $200B of Amazon's $475B valuation is from AWS and Amazon's subsidiaries. They have [small] stakes in some companies too. To be fair, the subsidiaries are peanuts^ (let's be generous and give them a combined value of $10B).
Amazon has their Kindle product line of e-readers (along with their ebooks infrastructure and Kindle Unlimited), tablets, and smart tv sticks. Their Alexa ecosystem is thriving for now and its products are at 5 now.
Amazon has around 70M prime members. That's over $6B in revenue alone. Reports say these members spend more at Amazon too. They probably don't care about prices being a bit higher on Amazon either. That last sentence is my own hunch.
And who knows how the Whole Foods acquisition will shake out.
I'm not sure how much debt Amazon has, but their cash pile is over $20B.
^Like Audible, IMDB, Goodreads, Twitch, Zappos, Alexa, Kiva, and Souq. Woot went to shit. And they shut down Quidsi's sites like soap.com so that didn't matter anymore.
> I'm guessing over $200B of Amazon's $475B valuation is from AWS and Amazon's subsidiaries. They have [small] stakes in some companies too. To be fair, the subsidiaries are peanuts^ (let's be generous and give them a combined value of $10B).
I just believe (rightly or wrongly) that Amazon's customers are more price sensitive that is commonly believed and the merry-go-round of constant reinvestment isn't going to be something that can be stopped for that reason. I always thought Amazon was fairly valued around $300-400/share and pretty much dumped all my stock in Amazon accordingly.
Maybe I'm wrong but I have a suspicion I'm not.
Look at Alphabet's financials vs. Googles and I think you'll find one of these seems just a much more reasonable valuation than the other at ~$1000/share.
> I just believe (rightly or wrongly) that Amazon's customers are more price sensitive that is commonly believed and the merry-go-round of constant reinvestment isn't going to be something that can be stopped for that reason.
Maybe. But the 70M prime members whose numbers just keep going up and we will see that number break 100M at some point. They don't account for a majority of Amazon's revenue but Amazon is doing over $6B in subscription revenue alone on them right now. Those members aren't as price conscious. And there's many people who aren't willing to pay the $80-100 yearly fee but still use Amazon as a default like Prime members. Those two groups combined most likely account for a majority of Amazon's ecommerce revenue and profit.
> I always thought Amazon was fairly valued around $300-400/share
But you quoted my part saying AWS itself (and technically I included the subsidiaries) is worth that much in share value itself/themselves. At $300/share you're talking about just a $150B market cap. At that point, whose values are you killing off? Amazon retail, value of all the prime members, AWS, Alexa/Kindle/Fire ecosystem, subsidiaries?
Their PE would be at 60 at that point. People once balked at FB's PE for being in the hundreds. Now it's at a cool 40. PE of 60 is about double Google's. Who coincidentally have been going harder in recent years on cutting spending with their latest CFO and continue with trying to raise profits of their golden goose.
Putting that into context, your thinking of $300-400 a share is too low. AWS has a lot of competition. But it's currently still growing and profit margins are huge. Most business don't seem to mind AWS's high prices.
Amazon is still growing too. They bought Souq, the Amazon of Saudi/ME. They are investing billions to fight for India. Google I believe has already won south east Asia.
Their retail/ecommerce revenue alone is around $100B. Overall, they are going to top $150B this year. Without AWS which is their primary profit machine right now, they are still at $135B+ in revenue. Don't you think if they wanted to, they'd be able to eek out a few billion in profit from that remaining $100B+ in revenue if they decided to go that way? That would get their PE below 100. I will note I don't think PE matters that much for Amazon right now. Just look at Netflix's or Salesforce's PE ratios now and in recent years.
I agree, Google's profitability much like Facebook is extraordinary. But they are the two main internet advertising companies. Apple is even more insane, but they only intersect in certain aspects. Finally, Google and Amazon had around the same revenue at the beginning of this decade. By the end of it, Amazon will be double (or just about) Google's revenue. Comparing them isn't as simple as apples to apples.
> Their retail/ecommerce revenue alone is around $100B. Overall, they are going to top $150B this year. Without AWS which is their primary profit machine right now, they are still at $135B+ in revenue. Don't you think if they wanted to, they'd be able to eek out a few billion in profit from that remaining $100B+ in revenue if they decided to go that way? That would get their PE below 100.
Amazon can't actually compete with us on price without selling below their costs. That is the reason we are still alive despite Amazon moving into our market. They can't raise prices _at all_.
Their ability to do so _entirely depends_ on them becoming more efficient. I suspect they can't become substantially more efficient on the retail side than they already are.
Can they really not? I guess it really comes down to if people will shop at Amazon much less or at all if they raise prices by a few percent or don't decrease prices over the next few years (just an example). Both achieving the same thing. Not saying for all products, just some potentially.
I personally don't think they'd take that much of a hit. But i could be convinced by otherwise.
> That's a big part of the situation you left out. MFN 3rd-party is rarely going to beat any FBA for the buy box, even on a $7 difference.
The discussion was about comparison shopping. They can buy from our site or Amazon. We don't care.
So for purposes of the original comment it was irrelevant and it still isn't relevant really.
The original bit of the chain was this:
> One fascinating niche are online retailers which fill market voids Amazon deliberately creates out of corporate policy. For instance in the US one can readily purchase firearms and ammunition through the internet. Due to various legal formalities, Amazon won't touch that particular market segment. Visiting sites like www.sgammo.com, www.palmettostatearmory.com, or www.midwayusa.com, is like stepping into an uncanny PHP laden alternate reality where Amazon never existed. This federation of specialized retailers offers a glimpse into what the online shopping experience _could_ have become, if it weren't for Amazon's hegemony.
I was arguing that was absurd and is unique to that niche. Also, Amazon isn't benevolent.
I didn't argue that I cared about the mechanics of how Amazon screwed its customers.
> Also, I'm pretty sure you're allowed to set different prices on different marketplaces. Your Amazon offer must be the lowest though right?
Correct. And charging customers via FBA $62.25 is untenable for Amazon as well as us which is why they charge noticeably more.
We _could_ charge their customers $65 and ours $65 but:
1) Amazon will find compliance issues with our identical products.
1b) If we comply, Amazon will drop prices until we stop competing with them and/or use their size to pressure a manufacturer into obedience (a la Walmart).
2) We will be cannibalizing our own sales channel to drive more people to Amazon by lowering Amazon's price to the customer $4. This is objectively a terrible decision.
So why bother?
FBA is a _terrible_ idea if you are in competition with Amazon on any level. The sales they'll send you aren't worth selling MFN at a better price point.
Also, as an Amazon shopper, their fulfillment is a known quantity to me. If I buy from your shop with your shipping, I am taking on the risk of potentially longer shipping. And I also have an increased suspicion of fake or knock off goods. So, even if I saw both listings side by side, I'd pay 10% to Amazon for their fulfillment and a perceived lower risk of knock off (despite reading much about Amazon sold knock offs). In fact, I've often bypassed the buy box to buy the same item from amazon at a higher price for these reasons
As a consumer, most of the time the convenience, security, service and shipping speed is worth the trivial difference. I don't bother doing price comparisons anymore unless it's several hundred, and even then usually need about 10% delta to switch retailers.
> As a consumer, most of the time the convenience, security, service and shipping speed is worth the trivial difference. I don't bother doing price comparisons anymore unless it's several hundred, and even then usually need about 10% delta to switch retailers.
If you want to voluntarily pay a 10% tax most Americans can't afford, that is your choice.
I kind of like having a selection to choose from, like restaurants. I even still like the older, less-polished ones from time-to-time. (As long as the food checks out, which is pretty easy to handle.)
Same with online retailing – I like the choice and the good feeling that Amazon has to keep trying to earn my business. I don't want too much Amazon homogeny for the same reasons I wouldn't want too much, say, Walmart homogeny. Or Ford dominating autos.
Great just-so story. Here's a completely opposite one:
Every last online retailer would use shopping carts apps of the highest quality if Amazon didn't have such a huge market share. But the shopping cart developers saw the writing on the wall of an encroaching amazon and got out. If they hadn't, everyone who wanted to sell something online would have easy access to a multitude of of hosting platforms explicitly target merchants. And because they're in competition with eachother, the quaility of their platforms in this hypothetical is better than IRL-Amazon's local maximum.
I think many people fail to understand Amazon's approach.
From watching their business over the years, Amazon isn't about books, or online purchasing, or data, or Whole Foods.
Amazon's secret sauce is lowering costs, especially transaction costs. Monetization and business case are easy to justify when lowered costs are provable (not just expected).
Google was the same for search and ads, but seems to forget these lessons in other fields and experimental ventures (Google Reader, etc.).
Both tend to bring high quality (from this user's experience). But the reason they are so fascinating to watch really is due to the reduction of transaction costs.
> Amazon's secret sauce is lowering costs, especially transaction costs. Monetization and business case are easy to justify when lowered costs are provable (not just expected).
I disagree. Walmart is obscenely good at this cost-lowering too. Indeed, I'm able to price-match a better deal from Best Buy, Target, and so forth today.
I prefer buying used (and new) games from Gamestop, even online. Almost explicitly because even with free "Prime" shipping, Amazon's prices are slightly higher. These other online shops simply wouldn't exist if the prices were cheaper at Amazon.
Amazon is people's first choice online now. It is no longer the cheapest deal in my experience. Instead, Amazon's main benefit is the social network, its marketplace (as full of counterfeits and cheap Alibaba peddled goods are... that's a lot of business Amazon has on its marketplace), and AWS.
None of those things make Amazon the cheapest. (Cheap questionable crap can be bought from Alibaba at much lower prices. Especially since USB-C cables from Amazon may blow up your computer: https://news.ycombinator.com/item?id=11021665)
Brand-name stuff is never cheaper at Amazon. The Brands are powerful, and they make sure that their prices are the same at Target or Walmart as they are at Amazon (ex: PS4 or Nintendo Switch). Designer Clothing from Amazon has questionable quality (See: http://amazonadviser.com/2017/06/22/nike-partners-amazon-hel... Nike recognized the problem, and is now directly selling on Amazon to try and stamp-out the fakes and counterfeits.) Again: if I wanted fakes, I go to Alibaba for cheaper prices.
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Amazon just wants you to think they're good at lowering costs. But they haven't been a market leader in cost-cutting for... several years now.
I consider one of the biggest costs of Walmart to be the time and experience of actually going to Walmart. I generally find the experience unpleasant, or at least a chore, and it is time consuming because Walmarts are so large and then you have to wait in line. I consider Amazon "cheaper" even when their prices are slightly higher because I save time and energy. Now living in NYC, transportation from stores is much less convenient than when I used to live in a city with a car. With Amazon, it just comes straight to my door.
Then there is the competition on items. With Walmart, it's all sold by Walmart. Knockoffs aside, Amazon is bringing multiple sellers together where they are competing head to head on prices. That would be like going from Walmart to Target to compare prices on items -- such a time consuming activity that nobody would really do it except for large ticket items.
It's hard to compare like for like with used games, but Amazon is typically better at discounting newer games. If you are prime, Amazon kills GameStop with pre-orders. GameStop is almost always full retail - $59.99. Amazon discounts pre-orders to $47.99.
Another knock on GameStop is their miserable in store experience with aggressive upsells, selling opened products as new, data breaches, and lousy treatment of their salespeople. It is impossible for GameStop to survive because they are fighting Amazon on one side, and the digital distribution platforms of the console manufacturers on the other. They are the next Blockbuster/Radio Shack.
Well, what you say may be true with regards to investing advice. I would NEVER invest in Gamestop, and I would (and have) pumped more money into Amazon.
But alas, my opinion as a consumer is grossly different from my opinion as an investor. As a consumer, I've had better luck browsing used games from Gamestop than on Amazon (yeah, I'll save $20 on used rather than buy new or full-priced digial). Be it in-store or online.
"Instead, Amazon's main benefit is the social network, its marketplace (as full of counterfeits and cheap Alibaba peddled goods are... that's a lot of business Amazon has on its marketplace), and AWS."
I speak only for myself and do not presume to extend my experience into any kind of larger data, but for me the entire value proposition of Amazon is quick, predictable shipment of items.
If I order something from Amazon I will receive it when they claim 99.9% of the time, and the only failures I've ever experienced were the fault of 3rd party package deliver companies (eg. FedEx, USPS...) This will be either same day, next day or two days. I don't use non-prime Amazon, not because it will cost me extra for shipping (I will often spring extra for same-day/next-day shipping on orders less than $35), but because I no longer trust the shipping estimates when it isn't Amazon fulfilled.
The only two sites on the whole of the Internet that have ever earned my trust on fast, predictable shipment are Amazon and Newegg. Every other site I've used has failed me in one way or another on fulfillment and lost my trust on predictability.
> Amazon is people's first choice online now. It is no longer the cheapest deal in my experience. Instead, Amazon's main benefit is the social network, its marketplace (as full of counterfeits and cheap Alibaba peddled goods are... that's a lot of business Amazon has on its marketplace), and AWS.
I have to agree. I've been doing some price comparisons for stuff I normally buy at the store vs Amazon, and Amazon is generally in par, if not a little more expensive. Add in sales tax and it's really the same as buying it in stores now. Of course, there are exceptions for stuff that's on sale, but generally, I'm not saving a lot on stuff I buy from Amazon. Is my time worth $1.00? I guess there's the argument of not having to spend time/gas going to the store to buy something, but if I'm already going there, or it's on my way home...
As I don't have a car, I price compare items in stores with amazon and if I can get prime shipping for something and it is comparable in price, I will order it off of amazon so that I don't have to lug it by hand all of the way home.
Also Amazon isn't that cheap either. They try their best to keep third party websites from displaying historic price.
MassDrop doesn't show their past price too.
I find often now that you can go the a publisher website and their book will be cheaper to order from there. Sure you won't have 2 day shipping but standard shipping is free.
CamelCamelCamel seems to have no problem providing historical price. I find that most people can't be bothered to check it, perhaps similarly to why they're skipping the search engine these days.
At somepoint does it become a national security concern? Could a large nation-state buy a controlling interest in a company like Amazon? And effectively use it against the US?
I don't think amazon has an interest in that, because it will lead governments to make amazons life uneasy, and they are capable of making it very uneasy.
I comparison shop - and while Amazon often beats other retailers in price due to Prime, it's not not always the case. Most times, unless Amazon stocks the item, the price of shipping is padded into the Prime cost compared to another retailer.
I smell an opportunity for google here to eject some kind of a price search engine that maes it eas/y/ier for us to find products ... That's usually what it comes down to anyway, once you know what you want to get.
>Ask Alexa to send you batteries and you won't get the option of Duracell or Energizer; you'll be shipped Amazon-branded batteries.
Amazon favors its own in-house products the same way Wal-Mart, Target and Costco put their private label brands in more effective places than their competitors.
In any case, if you tell her you don't want those, she will list competitors after.
I don't care which battery brand I use. The Amazon Basics brand is cheap. The packaging is subtle and minimal. Oh, and I can have them delivered in an hour!
Duracell on the other hand... They've been showing me ads on Twitter for months, probably because I googled "2032 vs 2025 battery"
I am very curious how Walmart will fight back. As we all know Walmart is the biggest company in the world. Their board is consist of famous politicians who have powers.
They will fight back with Amazon as hard as they can.
Their board is consist of famous politicians who have powers.
This is exactly what a just government should stop. The winner should rise up via their economic prowess (i.e., their ability to provide a better/cheaper/lighter/denser good or service that improves human life). NOT their political power (i.e., lobbying for regulations to kneecap an innovative competitor).
What hangs in the balance is your access to a better life. Words cannot describe how much better life is when you don't have to babysit physical servers, drive to the mall to buy a pair of jeans, drive to the grocery store to get things like food and soap, etc. If you don't speak up and root for the innovators - those that make long bets when everyone else is against them - you are doing nothing more than shutting down your own future. (It is not an inevitability that achievement is rewarded. There are periods in history and in other cultures where this does not occur! Thus it is a mistake to take wealth and technology for granted - it didn't always exist, and it may not exist in the future. Especially if those that take great risks to drive humanity forward are mercilessly swatted down by lesser minds.)
Amazon is a company that made several such long bets.
Oh right, this isn't 1997, Amazon is the new new fear monster click-bait machine. Bezos is the new new world's richest (soon to be). And Amazon is going to rule everything!
You know, or, it turns out the US economy is so massive that it takes so long to conquer any given big corner of it, that long before that happens the all-critical founder retires or dies, and whatever big conglomerate one happens to be speaking of at that time (whether Sears or Walmart or Alcoa or IBM or American Tobacco or GM) then goes into erosion or stagnation as competitors/government/technology change attacks it.
"Last year, Amazon captured nearly $1 of every $2 Americans spent online." Actually, 43%. Online sales were 11.7% of US retail. So Amazon is taking over the country with a whopping 5% of total retail. Buy hey, got you to click on it and upvote it.
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[ 2.9 ms ] story [ 135 ms ] threadWhat the ever loving christ is this image?
"Jason Koebler" ought to be formally introduced to photoshop as at the minute he is a danger to the eye.
Further down, in an article about pythons, the snake, the publishing system inserts a plug for an article about Python, the language.
>Image: Shutterstock/remix Jason Koebler
Jason Koebler is a VICE contributor: https://motherboard.vice.com/es/contributor/jason-koebler
Great fast company article on Walmart's monopsony power: https://www.fastcompany.com/54763/man-who-said-no-wal-mart
Low low prices! Customers customers customers.
The only people who get screwed are the businesses.
If you can't explain what those benefits are well enough to convince people to freely choose to buy from your company instead, you are not helping to make the world a better place. If you advocate running to the government to get them to smack down others who are more successful, you're just limiting choice, and that makes you part of the problem. (Assuming that you agree that the point of technology is to make lives easier, longer, more enjoyable, etc.)
Notice what Jobs did with regarding the Microsoft antitrust lawsuit stuff. He was very careful not to let all that groupthink pile on and rule his mind. Instead of joining in with all that sour grapes stuff, he focused on creating the future instead.
I do not care about "unfair". What I care about is consumers. And consumer welfare.
Unless what you are describing helps consumers in a specific, measurable way, ex by lowering prices, then it is harmful.
You know all those scifi movies where corporations in the future are the government in space and have giant armies and space ships? Well at this rate I am betting one of those solar empires will have "Amazon" on its flag.
In all seriousness though, people need to take the rise of companies like amazon and really think hard what we are loosing by enabling them to take over our lives. This is not a rant against corporations though, or even Amazon or the great people that work there, but its more about what we as a society allow.
Consumers don't think, they consume. Much like zombies. If you want consciousness in the system that has to come from gasp government. But that would be against what we all stand for. And it will continue to win until there is some major paradigm change. It has nothing to do with any choices, and everything to do with consumer and corporate behavior.
Nearly every part of that statement is false.
>If you want consciousness in the system that has to come from gasp government.
So, the masses are too stupid to know where to buy toilet-paper, but they are intelligent enough to elect the right politicians whom will enforce the right regulations?
For a corporation like Amazon or Walmart to survive they only need the masses. The small minority of conscious consumers don't affect them... and even if they do, it's not as if lots of conscious consumers don't buy from Amazon and Walmart anyway, despite the fact that they might disagree with their business practices or business philosophy. Consumers in general in America and Europe don't care that much about these things... and even if they do massive corporations can buy other corporations and sell to them through that brand while still furthering their own business philosophy, business practices: example Whole Foods.
There exists at least one consumer/thinker.
IMO, that statement doesn't become "false" by the existence of an amputee or someone wheelchair-bound.
Similarly, I believe the "consumers..." thought has relevance and information content even With awareness that there exists a particularly thoughtful consumer.
The problem is everything has issues when you look close enough so you can only meaningful think about a tiny fraction of these isssues at a time. Net result Exxon did not even need to change it's name after the Exxon Valdez oil spill. BP, paid a fine and then moved on after causeing 10's of billions in dammages without any real consumer backlash. In part because which oil company are you going to turn to?
https://www.vox.com/policy-and-politics/2017/6/1/15515820/do...
Somebody on YourNameHere gets wise to this. Suddenly, they have something worth a lot of money -- being the last place in the known galaxy without a corporate name on it, worthless backwater mediocrity be damned.
This wave/backwave is so strange to me.
I can think of the children, er, think of other instances of radically focusing on children which might not be so positive.
- Taleb's Thanksgiving Turkey
Lack of cooperation builds these monopolies like Google and Amazon.
https://xkcd.com/927/
If I recall correctly, US telcos couldn't even agree on which mobile payment system to use, because every company wanted to partner with someone and get a larger piece of the pie. Now it seems the only mobile payment system anyone actually uses is Apple Pay.
That anecdote aside, I agree it would be awesome if such a standard existed. I just don't see it working out since retail is such a cut throat business and everyone will be looking to undercut their competitors.
Remember, competition is good for the consumer and bad for companies.
You are paying for that trust.
For instance, right now, Amazon is charging $69.00 for a shoe we sell for $62.25 (including the item we list on their site, including shipping, etc.)
This is universally true for every item Amazon has cut us out on. It defaults to "Ships and Sold from Amazon.com" despite the fact they are the higher price.
Personally, at this point, I'd rather buy from smaller retailers. If you ever look outside of Amazon for "niche" items you'll start to notice Amazon stops being cheaper. Try looking at some of the clothing brands, the Guns&Ammo dystopia is unique to their industry. :P
To be honest, I'm surprised their valuation is what it is given I genuinely don't see how they can raise prices more than they have. Charging an extra 10% over your competitors is really already pushing the envelope as far as can be done.
The clothing I'm talking about is pretty niche as well. It isn't everyday clothes/shoes.
Amazon has their Kindle product line of e-readers (along with their ebooks infrastructure and Kindle Unlimited), tablets, and smart tv sticks. Their Alexa ecosystem is thriving for now and its products are at 5 now.
Amazon has around 70M prime members. That's over $6B in revenue alone. Reports say these members spend more at Amazon too. They probably don't care about prices being a bit higher on Amazon either. That last sentence is my own hunch.
And who knows how the Whole Foods acquisition will shake out.
I'm not sure how much debt Amazon has, but their cash pile is over $20B.
^Like Audible, IMDB, Goodreads, Twitch, Zappos, Alexa, Kiva, and Souq. Woot went to shit. And they shut down Quidsi's sites like soap.com so that didn't matter anymore.
I just believe (rightly or wrongly) that Amazon's customers are more price sensitive that is commonly believed and the merry-go-round of constant reinvestment isn't going to be something that can be stopped for that reason. I always thought Amazon was fairly valued around $300-400/share and pretty much dumped all my stock in Amazon accordingly.
Maybe I'm wrong but I have a suspicion I'm not.
Look at Alphabet's financials vs. Googles and I think you'll find one of these seems just a much more reasonable valuation than the other at ~$1000/share.
Maybe. But the 70M prime members whose numbers just keep going up and we will see that number break 100M at some point. They don't account for a majority of Amazon's revenue but Amazon is doing over $6B in subscription revenue alone on them right now. Those members aren't as price conscious. And there's many people who aren't willing to pay the $80-100 yearly fee but still use Amazon as a default like Prime members. Those two groups combined most likely account for a majority of Amazon's ecommerce revenue and profit.
> I always thought Amazon was fairly valued around $300-400/share
But you quoted my part saying AWS itself (and technically I included the subsidiaries) is worth that much in share value itself/themselves. At $300/share you're talking about just a $150B market cap. At that point, whose values are you killing off? Amazon retail, value of all the prime members, AWS, Alexa/Kindle/Fire ecosystem, subsidiaries?
Their PE would be at 60 at that point. People once balked at FB's PE for being in the hundreds. Now it's at a cool 40. PE of 60 is about double Google's. Who coincidentally have been going harder in recent years on cutting spending with their latest CFO and continue with trying to raise profits of their golden goose.
Putting that into context, your thinking of $300-400 a share is too low. AWS has a lot of competition. But it's currently still growing and profit margins are huge. Most business don't seem to mind AWS's high prices.
Amazon is still growing too. They bought Souq, the Amazon of Saudi/ME. They are investing billions to fight for India. Google I believe has already won south east Asia.
Their retail/ecommerce revenue alone is around $100B. Overall, they are going to top $150B this year. Without AWS which is their primary profit machine right now, they are still at $135B+ in revenue. Don't you think if they wanted to, they'd be able to eek out a few billion in profit from that remaining $100B+ in revenue if they decided to go that way? That would get their PE below 100. I will note I don't think PE matters that much for Amazon right now. Just look at Netflix's or Salesforce's PE ratios now and in recent years.
I agree, Google's profitability much like Facebook is extraordinary. But they are the two main internet advertising companies. Apple is even more insane, but they only intersect in certain aspects. Finally, Google and Amazon had around the same revenue at the beginning of this decade. By the end of it, Amazon will be double (or just about) Google's revenue. Comparing them isn't as simple as apples to apples.
Amazon can't actually compete with us on price without selling below their costs. That is the reason we are still alive despite Amazon moving into our market. They can't raise prices _at all_.
Their ability to do so _entirely depends_ on them becoming more efficient. I suspect they can't become substantially more efficient on the retail side than they already are.
I personally don't think they'd take that much of a hit. But i could be convinced by otherwise.
We would have to raise prices to use FBA for that shoe and Amazon doesn't allow us to sell a different price on Amazon than we do elsewhere.
Also, I'm pretty sure you're allowed to set different prices on different marketplaces. Your Amazon offer must be the lowest though right?
The discussion was about comparison shopping. They can buy from our site or Amazon. We don't care.
So for purposes of the original comment it was irrelevant and it still isn't relevant really.
The original bit of the chain was this:
> One fascinating niche are online retailers which fill market voids Amazon deliberately creates out of corporate policy. For instance in the US one can readily purchase firearms and ammunition through the internet. Due to various legal formalities, Amazon won't touch that particular market segment. Visiting sites like www.sgammo.com, www.palmettostatearmory.com, or www.midwayusa.com, is like stepping into an uncanny PHP laden alternate reality where Amazon never existed. This federation of specialized retailers offers a glimpse into what the online shopping experience _could_ have become, if it weren't for Amazon's hegemony.
I was arguing that was absurd and is unique to that niche. Also, Amazon isn't benevolent.
I didn't argue that I cared about the mechanics of how Amazon screwed its customers.
> Also, I'm pretty sure you're allowed to set different prices on different marketplaces. Your Amazon offer must be the lowest though right?
Correct. And charging customers via FBA $62.25 is untenable for Amazon as well as us which is why they charge noticeably more.
We _could_ charge their customers $65 and ours $65 but:
1) Amazon will find compliance issues with our identical products.
1b) If we comply, Amazon will drop prices until we stop competing with them and/or use their size to pressure a manufacturer into obedience (a la Walmart).
2) We will be cannibalizing our own sales channel to drive more people to Amazon by lowering Amazon's price to the customer $4. This is objectively a terrible decision.
So why bother?
FBA is a _terrible_ idea if you are in competition with Amazon on any level. The sales they'll send you aren't worth selling MFN at a better price point.
Is this just for FBA items or for any items you sell on Amazon? I've definitely seen products selling for less on other websites than on Amazon.
All I know is if we do that, we get de-listed and a warning.
As a consumer, most of the time the convenience, security, service and shipping speed is worth the trivial difference. I don't bother doing price comparisons anymore unless it's several hundred, and even then usually need about 10% delta to switch retailers.
If you want to voluntarily pay a 10% tax most Americans can't afford, that is your choice.
Same with online retailing – I like the choice and the good feeling that Amazon has to keep trying to earn my business. I don't want too much Amazon homogeny for the same reasons I wouldn't want too much, say, Walmart homogeny. Or Ford dominating autos.
Every last online retailer would use shopping carts apps of the highest quality if Amazon didn't have such a huge market share. But the shopping cart developers saw the writing on the wall of an encroaching amazon and got out. If they hadn't, everyone who wanted to sell something online would have easy access to a multitude of of hosting platforms explicitly target merchants. And because they're in competition with eachother, the quaility of their platforms in this hypothetical is better than IRL-Amazon's local maximum.
Arms, slaves, drugs, trade.
https://www.theguardian.com/world/2015/mar/04/east-india-com...
From watching their business over the years, Amazon isn't about books, or online purchasing, or data, or Whole Foods.
Amazon's secret sauce is lowering costs, especially transaction costs. Monetization and business case are easy to justify when lowered costs are provable (not just expected).
Google was the same for search and ads, but seems to forget these lessons in other fields and experimental ventures (Google Reader, etc.).
Both tend to bring high quality (from this user's experience). But the reason they are so fascinating to watch really is due to the reduction of transaction costs.
I disagree. Walmart is obscenely good at this cost-lowering too. Indeed, I'm able to price-match a better deal from Best Buy, Target, and so forth today.
I prefer buying used (and new) games from Gamestop, even online. Almost explicitly because even with free "Prime" shipping, Amazon's prices are slightly higher. These other online shops simply wouldn't exist if the prices were cheaper at Amazon.
Amazon is people's first choice online now. It is no longer the cheapest deal in my experience. Instead, Amazon's main benefit is the social network, its marketplace (as full of counterfeits and cheap Alibaba peddled goods are... that's a lot of business Amazon has on its marketplace), and AWS.
None of those things make Amazon the cheapest. (Cheap questionable crap can be bought from Alibaba at much lower prices. Especially since USB-C cables from Amazon may blow up your computer: https://news.ycombinator.com/item?id=11021665)
Brand-name stuff is never cheaper at Amazon. The Brands are powerful, and they make sure that their prices are the same at Target or Walmart as they are at Amazon (ex: PS4 or Nintendo Switch). Designer Clothing from Amazon has questionable quality (See: http://amazonadviser.com/2017/06/22/nike-partners-amazon-hel... Nike recognized the problem, and is now directly selling on Amazon to try and stamp-out the fakes and counterfeits.) Again: if I wanted fakes, I go to Alibaba for cheaper prices.
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Amazon just wants you to think they're good at lowering costs. But they haven't been a market leader in cost-cutting for... several years now.
I consider one of the biggest costs of Walmart to be the time and experience of actually going to Walmart. I generally find the experience unpleasant, or at least a chore, and it is time consuming because Walmarts are so large and then you have to wait in line. I consider Amazon "cheaper" even when their prices are slightly higher because I save time and energy. Now living in NYC, transportation from stores is much less convenient than when I used to live in a city with a car. With Amazon, it just comes straight to my door.
Then there is the competition on items. With Walmart, it's all sold by Walmart. Knockoffs aside, Amazon is bringing multiple sellers together where they are competing head to head on prices. That would be like going from Walmart to Target to compare prices on items -- such a time consuming activity that nobody would really do it except for large ticket items.
Another knock on GameStop is their miserable in store experience with aggressive upsells, selling opened products as new, data breaches, and lousy treatment of their salespeople. It is impossible for GameStop to survive because they are fighting Amazon on one side, and the digital distribution platforms of the console manufacturers on the other. They are the next Blockbuster/Radio Shack.
But alas, my opinion as a consumer is grossly different from my opinion as an investor. As a consumer, I've had better luck browsing used games from Gamestop than on Amazon (yeah, I'll save $20 on used rather than buy new or full-priced digial). Be it in-store or online.
I speak only for myself and do not presume to extend my experience into any kind of larger data, but for me the entire value proposition of Amazon is quick, predictable shipment of items.
If I order something from Amazon I will receive it when they claim 99.9% of the time, and the only failures I've ever experienced were the fault of 3rd party package deliver companies (eg. FedEx, USPS...) This will be either same day, next day or two days. I don't use non-prime Amazon, not because it will cost me extra for shipping (I will often spring extra for same-day/next-day shipping on orders less than $35), but because I no longer trust the shipping estimates when it isn't Amazon fulfilled.
The only two sites on the whole of the Internet that have ever earned my trust on fast, predictable shipment are Amazon and Newegg. Every other site I've used has failed me in one way or another on fulfillment and lost my trust on predictability.
I have to agree. I've been doing some price comparisons for stuff I normally buy at the store vs Amazon, and Amazon is generally in par, if not a little more expensive. Add in sales tax and it's really the same as buying it in stores now. Of course, there are exceptions for stuff that's on sale, but generally, I'm not saving a lot on stuff I buy from Amazon. Is my time worth $1.00? I guess there's the argument of not having to spend time/gas going to the store to buy something, but if I'm already going there, or it's on my way home...
As I don't have a car, I price compare items in stores with amazon and if I can get prime shipping for something and it is comparable in price, I will order it off of amazon so that I don't have to lug it by hand all of the way home.
MassDrop doesn't show their past price too.
I find often now that you can go the a publisher website and their book will be cheaper to order from there. Sure you won't have 2 day shipping but standard shipping is free.
I smell an opportunity for google here to eject some kind of a price search engine that maes it eas/y/ier for us to find products ... That's usually what it comes down to anyway, once you know what you want to get.
>Ask Alexa to send you batteries and you won't get the option of Duracell or Energizer; you'll be shipped Amazon-branded batteries.
Amazon favors its own in-house products the same way Wal-Mart, Target and Costco put their private label brands in more effective places than their competitors.
In any case, if you tell her you don't want those, she will list competitors after.
Duracell on the other hand... They've been showing me ads on Twitter for months, probably because I googled "2032 vs 2025 battery"
They will fight back with Amazon as hard as they can.
This is exactly what a just government should stop. The winner should rise up via their economic prowess (i.e., their ability to provide a better/cheaper/lighter/denser good or service that improves human life). NOT their political power (i.e., lobbying for regulations to kneecap an innovative competitor).
What hangs in the balance is your access to a better life. Words cannot describe how much better life is when you don't have to babysit physical servers, drive to the mall to buy a pair of jeans, drive to the grocery store to get things like food and soap, etc. If you don't speak up and root for the innovators - those that make long bets when everyone else is against them - you are doing nothing more than shutting down your own future. (It is not an inevitability that achievement is rewarded. There are periods in history and in other cultures where this does not occur! Thus it is a mistake to take wealth and technology for granted - it didn't always exist, and it may not exist in the future. Especially if those that take great risks to drive humanity forward are mercilessly swatted down by lesser minds.)
Amazon is a company that made several such long bets.
Exhibit A: an article, entitled "Can Amazon Survive?" from 1999: http://knowledge.wharton.upenn.edu/article/can-amazon-surviv...
Exhibit B: "Jeff Bezos' Risky Bet," wherein Bloomberg heaped nothing but doubt on AWS when it first came out: https://www.bloomberg.com/news/articles/2006-11-12/jeff-bezo...
http://i.imgur.com/CfaOAxF.jpg
http://i.imgur.com/ZEMkiPk.jpg
Oh right, this isn't 1997, Amazon is the new new fear monster click-bait machine. Bezos is the new new world's richest (soon to be). And Amazon is going to rule everything!
You know, or, it turns out the US economy is so massive that it takes so long to conquer any given big corner of it, that long before that happens the all-critical founder retires or dies, and whatever big conglomerate one happens to be speaking of at that time (whether Sears or Walmart or Alcoa or IBM or American Tobacco or GM) then goes into erosion or stagnation as competitors/government/technology change attacks it.