Though it is impressive that Amazon has turned a delivery fee - that most people don't like paying - into an exclusive subscription service. A service that customers fall over themselves to sign up for when it's offered at a discount.
I cancelled it because Amazon's abusing their position. Refusing to sell Chromecast and Apple TV, then lying, repeatedly, about the reason when asked?
I've been an Amazon customer for 13 years. I was rather annoyed to see them go with the anti-Wikileaks and try to be "sensitive" by banning certain cultural items. But this shows they've zero commitment to selling products customers want.
Edit: And it really hurts. Some times I buy stuff from Amazon every day of the week. I've tried Jet.com, which is just a poor experience. I hate to cry antitrust but Amazon really dominates in any usable online sales env, it seems.
Wow, TIL Amazon doesn't sell Apple TV or Chromecast, but instead immediately suggests their own competitors. For a company trying to replace all retail, that's pretty lame.
True, but the point of the Apple store is to sell Apple products, and the Google Play store only sells google devices. Amazon supposedly sells everything. It wasn't created to only sell Amazon products, and it's misleading to consumers to not be more open about that.
Case in point - they sell iPads. Why don't they just sell Kindles? The inconsistency comes off as sleezy.
It's not sleazy, it's smart business. Amazon doesn't sell guns either, and they technically could probably do so if they setup the proper infrastructure and background checks and whatever else to do so.
Just because they are Wal-Mart of the online world doesn't mean they must sell everything everyone wants.
The devices they don't sell are in a heavily contested field, no wonder they don't carry them, that's smart business. It's a bit silly to get self-righteous about it otherwise.
They do sell streaming devices, though. They just don't sell the ones made by their competitors. Using their position as #1 online retailer to bolster their position as a streaming service is more than just smart business.
It's life if Microsoft had used its market position with Windows to push IE.
Apple sells many products that are not owned by Apple. I can buy headphones by Bose, RHA, BlueAnt, Beats (were on store prior to Apple purchase).
Amazon gets the criticism but they all do it.
Remember, we had a store that was willing to sell all these products, it's called Best Buy and it's on the way out. As consumers we choose to boost Amazon into the leading online position.
Yes, Apple also sells premium accessories for their devices including headphones, cases, backpacks, other hardware accessories and even 3rd party software for their devices. They are not a general purpose store. Amazon is, or at least pretends to be.
So you are saying that if you are a general purpose store, you have to offer products from your competitors. Walmart should sell Target brand products, Home Depot should sell Lowes brand products. See my point? Stores just aren't in the business of selling their competitors products.
Store brands are not usually made available through general supply chains (or rather, they come from a shortened supply chain), apple and google devices are. And Walmart does sell its "competitor's" products alongside their store brands (where they are available), as does Target, Home Depot, and Lowes. This is because their main business is selling things and having a store brand is just a means to squeek a little more margin out of the things they sell anyways.
Obviously a store is under no obligation to carry every product ever, but this argument that an apple or android tablet is equivalent to a store brand is just silly.
How is an Apple iPhone not equivalent to a Walmart Basics pack of toilet paper? Apple makes the iPhone, Walmart makes the toilet paper. Or atleast companies build these products for their associated brands.
I also ask you to provide an example of where Walmart sells competitor branded products (Target etc). Walmart's brand products, Basics (I believe) are not sold in any other store. Targets brand products (Archer Farms) are not available in any other store.
Absent the select few exceptions, Amazon is a general purpose store. If we're really going to be picky, Apple(and Google) sell products through their store that are "general purpose".
True - but most of those products support or interact with the core apple products. Amazon offers way more things, like toilet paper and cat food. I'm not sure how they're supposed to interact with a Kindle.
It'd make more sense if they carried it - but advertised their own products heavily around it. At least they would be honest about the "selection" game.
But let's be honest - Amazon devices push more people into Prime, Amazon Instant Prime Video, and their other digital services. Maybe it had something to do with Prime Video not yet being on those devices, but we'd need to see them support Prime on Chromecast or AppleTV and then re-list those products on Amazon.
But obviously anything Amazon makes is far superior to the competitor's offerings, so by refusing to sell those devices and pushing customers to our own products, we are focusing on the customer. It's for their own good, you see. /s
Not really, it doesn't mean 'completely ignore your competitors and sell their products on your own store', it means 'Develop your products by listening to what customers tell you and not by watching and copying what your competitors do'.
I cancelled my Prime subscription for the same reason. I've been experimenting with using eBay the same way I used Amazon (mainly for computer-related purchases—we never got into the habit of using it for many household goods).
So far, I've found eBay to be in many ways better than Amazon was. Amazon has gotten to the point where you're often buying from some unknown vendor anyways, so in many ways it's already similar to eBay. However, eBay was built from the start to be a simple middleman, so I find its reputation system and expectations for sellers and buyers to be superior in many ways. Of course, I still have to be careful when evaluating sellers, but if I stick to the high-volume 99.5%+-positive sellers, there's rarely an issue.
I mainly only do this for small purchases—rechargeable batteries, game system controllers, cables, etc. For larger items, I try to find a niche vendor that offers more specialized customer service—ideally a local brick-and-mortar, but often an online seller.
> Amazon has far stricter requirements for sellers.
I wouldn't notice. The site is filled with dishonest merchants peddling their misrepresented wares. I've had far more issues with merchants on Amazon than on ebay.
I'm fed up with Amazon's business practices. I've found eBay to be an acceptable alternative that has a decent UI. And I find the closer interaction with the seller to be helpful.
Don't forget artificially tying their so-so Netflix competitor video service to their own so-so Android-based tablets and not allowing it to be used on proper Android at all for years. And now artificially tying their video service to their app store so Android users who pay for it can't use it without compromising the security of their device by enabling apps from unknown sources and manually installing the Amazon App Store on their device with full permissions for everything - and the ability for it to spy on and alter anything it wants.
Amazon sells the nVidia shield TV which is an android device for your tv that has chromecast capabilities but admittedly at a much higher price than the Chromecast. Still, if you buy on Amazon and want that kind of functionality it's a good value for a home theater in a box. The android games are pretty lame though.
Maybe you don't like it, and you are fully within your rights to cancel, but it is not abuse. They can or should be able to carry whatever products they damn well please.
Sure, but it flatly contradicts everything Bezos says in this letter, and elsewhere, about Amazon being customer-focused rather than competitor-focused.
A truly customer-focused company would sell the products its customers wanted, even if they competed with the company's own-brand products. And demand for these competing products would be seen as a spur to improve their own.
I personally don't think the Amazon's talk of customer-focus is entirely marketing fluff, but I do think it's unevenly applied. Petty, anti-customer, monopolistic business practices have been a mainstay of the tech industry for years, and it's inevitable that they would infect Amazon to some extent.
Amazon stopped selling players that don't support Amazon Prime Video. That can been seen as first-order customer unfriendly, but second-order customer-centric, if you take the view that Amazon Prime Video is a consumer benefit overall. (I do, but I'm still annoyed that I can't get Apple TV on Amazon.)
Context: I'll admit to being a fairly rabid Amazon fan (no other conflicts, other than as a retail shareholder). I still cross-shop NewEgg (to support anti-patent-trolling), Ebay, Aliexpress and others, but Amazon wins more than its share of my purchase traffic.
Amazon's customer centric nature is generally pretty good, but they toss it aside at times. AIV on Android is one of those times (took them years to release the app and when they did it required a completely screwy install)
nah dog, Apple has said they are free to make an Apple TV app. But they won't for some reason. They don't even have to sell items through the app and incur Apple's cut.
I don't think it does contradict anything he says about being customer focused. In my opinion, and experience, it doesn't mean 'completely ignore your competitors and sell their products on your own store', it means 'Develop your products by listening to what customers tell you and not by watching and copying what your competitors do'.
If you take that as the intent behind the quote then it's kinda parallel to the issue of whether to sell chromecast or not.
I think that was his point, he's critical of Amazon because they lied about their reasoning for not carrying the products, not questioning the legality of not carrying specific products.
I thought that was obvious, and a charitable interpretation of his post would've made this clear, I think.
Yep. Several CSRs told me "Oh it's out of stock" (not explaining the 404, or no "marketplace" vendors). I escalated. Then I was told the Chromecast was not sold due to "too many complaints". A supervisor then flat out denied that, as well as denied there being any ban on any such product.
I asked about the Apple TV. After other lame "stocking" issues, a supervisor said "oh, we don't have licenses to sell Apple TV" and went on about how there's all sorts of legal issues.
It's vile for a company that's supposedly pro-consumer.
Amazon and Apple have had a long patchy history when it comes to selling Apple products.
Primarily it comes down to Apple's need to control the pricing of their products and Amazon's desire to drop prices far into the realms of lossmaking, which in part is due to their customer centricity. I cannot comment on this specific case but it is not always necessarily as clear cut as you think.
As an aside, the customer obsession is not fluff. It is deeply engrained within the business and is taken very seriously. Any decision that is not customer centric (e.g. Halting the sale of Harper Collins titles) is usually escalated to Diego (head of Retail) if not to Jeff himself.
Any business is well within their rights to make money and preserve their self interests, and occasionally strategic decisions may well clash with the culture so not every decision Amazon makes will be perfectly customer centric. With that said, from both the inside and outside I've witnessed really great customer obsession on the whole especially when compared to other businesses.
The problem is that they won't allow third parties to sell them on marketplace. Even if Apple won't sell to Amazon, as long as third parties want to list they should be allowed to and it shouldn't cause problems. (I'm probably missing something; what is it?)
Amazon is big enough that they could be seen as abusing their power as the largest online retailer to suppress competitors in other markets. These are products that consumers would reasonably expect Amazon to carry, but they don't because it competes with Amazon's other businesses.
I cancelled it because I was buying crap I didn't need. I cancelled it because I noticed the prices of items rising. I cancelled it because I felt guilty about a huge truck delivering an AM radio. I cancelled it because I was having problems with third party sellers.
The real reason I cancelled it; the prices went up. It was slight at first, but after reading feedback, I noticed a trend. They all bought their item at a lower cost than Me.
It's more akin to a used car lot deciding to manufacture cars, and removing Ford & Chevys from their lot. I'm not saying it's right or wrong, but it is interesting that they only removed those two items and not Rokus and other streaming options.
When can we regulate this .... and break this company into 4 companies, that compete with each other :) I bet 3 will sell Ford and Chevy's on their display.
Yeah, the huge vertically integrated corporations are starting to seriously limit competition in several economic markets. Good for their profits, bad for pretty much everyone else. It's like Weyland-Yutani in the making.
The issue is that Amazon is the largest online retailer in the world and they are refusing to carry items that compete with their other business units.
Your example misses the point. People reasonably expect Amazon to carry electronics. Amazon is abusing their position as the largest retailer in world to suppress competition. That's illegal.
But with your example, Ford does not control 90% of car dealers in the US, so they are not in a position of power. Now, if Ford owned 90% of car mechanics in the US and they refused to repair Chevys, that would be abusing their position of power to suppress competition.
Or Microsoft refusing to allow installation of competitive browsers. The line is in market reach, anti-competitive legislation was inacted due to such abuses by a powerful player.
It's the value of certainty that people are buying. Think of it more like 'Shipping Insurance', delivery fees are an unfortunate unavoidable thing, like car accidents.
However, by purchasing 'shipping insurance' one can normalize the cost of shipping similar to the way one normalizes the cost of car accidents through car insurance.
There is a virtuous circle too that is the opposite of moral hazard typically incurred by insurance companies as having certainty of cost makes risk taking less costly. Similarly, if shipping is free, then people order more things, creating economies of scale that reduce shipping costs, enabling amazon to make more profit, or price prime cheaper.
There are other valid reasons besides not paying the initial shipping cossts.
Typically anything shipped Prime is a no-fee/no-hassle return. Great for when you're buying clothes. After accidentally buying something NOT shipped prime, then getting hit with a bunch of fees from the seller to return it I've gotten much more careful about it.
We also get discounts on our monthly recurring purchases that make it cheaper than going to the store to replenish, not even factoring for saved time.
There's also the Prime video- which has a surprisingly good catalog of shows and movies (in the US at least). I still watch Netflix more, but I use prime video at least once a week.
Most non-clothing items are not no-fee returns unless Amazon has made an error or the product is defective.
My wife and I double-bought a gift for our daughter and the return shipping fee was going to be $6.99 as it was our mistake. That's fair enough, IMO, but it's not free.
Returns are often free on clothing/shoes and around Christmas.
Prime Video is indeed a bigger benefit than I originally thought. The kids watch it several times a week and I probably once a week.
I got prime pretty much for the new Top Gear, everything else is just gravy. And now that I know I can return stuff I'm probably going to start buying clothes through prime.
It's very effective sleight of hand. The cherry on top is 2-day delivery being prepaid. I wouldn't have paid for 2-day otherwise. They "fixed" that for me.
The whole thing makes going to a brick and mortar store feel like going to the DMV.
With the exception that if you drive to store and back home for a single item, you'll have the item inside of an hour. If you live close, inside of 15 minutes?
When I know I will need batteries in a week, I'll buy a box on Amazon and get it in a few days. If I need batteries now, I'll have them within an hour. It's certainly not "like going to the DMV."
Here in the UK Amazon seem to be heading for same-day delivery for Prime customers (we already have free next day on Prime) and ultimately "within the hour" types of delivery in major cities.
Well, the advent of prime now means you can get many things in an hour from Amazon, though of course there are additional fees that are not covered by the annual prime membership fees.
It's funny, it feels like the opposite to me. Going to a regular store is pretty simple. Buying with Prime is a pain in the ass, since half the stuff they sell isn't eligible. Amazon is rarely the cheapest option anymore, too, so I no longer have the luxury of skipping the price comparison and knowing I'm getting a pretty good deal anyway.
> Buying with Prime is a pain in the ass, since half the stuff they sell isn't eligible.
From what I can see, Amazon sells very little that isn't Prime eligible. There are lots of "Marketplace" offerings that aren't Prime eligible, but you can filter those out by clicking the "Prime" checkbox that pops up on the left whenever you're in a search or category view.
From the user's (i.e. my) perspective, "Marketplace" offerings are still things that Amazon sells. The "Prime" checkbox doesn't work well. It doesn't filter out add-on items (which can be removed with another checkbox), and it doesn't do a very good job of only showing me Prime items. Searching for hard drives, just as a random example, I get results where the primary seller isn't Prime, and the Prime option is either more expensive than what's listed, or is a used or refurbished item. I'm sure there's a combination of checkboxes that will do what I want, but they sure don't seem to be optimizing for the common case.
I was gifted Prime and it surprised me how awesome it was. Say I want to buy a few pairs of SmartWool Socks, but since I'm buying them over the internet don't get a chance to try them on. Do I buy 7 pairs and risk it? No, I just buy 1 pair and get it in 2 days with no shipping fee.
In fact I buy all kinds of things now on Amazon because I can get them in 2 days with no shipping fee.
I get that I'm paying upfront for shipping, of course, which really only incentivizes me to shop more on Amazon. After a certain number of orders I'm beating the system, and that's fun.
Saying Amazon is absorbing a loss on shipping costs to get market share implies that that they're engaged in predatory pricing (i.e. they're selling below cost to get market share with the intent to raise prices once competition has been destroyed).
There might be some truth to that, but the better explanation for why Amazon isn't profitable is that it's simply plowing all of its profits back into the business. This link is older, but it does a pretty good job of going through the numbers and Jeff Bezo's thinking: http://a16z.com/2014/09/05/why-amazon-has-no-profits-and-why...
It's not uncommon for an ecommerce site to charge less for shipping than it actually costs them (for perception/psychology reasons), and make up the difference on margin or services.
How much are Walmart, Home Depot, and BestBuy losing on "operating retail stores"?
It's a cost of operation or cost of sales, IMO, and you have to look at it in the context of overall profitability and revenue growth, not as a standalone line item. Otherwise, you might argue for those other three to close all their retail outlets or charge admission in order to "stem the losses".
It's an operational cost, not COGS. And, sure it's a standalone line item as much as any other.
Not sure I understand the distinction you're attempting to make. It's a function of their model that can affect their competitiveness and may well argue for (or against) closures.
I used "cost of sales" when I meant "cost of revenue". However, I suspect the revenue from Prime counts as top-line and the shipping cost losses are absorbed as a cost on the COGS line, so the net effect is probably reflected as revenue and COGS. If I get some time, I'll poke through their last 10-Q/10-K to see if I can confirm that treatment.
The point I was trying to make is that Prime (and any associated losses) is part of Amazon's go-to-market strategy, just as opening retail stores is part of HD, WMT, and BBY's strategy. Saying that Amazon is "losing money on Prime" but that the others aren't "losing money on stores" seems a double-standard to me.
I guess you can parse it any way, but I consider those to be very different. A more valid comparison is between the retail stores and Amazon's distribution network, fulfillment centers, warehouses, etc. These things all fall under capital expenditures (CapEx) and represent hard costs that must be paid/financed.
Like retail stores, they are also part of the required infrastructure to fulfill customer orders.
Prime, OTOH is more a marketing expense. I would compare it to coupons, store savings cards, etc.
So, the double-standard doesn't exist in my view; unless you were to count retail store costs without counting Amazon fulfillment costs.
amazon is very profitable but they plow back all profits into new business ventures so they pay 0 taxes because they can report no profit. If you make a billion dollars profit and then immediately spend that building a new datacenter or warehouse whether you need it or not that still counts as a business expenses that is subtracted from profits. Amazon will never stop trying to enter new businesses because they have no plans to ever pay out dividends or hold on to cash profits
That's a concise description of why I (as an Amazon fanboy) have probably unconsciously abstained from becoming a Prime member ... something just smelled off.
How can subscription to a shipping service be compared to membership in a community? Where is the "community" in this? Do Prime-subscribes gather sometimes to discuss how they are subscribed to Prime?
> Though it is impressive that Amazon has turned a delivery fee - that most people don't like paying - into an exclusive subscription service.
Where Amazon has convinced people to prepay $100 per year for shipping on select items similar to how Apple has convinced customers to overpay on hardware and accessories to be part of the same style club. Community was probably the wrong word, but exclusive/elite membership maybe? And yes I hear people all the time talk about their prime memberships, especially at work.
Amazon is too good at what they do. The feeling that they give too good of a value, while I spent thousands of dollars on their site was a weird kind of high. That is the end game, you spend a lot with Prime since, it shows up in two days and no shipping etc. I cancelled my Prime membership, and just that saves me a hundred or two a month, because now I have to think twice before ordering anything since shipping cost is involved and also have to bundle enough items such that I qualify for free shipping.
side note: jet.com is not collecting sales tax yet. That is 8.25% differential where I live.
You shouldn't consider Jet.com not collecting sales tax as a "good thing" since you are technically required to pay it by law (in most places, normally, afaik, IANAL)
So you technically do still need to pay that 8.25% differential.
Indeed you do. Many years ago I had a business. One year the state decided to audit my business. No biggie, I had paid all my taxes as required. Except I hadn't. My business was located near a big box warehouse and you could order on the website and go pick it up. This was when almost all online orders were claimed to be "tax free". I did that for a few hard drives and some other stuff. I ended up owing about $150 in back taxes and penalties because I hadn't manually figured out the sales tax I was supposed to pay and reported it. I was a little annoyed at my accountant whose reaction was, "Yeah, nobody pays that, though technically you're supposed to." Needless to say, I have a new accountant.
> Many good accountants will weigh the chance of you getting audited + fined against the ROI of an "oversight."
"Good" is a questionable descriptor here. I would think that a good accountant should follow ethical rules, which would exclude the possibility of knowingly breaking the law to under-report taxes.
I went to the site. They popped up a window that asked for my email address and there was no way to dismiss this without giving it something. I closed the tab.
I think I'm being plenty responsible by (1) finding cheaper prices outside of Amazon (2) buying few enough things that the cost of Prime amortizes to an expensive shipping rate and (3) not making impulse purchases and being patient enough that I can live with the free non-Prime shipping.
I recently took advantage of Prime but I don't buy from them often enough, not even every year. I cancelled before the 30 days free trial expired. If they somewhat manage to get me buy stuff on Amazon often, I'll be back.
I don't know why this guy is being downvoted, it's true. I've had several orders I ordered on a Monday, sold by Amazon, shipped by Amazon, on Prime two-day that didn't get here until after Wednesday (once, even the following Monday).
Then Amazon is going to have to become much much better.
I live in London, UK and do not use Prime. I've almost stopped using Amazon altogether now.
Why?
1. Delivery - For our flat, their network either fails to deliver, mis-delivers or screws up in some other way far more than they succeed. There is no option to choose the one postal service that shines for my property: Royal Mail. Anything I order from Amazon may turn up eventually, but certainly isn't going to arrive whenever they claim. This is my #1 reason for abandoning Amazon.
2. Range and choice - Either you can't find what you want (the range within cycling for example is extremely limited) and have to look elsewhere, or you're swamped with marketplace sellers and what feels like a million grey goods. The Google engineer's "Which USB type-C cables are good" illustrates the sheer number of items that are of shoddy quality but are represented on the site as being of quality. There is simply, too much crap and not enough quality.
3. Price - I simply don't find Amazon the cheapest at almost anything. On their site it looks cheaper, always discounted, but if you take the manufacturers' SKU and Google it one quickly finds a whole load of places selling it for the same price or cheaper, also with free postage, or cheaper to the point that postage is irrelevant.
4. Bundling - Amazon Prime Video really isn't as good as Netflix, Amazon Prime Now isn't beating Shutl for me in London https://shutl.com/uk/, free postage hasn't been compelling (point #3)... but somehow bundling all of these things together into an
~£80 per year subscription is supposed to make a range of sub-par offerings value for money?
5. Warranty - I've purchased things on Amazon Prime, thinking they were covered by Amazon's customer service, only to discover that the obscure market place seller is really the seller and so my warranty complaints go back to them. They've been overseas and uninterested, and I've had to simply write-off the value of those items. If I buy elsewhere I can factor this in a lot more and choose a reputable seller. Depending on the item, i.e. I recently purchased a 40" 4K Sony TV, then I really want to be sure these high value items are going to be covered by a company that delivers great customer service... John Lewis in my case. There needs to be a Public Service Announcement in the photography section for the sheer number of lens that wouldn't be covered by warranty.
I actually view Prime as nothing more than a hook, to keep shoppers too lazy to look around under a spell of "this is a bargain, you're receiving great value".
In reality what Amazon once was is a long way from what they now are and Prime is a mask for that.
6. Marketplace sellers lying about the origin of delivery. Says ships from Germany, so should arrive in few days but arrives a month later from China.
7. I use a redelivery service for goods from German Amazon (because delivery to German address is often free but out of Germany very expensive). Amazon displays items to be delivered as one shipment before placing an order.
Right after ordering it displays that the items would be shipped in 4 separate shipments making the price of the delivery 4 times more expensive for me.
I actually emailed Amazon asking for other couriers to be an option as I hate everything about royal mail. They "lose" loads of mail, they lie by posting "you weren't in" cards when I'm working from home all day specifically to receive a parcel and if you want to pick up a failed delivery you have to travel at inconvenient times to a hard to get to location. This was around the time Amazon dropped them for certain categories of delivery; I doubt I had much, if any, impact on their decision but it felt good. When I've used other companies I've literally been able to follow the van on a map on real time, and my heart always sinks when having ordered an item and clicked on the tracking button I see "tracking isn't available on this item" as it means royal mail will be involved. They only survive because of being a state monopoly which also benefits from junk mail which they require to stay a viable business.
Have you ever contacted Amazon about the delivery firms that you've had issues with? I contacted them on 3 separate occasions about CityLink - they refused to leave parcels either in my porch or with a neighbour and their nearest collection depot was at that time 3 bus journeys away in a different county.
After the third one, I said I would be cancelling my Prime if they ever delivered (or rather didn't deliver) again. I don't know if was coincidence or not, but I don't think I've had an attempted delivery from them since.
It has not resulted in any change. They prefer their own drivers, and these are what we have issues with.
We live in a high-rise, one of several, and have a concierge from 8am through to midnight. Even so, the items are seldom left with the concierge, and frequently we get "attempted delivery" when the concierge is on-duty and open or whilst we are in (no delivery attempt is made at all).
Sometimes the driver gets to our door and leaves the item without knocking. We discover the item the next morning as we head out to work. Which explains why so many items don't get through as next door to us is a drug dealer with a lot of their customers coming and going at all hours.
All we want to achieve is: put it through the letterbox or leave it with the concierge. Neither seems to be possible.
No amount of complaining to Amazon has resolved it, but shopping elsewhere means the Amazon delivery network isn't used and every item then ends up through the letterbox or with the concierge.
I can graph my non-digital orders for the last few years, I've gone from 5-10 orders per month 2 years ago, down to 1 order every 3 months last year.
The only thing I still order from Amazon are Kindle books, for everything else, I now look elsewhere first.
Delivery has gotten really bad. When they used DPD it was great, but really nothing to do with Amazon, DPD are just far and away the best UK courier.
Recently around me they switched to "Amazon logistics" which to me is code for "a man in a van we hired". All in all quality of delivery has dropped; I've got about a year of free prime because one delivery driver, delivering to an obvious business address, couldn't wrap his head around "work hours" and kept turning up at 7pm.
LaserShip still gets my Amazon packages. After the last one, even with their "here have a refund" (after digging around trying to find a help/support contact on Amazon's page for 20 minutes), I stopped ordering off of Amazon completely. I've spent at least $20,000 on their site in the last 5 years.
LaserShip is universally reviled and has the worst complaints in the entire logistics industry. Amazon does not care. Amazon just cares who and where the lowest bidder is, and for small packages in Midtown Manhattan, LaserShip is it. If you don't live in a doorman building, you are fucked.
Agree with everything you said. I will add DPD in addition to Royal Mail - first, you can track the delivery van on a map, in real time. Second, you can text DPD in-flight and ask them to deliver to a local pick-up location instead of your home address. And most of all yes, shopping online with John Lewis is amazing. Their products are quality, and their service is awesome. Amazon, in comparison, is a £ shop.
I tried to by the Dragon Book as an eBook. I managed to purchase it, paid good money and it was revoked as I wasn't a U.S. citizen. I was never refunded.
I grabbed a copy from... elsewhere... and then never shopped at Amazon again.
> 1. Delivery - For our flat, their network either fails to deliver, mis-delivers or screws up in some other way far more than they succeed. There is no option to choose the one postal service that shines for my property: Royal Mail. Anything I order from Amazon may turn up eventually, but certainly isn't going to arrive whenever they claim. This is my #1 reason for abandoning Amazon.
Very few online stores give you a choice of delivery service. For me Royal Mail are the absolute worst (DPD are ideal, others are close), but it seems to vary by area. I find Amazon gives you a lot more choice than any of their competitors (they integrate with four or more different "collect a parcel from here" services, in London you can almost always find a pickup location very close to wherever you are). I mean if you live somewhere where Royal Mail are better than XYZ then a Royal Mail-only store is better for you than Amazon, but I don't think anyone's better in general. (Also in London you have Prime Now as an option).
> Either you can't find what you want (the range within cycling for example is extremely limited) and have to look elsewhere
Oh? A week ago I was looking for some specific bike accessories (to go with a specialized bike that I'd bought from the one shop in London (perhaps even in Britain), but even they didn't have the accessories for it); on ebay they were badly described and the range wasn't good. Amazon had what I needed. Maybe a specialized online bike store would have an even better range, but I don't want to have to figure out and trust a new store for every product category I might want to buy; I want a generalist, and Amazon is good at that.
> 4. Bundling - Amazon Prime Video really isn't as good as Netflix, Amazon Prime Now isn't beating Shutl for me in London https://shutl.com/uk/, free postage hasn't been compelling (point #3)... but somehow bundling all of these things together into an ~£80 per year subscription is supposed to make a range of sub-par offerings value for money?
Doesn't it? Their video isn't as good as Netflix, their music isn't as good as Spotify, I'll take your word for it that Shutl is better - but a year's subscription to Netflix and Spotify and Shutl and ... would cost a fair bit more than GPB80, the Amazon options are good enough a lot of the time, and having it all integrated in one place is valuable.
> I've purchased things on Amazon Prime, thinking they were covered by Amazon's customer service, only to discover that the obscure market place seller is really the seller and so my warranty complaints go back to them.
I would agree that the UI isn't as obvious as it might be, but it's still pretty easy to see who the seller is
> They've been overseas and uninterested, and I've had to simply write-off the value of those items.
What? No. If they're not honouring their warranty, do a credit card chargeback.
> Very few online stores give you a choice of delivery service.
The ones I'm now using all do.
The different options of exigency are usually different providers, which is very convenient.
> Oh?
As a quick experiment I built a bike from components and accessories last year and couldn't find any of the items I wanted on Amazon, but have just tried again.
No Rohloff hub, Enve rims, Gilles Berthoud mudguards, Schmidt dynamo hub, etc.
Only the brake pads for Hope brakes, not the brakes themselves.
The only bits of an entire bike that I managed to find was the Carradice bag and the Fizik saffle. No other part was on Amazon.
> Amazon options are good enough a lot of the time
They're only "good enough" if having them means that you do not have the Netflix, Spotify and other things in place. A quick survey of the people sat around me with Prime is that every one still has those subscriptions elsewhere.
It's not a saving if it's in addition to other costs.
> If they're not honouring their warranty, do a credit card chargeback.
A warranty period is measured in years, a chargeback period is measured in days... 60 days is usually the upper limit.
Such as? What's the Amazon-like where I can buy a big range?
> The different options of exigency are usually different providers, which is very convenient.
That's true on Amazon too
> They're only "good enough" if having them means that you do not have the Netflix, Spotify and other things in place. A quick survey of the people sat around me with Prime is that every one still has those subscriptions elsewhere.
Hmm, weird. I don't know why you'd get Prime in that case - I guess they find the next day delivery worth the GBP80 on its own?
Prime Video isn't anywhere near as good as Netflix in terms of content or in terms of technical prowess. The Xbox apps are pretty bad. The Android Prime Video app can't even be used without enabling Unknown Sources and then manually installing the whole Amazon App Store on your Android device. Even then, it doesn't work that well. It's kind of a joke.
Yes, but it's probably also the only justification for paying money for prime.
I also use it mainly because it's a requirement for their DVD/Blu-Ray rental service. However that got a massive price increase the last month - so I'm considering stopping to use both.
Regarding delivery the interesting thing is that before prime emerged nearly all orders here in Germany were delivered on the next day. Then prime came up and from there on orders without prime took 2 days and looked artificially delayed so that you would have a reason to pay for prime.
I observed the same thing in Germany: pretty much all delivery services deliver packages the day after they receive the package, so that for Amazon to achieve 2-day delivery they need to deliberately wait a day before they start packaging a non-prime order. Maybe not so customer-obsessed after all.
I had the same experience with much slower normal shipping suddenly after the introduction of Prime. But I just recently allowed my Prime subscription to lapse, and based on my very limited data it seems back to normal again.
We got a price reduction for DVD rental. However, we use Lovefilm-1DVD-without-streaming, because streaming does not work reliably for us. Amazon streaming often stutters and hangs. For comparison, Youtube works great.
The reason I got Prime in Germany (at student rates: €24/y) was free delivery without a minimum amount. Nowadays it's even free same-day delivery (when it's available).
I was surprised how popular DVD rental still was in Germany. Someone I know from Amazon was telling me. I get the impression they desperately want to kill off the market for it though?
I also got the impression because after they took the company over that provided the rental service before (Lovefilm) everything got worse. Amazons website is far worse than what existed before, prices got up and in the first phase the delivery also took longer.
However Streaming and especially Amazons offering is no alternative for Blu-Ray rental in my opinion:
- The video quality for streaming is lacking.
- The amount of movies (not shows) that amazon is offering through VOD is quite low and most of it is old and uninteresting stuff. Outside of prime you can get newer videos also through VOD. But the prices are not really attractive when you can get a higher quality version on disc for a lower or equal price.
Dude kind of missed the point that Bezos has clearly read a lot of Buffet's shareholder letters and is now taking on this good-natured, funny grandfather tone to soften public percpetion the hard economics that run his business - cost cutting, ruthless management, etc. that have recently come to light. Smart move, not subtle, but also not meant to be subtle.
Wouldn't be surprised if Bezos starts madly pitching for the USA and including pictures of him and his employees soon...on the other hand, nobody breaks down the business of insurance/multi-national conglomerate management as elegantly, wittily, and insightfully as Buffett so we have that to look forward to from Bezos.
I see this letter as an attempt at vindication for the controversy sparked by the NYT article on Amazon's corporate culture. Jeff Bezos was clearly affected and I see this as a defense of their "distinctive culture". "For better or for worse" that culture got them to $100 billion in annual sales faster than any company in history.
I live in Seattle and am friends with a lot of Amazon folks. Most work very hard and complain from time to time, but I only know one who left for another job because most who are there now actually really like their jobs.
One friend put it best after he transitioned from a small department in the ecommerce side of the business to one of AWS's early-ish hires, that most young departments have the thrill of working at a startup but with some very supportive corporate backing (as long as things are growing).
I know a lot of people who have left Amazon, and are very bitter about how it was to work there. I know some who are waiting out their signing bonus. I also know a lot who've left Microsoft, but they definitely have a lower average bitterness about the company.
If you don't work at Amazon, there's a pretty big sampling bias in your data. (You are wildly more likely to work with someone who has left Amazon than someone who has happily stayed there, and in casual interactions, you're more likely to hear from the strongly disgruntled than the happy. In the same way, current Amazon workers are likely to know a higher than average percentage of long-tenured and happy Amazon employees than is reality in overall population.)
Owed them for moving expenses, etc. but I really didn't care.
I spent 6 months doing nothing before I even considered getting another job.
Easily the worst experience in my life and completely colored my entire impression of the tech industry negatively. I went from loving what I did to just doing this as a job for a paycheck (even at another company now that is leaps and bounds "better") with an ever-present need to get out of the industry entirely (but no real plan to do so).
Based in Seattle (well, probably a fairly obvious point there). I shifted offices once while I was there, but spent the most time in Varzea (where everyone was packed like Sardines).
I'll echo that from personal experience. I left AWS to start my current company. I had a regret-prevention imperative to do so, but it was still the toughest call.
Amazon's culture is highly polarising. The emergent properties of which are all the truths and lies you ever read about the place.
My views don't represent that of my employer yada yada yada.
Anything in the NYTimes piece that wasn't a personal story was grounded in truth, but spun as bullshit. It was a hit piece. There are bad teams, but at a company of this size, there will always be bad teams, and I am sorry for the poor experiences that people seem to have had, but I would hardly call them widespread. The entire article has really become a bit of an internal joke. That is how ridiculous many people find their claims.
I also live in Seattle and worked at Amazon. When I was interviewing, a conversation I had often went something like this.. "Oh, I see that you were at Amazon; we've interviewed many people from there. I'd ask you why you left but I think I already know."
I think it really just depends on your team though. Most of the people I worked with didn't particularly like Amazon (or working in general) but it was a job and paid (relatively) well. They don't pay as well as Google/FB but they still pay much better than most companies in Seattle and as far as I can tell it's easier to get into Amazon.
Amazon's job levels outpace others fairly quickly I've found. If I were to ask for my salary at Google or FB, I'd probably get laughed out the door. You start lower, but if you work at it, you'll surpass what you'd be paid elsewhere. Benefits however is another story...
You are literally the only person I have ever heard say they make more money at Amazon than elsewhere, and this is counter to my experience working at Amazon.
You might be surprised if you were to actually have that conversation with a competitor.
What other big companies are hiring in Seattle besides Amazon, FB, and Google? The only ones I know of are Zillow and Expedia.
I just assumed they paid relatively well because there was a salary spreadsheet on here a few weeks ago and doing a ctrl F for Seattle, the salaries seemed lower.
For me amazon just seems like a bad deal compensation wise compared to other BigCos like facebook, google, apple, msft . Back loaded stock grants, lower pay, etc. Then add a high pressure big-company culture on top of that. I'll be pleasantly surprised if I'm wrong!
The thing that I like about working at Amazon is that they don't push the "Kool-Aid" culture that I sense from Facebook, Google, and Apple. I come to work, I feel proud of what I've done, I go home. That is it. That is what I want out of a job. I don't want to be a "Googler," or be told that I'm "changing the world" as I deploy a new sticker pack of poop emojis to Messenger. I want a job, not a cult.
The funny thing about your statement is that you are drinking your own version of koolaid at Amazon.
FWIW, there is definitely koolaid mentality at Google and Facebook (source: worked at, and have lots of friends at both), but it's not the same way as you think. People are proud of what the company has accomplished as a whole in changing the world, but they aren't as blind to think that the feature that they added to a product is world changing in itself.
Employees of other companies are not a cult, though this perception is common internally to Amazon. It discourages you from quitting, and stigmatizes people who leave.
Think about this next time you have a conversation where everyone quotes the leadership principles.
I left AWS after 7 months full time and 3-4 months internship. Almost everyone I worked with (~30 people) either stayed put, or left the team but stayed within Amazon.
We venerate leaders like Churchill and Roosevelt because they inspired millions of individuals to act directly against their self-interest and in favor of the organizations that those leaders own and manage. "We will fight on the beaches" sure sounds inspiring, but if it was my intestines bleeding out onto the sands of Normandy, at that exact moment, it wouldn't have quite the same ring. Yet these inspiring words still convince millions to follow them, and so we have warehouse workers dropping from heat stroke and programmers sacrificing their personal life to fix that bug into the late hours, all so people like Bezos can live the high life, rake in millions, and write some pithy emails. Works for them I suppose, and it seems to be human nature for such type of organizations to arise and dominate. Amazon is a great company that makes a lot of money, no doubt about its success. Me? I'll try to keep my intestines _inside_ my stomach.
Churchill [...] inspired millions of individuals to act
directly against their self-interest
If a Brit is equally happy living under the Nazis or a British government; or if military victory is impossible for the Brits; yes.
But if most Brits would prefer to live under British rather than Nazi rule, you have something game theorists call a "Cooperative game" and it may well be more profitable on average for /everyone/ to fight rather than for /no-one/ to fight. It can even be in the self-interest of a /coalition/ to fight, tolerating non-fighting free riders, as long as the coalition remains large enough to win.
In other words, Churchill convinced millions of people to act in their /collective/ best interests, rather than their /individual/ best interests.
That's kind of a ridiculous comparison. Those men didn't fight on the beaches because Churchill made a nice speech, they did it because they could see very clearly what the approaching Nazi army would do if they weren't stopped. Nice speeches from inspiring leaders helped - a bit - but frankly I think things would have worked out the same anyway. We tend to look at Churchill with rose tinted glasses because the Allies won the war, but he got booted out pretty quickly once the war was over for being, essentially, a bad prime minister.
WWII is like the one war you could pick where it was not against the soldiers' self-interest to fight. With most wars you could argue it's more about rulers fighting over power than it is about people defending themselves, but not WWII. It's the most morally straightforward war I can think of.
Most of his shareholder letters are like this. Even the 1997 reprint they put in every year as part of the letter talks a lot about the company philosophy and culture. Certainly some of the stuff at the end about new programs for parents and students is from NYTimes, but I think the rest of it is consistent belief/action since the start of the company.
This is just how Jeff Bezos writes those letters, and those letters need to be written regardless of if the public is currently discussing of how poorly Amazon treats its employees or not.
The last part about "pioneering new programs" though, that's very likely related to the public's new awareness of how frustrating it is to work there.
I agree. I think these lines are directly related to the NYT controversy:
"""
If it’s a distinctive culture, it will fit certain people like a custom-made glove. The reason cultures are so stable in time is because people self-select. Someone energized by competitive zeal may select and be happy in one culture, while someone who loves to pioneer and invent may choose another.
"""
I work at a small software company, and too often our CEO and company will latch onto nuggets from material like this and use it to justify a "swing for the fences", "nothing ventured nothing gained" sort of mindset. All well and good, but they blithely overlook the "we fail all the time" parts, and sometimes we take risks where the potential losses are not easy to absorb, or we don't have the vast resources of a big company to attempt a thing without impacting our mainline investment. Unfortunately, I've seen first hand that interesting, inspiring ideas can turn cargo cult real quick without some reality to temper them; namely, there are only two scenarios where you can easily justify risk (that is, not sweat over it): 1. You have nothing to lose. 2. You have relatively little to lose.
I suspect a lot of the current griping over hiring practices is due to this. Small companies cargo-cult hiring practices from Google/Amazon/Apple/Facebook, but they forget that these companies have huge numbers of good applicants who are willing to jump through hoops just for the opportunity to have $BIGNAME on their resume.
"The name derives from the belief that various ritualistic acts will lead to a bestowing of material wealth."
Basically, slavishly copying someone else's actions without actually understanding the underlying principle behind those actions. The most famous example is from WWII - Japanese and American armed forces built airstrips on underdeveloped islands, and either abandoned or shared what seemed like massive amounts of wealth with the islanders. When the war was over, islanders replicated airstrips and military bases, some even dressing up as soldiers, in order to bring back the flow of cargo.
>Basically, slavishly copying someone else's actions without actually understanding the underlying principle behind those actions.
And it should be noted that this works really well much of the time, which is why humans often do it. A deep understanding can be beneficial if you're capable of grasping it, but if we're honest, most people aren't.
Agreed. At least Bezos's letter is online where everybody can read it. At least we all know what the shiny little nugget looks like that people are chasing.
That's better than chasing some shiny buzzword from a business professor writing in the Harvard Business Review. With a public-company shareholder letter, everybody can know the context.
Oh god yes. At one company, I'd see an article trending on HN and think, "Oh fuck, some suck-up's gonna email to everyone, and the CTO will publicly pat him on the head for confirming his prejudices."
I think about this sentiment all the time. Any C-level professional (even if you're in a company with a single digit of employees) should be constantly challenging their own line of thinking.
From the 1997 letter that's included at the bottom:
> We established long-term relationships with many important strategic partners, including America Online, Yahoo!, Excite, Netscape, GeoCities, AltaVista, @Home, and Prodigy.
I honestly don't have the slightest clue how yahoo stays in business. And I don't mean that as rhetoric, either. Other than Bloomberg I don't get where the money comes from. I hope it's not organized crime...
I'd probably read a biography of the company out of curiosity.
All I can do is guess, but if you go to their home page take a look at the sidebar. That's a pretty impressive range of services. You can manage your email, buy stuff, check the news, see what's on TV, check the weather. It's AOL but on the web and for non-technical people having one place where you can do everything is probably pretty attractive. Especially if it came set as their web browser home page and they don't know how to change it or create bookmarks.
That's not a long term sustainable business though, as the non-tech savvy oldsters in the population get replaced by youngsters that mainly use mobile devices and apps anyway. I think Cringeley has a point. Yahoo should slim down and use it's remaining financial weight to turn itself into a tech industry specialised version of Berkshire Hathaway. Copy Google's corporate structure and hive off the portal into a subsidiary of a holding company that focuses on managing investments.
I think they should do the opposite. Even as a young guy their product is very valuable, or was, but they're destroying it piecemeal, closing the unprofitable services and not realizing that the value came from having all those services in one place.
They need to massively cut costs and write down a lot of their value. Their portal with all their services could easily be a cashflow-positive sustainable business. But because they were once big they're not willing to do what it takes to be sustainable now that they're small; instead they're selling off all the good bits to fund wasteful moonshots.
Just because is ad hominem, doesn't mean it's a fallacy. Sometimes a person's reputation is so bad you don't need to give any benefit of the doubt for his/her opinions.
Most so-called fallacies are empirically effective (though not valid proofs in classical logic). Public statements from kooks really are false at a much higher rate than public statements from non-kooks.
Not 100% sure how the Amazon/Zappos relationship is setup but I think it's odd that Zappos isn't mentioned anywhere in this or AFAIK anywhere in there investor documents. Does anyone now how Zappos is performing since being acquired? Especially with all of the controversy with their management styles? To be fair I'm sure Zappos is probably a small part of Amazon's revenue, but as a Las Vegas native I'm interested.
He knows the importance of image and says all the right things to tug at your heart strings... they're fighting global warming, they're helping single moms, and they're running a startup-like environment unlike the other big evil corporations.
It blew my mind that his example of helping a single mom of EIGHT was her getting trained as a long haul truck driver. Who's taking care of that many kids while she's gone? Truck driving is not that well-paid, and the length of absences is right there in the job title.
His example is a subtle jab at working class. He thinks people are such trash that truck driver is aspirational for them. The education benefits for blue collar workers at Amazon take years to kick in and don't cover a single year at most community colleges. Workers are frequently fired before 90 days to prevent benefits from starting. Workers would do far better to do a small education loan and start training early.
>He thinks people are such trash that truck driver is aspirational for them
What planet are you on? Truck driver is an excellent working class job. It's skilled labour (yes, really), you need to be trustworthy and able to operate independently, work long hours and take responsibility for a very expensive asset. As a result it pays a significant premium compared to a lot of manual labour and service jobs.
AWS and Prime are winners. So is marketplace, he says. Maybe financially for Amazon, but from a customer standpoint I think marketplace is a real failure. It's the reason I tell relatives not to buy on Amazon, because several got burned so many times by accidentally buying from dodgy sellers, thinking it was from Amazon.
They are convinced of the vision and have an unwavering belief that they will achieve this vision, but there are many paths one can take. So to act rationally when encountering a failed attempt, given their belief, is to learn and try something else. :)
Your quote is from the section where they are explaining their first attempt at an auction house and how it failed but how their current system of third party retailers is implementing a similar idea in a successful way.
They kept the same vision/goal but they learned from how their first attempt failed and iterated on it until it succeeded.
There's another part of the quote that was not included that relates to being flexible on tactics (...while being stubborn on vision). So the "why" and "for whom" stay constant, but the "what" and "how" may change as you learn.
He's talking about failures related to individual steps on the way to the greater vision of what Amazon is supposed to represent as a value proposition to customers.
A single failure on a step, such as the Fire Phone for example, doesn't imply a failure of the overall vision ("Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.").
Usually vision is paired with the concept of execution. The vision was to build a business out of being a marketplace where third parties can sell goods, they failed twice on the execution.
I think there is a fair bit of misunderstanding about Jeff's letter on this thread. For those who have not read all of his shareholder letters from the past 20 years, I would really recommend you to do so. What Jeff is saying in this years letter is nothing new. He's literally been saying the same things for 20 years now.
Occasional customer here buying only discounted goods from Amazon logistics only and always at the total minimum I need not to pay shippage. Quality is overall worsening year after year but Amazon has always been a bonanza, the day it ends thank you and good riddance, going local again.
Am I the only one who read "Type I and II decisions" and thought "System I and II decisions" (from Thinking, Fast and Slow?). I like the idea of distinguishing reversible from irreversible decisions, I just wish he'd come up with better names...
1 vs 2 is a bad, non-mnemonic naming convention to use, for either of those cases. Sadly, it also appears in "type I vs type II" errors. Even "false positive vs false negative" isn't helpful, since the decision of what counts as "positive" is arbitrary. Better to refer to the category directly: eg, "false ham vs false spam", "false acceptance vs false rejection".
While we're on the topic Amazon and bad naming, what's with AWS EC2 instances? They have "spot" vs "on demand" instances, which have very different properties, ideal for different use cases ... and yet, in the context of economics and markets, the terms are basically synonyms!
I'm not sure about "false acceptance vs false rejection" being better than "false positive vs false negative". False positive pretty much always means you give incorrect bad news; false negative means you give incorrect good news. "Acceptance" may mean either "ham" or "spam" depending on the context.
Positive means you found the special thing you are looking for; negative means you just found an ordinary thing. False positive means you thought you found the special thing but you didn't, it was just ordinary; false negative means you thought you found an ordinary thing but actually it was special.
False positives mean you throw away ham as spam (terrible), false negatives mean you let some spam into your mailbox (not a big deal). But false positives also mean you diagnose benign as malignant (annoying), and false negatives also mean you diagnose malignant as benign (fatal).
So depending on what you are looking for, it varies whether false negatives or false positives are worse. Or maybe they can be equally bad.
I don't think you need to rename positive and negative as long as positive is understood as unusual and negative is understood as normal.
Hmmm, good point. Ok, if you count individual messages, there is more spam, but if you look at the kinds of spam messages, they are way less diverse. So spam goes into one of ~10 buckets (419, pharmacy, fake conferences, view my profile, etc.), but the rest goes into 1000 different buckets. But you still have a good point.
I wouldn't read into it too much. Amazon has adopted every stupid management fad and religion under the sun from six sigma to kaizen to lean to 5s to agile, etc. The idea being that if you are an expert on something totally made up you must deserve that big fat raise and promotion. I feel sorry for all the people who are going to have to go through Bezos method decision making training (black belt omega critical OT level VIII version).
Amazon has a history of hiring MBA's - they hired a ton from HBS before the crash - when other tech companies didn't. Maybe it's Bezo's Wall Street background.
Amazon had a $7B biz in 2015[0]. I am on mobile but I believe they have more servers than google. obviously, it fits with my personal narrative/is self serving, to say that the war for search is coming, but it is.
Microsoft basically modeled azure as a more user friendly AWS, and is courting devs with the release today of integrated code search with hacker rank, as well as the push to open source a ton of tooling (similar to googledocs enterprise strategy) to get developers on the platform.
msft also is pushing blockchain on azure, likely because it is interesting to developers and they have failed miserably to get payments done like apple & google.
Search is going to be big as ecosystems narrow, however outside of this, and to your point, AWS is a very valuable part of AMazons strategy.
Never in the world (maybe robber baron era but quite dif) has anyone owned the entire channel.
Amazon:
1. Retailer of physical things.
2. marketmaker for physical things.
3. producer, market maker, and retail distribution for dogital goods.
4. last-mile delivery of physical goods.
5. backbone provider for phys goods (registered shipping broker)
6. owner of infrastructure of most of the conpetitors. in the christensen innovators dillemma sense, they don't have it. if someone does sonethong better than them and scale, they are hedged by getting paid for theyre infrastructure.
so interesting stuff. as search becomes less of a monopoly and continues to be edged out by ancilliary products, google is going to invest heavily in infrastruct. you can see them doing this now as they get cash together, tighten focus and embrace this meta stricture.
Short Term, AMZN is likely to be richest company in the world. excepting maybe Apple as they continue to build product & transition into an o2o Bank & Finance institution. they already are quite large, having users with accounts, they're own quasi credit card & payment system, and capital reserves. this lesves aside their lending activities (at tje supply chain level) snd affiliate marketing with barclaycard ect
I'm trying to do some math. What is the total economic value of the actual Amazon river, and how many Amazon rivers economies did Amazon.com make last year.
First off, most people read that as "price times volume", or the exchange value of some good or service. The Amazon River isn't exchanged, it has no exchange value.
Another definition of "economic value" is use value, which is to say, the benefit derived from use, possession, existence, control, etc., of some good. The problem here is that economics has little handle on estimating just what this use-value is. Some economists claim it cannot be measured or known (e.g., Ludwig von Mises), others note that it's not intrinsic but is always relative -- a property between the valuer and the valued (William Foster Lloyd in his 1834 essay on value, William Stanley Jevons in his book on money and transactions). That is, there is no absolute value.
(Lloyd's essay is prescient in some ways of Einstein's later work.)
Edwin Cannen, editor and researcher on Adam Smith notes that Smith's definition of wealth, "the annual labour and produce of the nation", specifically excludes the concept of land or mineral wealth as included in that definition. That's a recent discovery of mine in the past week or so, and I want to look into it further, but it's quite the observation.
I've been working on a couple of concepts. One is that there are really three related but distinct concepts: costs, value, and price. They're somewhat related, but through a loose mechanism.
Cost is what you give up to get something. "All costs are opportunity costs" (Krugman, Economics, 2008).
Value is what you gain by something. Individually, value is hard to measure but in aggregate you've got good percentage going off biological or ecological measures, usually of metabolism, energy, or energy-and-materials throughput.
Price then becomes a somewhat odd duck, in that it's a cost for the motivation of exchange. Ideally we'd like C <= P < V, that is, cost is less than or equal to price, which is less than value.
Several problems introduce themselves though, and I'm going to hand wave and say "it's complicated", but for numerous reasons over the short term, price can fall well below long-term costs (the rational is similar to the logic of the shut-down point in microeconomics).
But let's go back to the cost of providing Amazon, Inc., vs. the Amazon River.
The former has an economic throughput of, very roughly, $100 billion dollars. This is an estimate, and I think I'm high here. But there's a point to this.
Turns out if you look at US GDP and energy inputs, a barrel of oil generates about $1,000 of GDP. So Amazon's revenues represent about 1 million barrels of oil energy equivalent.
I'm going to estimate that the Amazon River Basin is about 1/4 the surface area of South America (which I've got as a constant in GNU Units). It receives incident sunlight at roughly 1 kW/m^2 for 8 hours a day, or equivalently, for 1/3 of the duration of a year.
In barrels of oil equivalent, that's about 7 trillion.
Which is to say, there's about 7 billion times the cost to provisioning the Amazon as there Amazon, Inc.
If Amazon, Inc. disappeared off the face of the Earth, a few tens of thousands of people would need to find a new job, and a few hundreds of millions others would have to travel to the store or find a new eCommerce provider.
If the Amazon disappeared off the face of the Earth, odds are that an event significant enough to destroy all of modern civilisation would have transpired. One valuation of that is the roughly $70 trillion of the global economy.
I'd say the river wins over Big River Book Company.
The fact that our economic system fails to account for the relative values correctly says far more for what's wrong with our economic system than with how valuable Amazon, Inc. is, or how unvaluable the Amazon River is.
----
And checking my estimates. The Amazon River basin is 7 million km^2, or about 39% the area of South America.
Amazon's 2015 annual revenues were actually $107 billion, though profits were $1 billion. So I was less generous than intended.
Still, at 7 billion : 1 I'd argue my analysis is within reason.
Amazon isn't making any money yet. Maybe in future they will make some. I don't like using AWS (I just don't know why), I prefer Microsoft Azure and Digital Ocean.
Amazon makes TONS of money. They aren't currently returning any of it to shareholders as profits, they're continuously reinvesting it in the company.
The difference between gross profit and net profit is how much Amazon is spending on building new businesses that after a few years start grossing $10b a year in sales like AWS. That got funded out of the gross profits from regular Amazon retail operations.
This seems like a huge distinction that people don't make often enough with high-performing, fast-growing companies. You see it with Tesla, too, when people claim that the Model S is "sold at a loss", ignoring the fact that a large part of the company's current expenditure is in setting up huge new factories.
I'd have thought comparing funding expanding Amazon's data centre capacity from revenue is very comparable to Tesla building out it's manufacturing capability the same way.
If you want defined returns you can buy amazon bonds today. if you want to try to triple your money in 5 years, well, maybe that'll happen with the stock again. who knows?
Not to mention that MSFT went from $50/share to $30/share under Ballmer's tenure as CEO. Not sure he has any legs to stand on to bash AMZN about being a "real business."
$596 million in net income the last four quarters to be exact. So yeah, they are making money.
Further, AWS is a money printing machine. It's generating over $700 million in operating income per quarter, and that's growing very fast. It'll be at $5+ billion per year in operating income within perhaps just two or three more years. There aren't very many technology businesses anywhere producing that kind of operating income.
Haven't tried Azure yet - will give it a spin eventually. I love Digital Ocean compared to AWS. Sure, AWS has a lot of bells and whistles, but this simplicity of DO is just what I need most times.
AWS has moved on from single-EC2-instance simplicity. It's not worth it if you don't need a virtual rack of servers with all the VPC networking that comes with it.
But if you _do_ need that, like we do, it's bloody brilliant.
