You have to love this sentence "We want Prime to be such a good value, you’d be irresponsible not to be a member."
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.
> 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.
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.
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.
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'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.
I thought that was obvious, and a charitable interpretation of his post would've made this clear, I think.
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.
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.
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)
They're just shitstains
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.
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.
Case in point - they sell iPads. Why don't they just sell Kindles? The inconsistency comes off as sleezy.
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.
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.
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.
It's like if eBay banned Kindle sales.
Selling surplus stock.
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.
It's life if Microsoft had used its market position with Windows to push IE.
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.
This is kind of like expecting a Ford dealer to sell Chevys.
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.
Apple Google and Amazon are even larger companies who manufacture and sell the competing products mentioned by this guy.
It's a direct comparison.
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. What specifically do you find better at eBay?
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.
> The company loses an estimated $1 billion to $2 billion on Prime shipping annually
http://www.marketwatch.com/story/is-free-shipping-killing-am...
Amazon wants market share enough to absorb a loss on shipping costs. It's part of why Amazon is still not profitable.
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 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".
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.
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.
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.
A profit margin of 0.57% [0]. That's so close to zero that I'm comfortable saying they're not profitable.
The whole thing makes going to a brick and mortar store feel like going to the DMV.
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."
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.
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.
Plus you get a lot of freebies, like movies.
That's only true if you would have bought those items anyway. If you wouldn't have then the system is beating you.
And if you would have insisted on 2-day shipping for everything you buy, which seems unlikely. Some purchases, sure, but everything?
side note: jet.com is not collecting sales tax yet. That is 8.25% differential where I live.
So you technically do still need to pay that 8.25% differential.
Your accountant was probably trying to save you money.
"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.
a) Hey I have a cousin Vinny. Great account. Knows every single rule and is always ethical. I sleep great at night
b) Hey I have a cousin Jen. Great accountant. She found all kinds of crazy savings, saved me $1000 last year.
People know in their heart they should go for the honest guy. But hey, saving money.. who can pass that up?
Knowingly and intentionally not paying a tax by falsifying records probably does not sit well with the Internal Revenue Service.
IRS can and has disbarred CPAs based on ethics [1].
[1]: https://www.irs.gov/uac/Newsroom/Certified-Public-Accountant...
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.
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.
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.
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?
I grabbed a copy from... elsewhere... and then never shopped at Amazon again.
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.
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.
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.
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.
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.