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