Amazon to shut down its Amazon Restaurants business in the U.S. | Hacker News Reader

Amazon to shut down its Amazon Restaurants business in the U.S.

geekwire.com

120 pointslxm127 comments

I'm amazed and amused reading some replies - it looks like some people would love to live in a world where single corporation fulfills all their basic needs:

* restaurants from amazon

* home real estate market[0]

* shopping from amazon

* entertainment from amazon

* alexa from amazon, listening all the time

* education (already some basic form of it exists - alexa is used to answer kids questions)

Although many important key services are still missing: healthcare, insurances, banking.. etc.

edit: banking-related product already out [1]

[0] https://news.ycombinator.com/item?id=20152956

[1] Banking - Amazon.com Credit Builder - https://news.ycombinator.com/item?id=20149304

> healthcare

Forget about Haven already?

Keep in mind feudalism, though far from ideal, had benefits.

Good lord if Haven can fix the broken US healthcare system, I'd happily embrace the feudal estate.

There is perhaps an appeal to megacorps as voluntary nation-state membership; it is not trivial to leave one's tech ecosystem, but it's much easier than leaving one's nation, and there are advantages to all the components of the stack working together. (Blood and souls for my Lord Apple of Cupertino!)

On the other hand, I think Douglas Rushkoff and Bruce Schneier are correct in comparing the FAANG ecosystem to feudalism: https://www.schneier.com/essays/archives/2012/11/when_it_com...

I haven't used the restaurant service, but I'm starting to be shocked at how quickly Amazon is going downhill in most of their consumer-facing businesses. I dropped prime last month after maybe 6 years, since the price keeps climbing and the value of the service keeps dropping. I used to make nearly all of my online purchases through them, but between the fakes and poor customer service I couldn't justify the cost of prime anymore.

Although I think this is a good thing, I'd rather not see one company control the entirety of e-commerce. And out of the big tech companies Amazon is the easiest to drop (excluding AWS, strictly consumer services). I'm still not Google-free, but switching email and search was much more difficult than leaving Amazon.

I want someone to come in and crush entrenched rent-seekers by building and scaling better, cheaper products. There are only a handful of companies in recent memory that have managed to do that - Walmart, Vanguard, Uber/Lyft, and arguably Airbnb and Robinhood are the first few that come to mind - and I can't think of any other than Amazon that have done it in multiple spaces (CPG + IaaS so far).

I'd prefer if different startups did it in each of those industries, but I can live with Amazon taking over the world if it means that health care no longer sucks and selling a home no longer costs 6% and kids in underfunded school districts get their questions answered.

You can sell your home though various portals without having to ever speak to a realtor. Walmart has innovated in a few different places but primarily logistics. Disney is not just an animation hub, they work on robotics, software, as well as psychology and other areas. I think it's easier to see when your company isn't already a behemoth. Amazon arguably has done innovation better than most, but a lot of that has been through investor money other people wouldn't have access to. Established companies have to balance the books and as they've shifted towards profitability and revenue innovation has necessarily slowed.

I think you're already seeing many of your problems getting closer to solutions. There is that natural tension though between capitalism and it's tendency towards monopoly and the government's responsibility to ensure that the market stays healthy and competitive.

Sad to see it go. I was on the original Amazon Local team for about two years, that ultimately turned into restaurants. A lot of my growth came from the people on amazon local, really solid people and good people, the product just had trouble catching on. That’s amazon, they’ll give just about everything a solid try and do their best knowing it may not work out.

Are you able to discuss some of the lessons learnt, like generically without going into too much private detail

Amazon had a restaurant business?

The funny thing is, Amazon probably could do a good delivery restaurant business. There are already many "delivery only restaurants"[1] Uber Eats encourages others to start them. But Amazon, unlike Uber, is capable of building physical infrastructure. The future of this is "food fulfillment centers", large warehouse spaces which house various specialty kitchens. Common functions, such as shipping, cleaning, equipment maintenance, and order handling are shared. Surprising that Amazon didn't go that way.

[1] https://ny.eater.com/2016/9/26/12717518/delivery-only-restau...

I think you might be partially on to something here; generally the idea being that food delivery is essentially commoditized and Amazon is uniquely suited to thrive in commoditized industries with their vast infrastructural advantages.

They do have Whole Foods and Amazon Go, which both supply ready-to-eat foods along with meal kits. It would be a minor logistical challenge to simply start preparing their own meal kits on-demand and delivering them via Prime Now (which operates inside the exact same markets as Amazon Restaurants?) with the bonus benefit of owning quality control in the kitchens.

The main problem is that kitchens operate with dirt cheap labor costs. In a market like New York, all those cheap hole in the walls are paying their workers cash under the table and running with razor thin margins.

It’s one thing to target a cushy market like bookstores, but restaurants are cutthroat, and on top of that meal kit customers are fickle.

> a cushy market like bookstores

Haven’t book stores been in a perilous position for decades?

Yes, and Amazon started selling books in 1995. Ie when it was still a cushy market.

Bookstores used to not be a cushy market, and bookstores generally pay sales taxes and minimum wages, practices that anecdotally are less followed with restaurants.

Hm kind of reminds me of Ikea's food racket. Actually I'm sitting here trying to think of why that wouldn't work but I honestly can't. Cool idea!

What is "Ikea's food racket"?

Ikea is a chain of furniture stores which (among other things) have food courts in them.

Yes I'm fully aware. I just don't see what the racket is.

I believe the racket is that the stores are so maze-like that food is required, since it seems to take half a day even for a short trip.

Sometimes HN... Racket meant just as an operational endeavor. Not the kind where you nefariously earn money.

Racket: a person's line of business or way of life.

Edit: oh yeah kids are out of school. I thought things felt dumber around here lately

Just as there are already “enough” physical cars, there is also already enough physical restaurant infrastructure, so today it’s more a question of efficient utilization. What Uber Eats is doing in this space is really smart: Keeping track of local food search keywords, and reaching out to local restaurants saying “Hey, if you provided such-and-such food items at such-and-such time of day in your area, we think you’d do really well. You can sell these items on Uber Eats under a different brand if they don’t fit in your existing cuisine niche.”

Longer-term you’re probably right that centralization could be more efficient in some cases, but looking too far into the future often makes less economic sense today. See: Webvan.

But a "restaurant on wheels" is a idea that will be truly profitable, at least in theory! Its true that restaurants abound in localities today but mobility of people (and their eating preferences) from one location to another has also increased. Restaurants which are profitable today may not be tomorrow. A restaurant on wheels can easily adapt to changing demands by constantly moving on from low demand areas to high demand ones. Maybe, Amazon can even build an AI or something to guide it for most efficiency.

"restaurant on wheels"

Have you reinvented the taco truck?

Why specifically tacos?

> large warehouse spaces which house various specialty kitchens. Common functions, such as shipping, cleaning, equipment maintenance, and order handling are shared.

Deliveroo in Australia does something like that.

https://foodscene.deliveroo.com.au/restaurant-profiles/secon...

https://www.news.com.au/lifestyle/food/restaurants-bars/deli...

Who announced a $575M funding round led by Amazon three weeks ago.

Yeah it did, and restaurants actually put up stickers for it on their doors!

What you're describing is what Travis Kalanick bought and have been building in LA and San Jose since last year. There are other commissary kitchens that's now doubling as virtual kitchens with half a dozen brands sharing utility, equipment and even staff.

I'll do you even one better, here's the real future in less than three years:

Restaurants will shed front of house as most low end full service will be liability, instead restaurants will consolidate, rely on DSPs (especially GrubHub because unlike the other two chooses to break apart their commission structure), and merge with digital agencies in order to brand, market, create content, and manage communities.

I'm doubtful. No service, low-cost restaurant setups are not a new thing (quick service/counter-based) and full-service restaurants are still everywhere.

I don't know if that's because profit isn't overwhelmingly the most important driver when running a restaurant or because restaurants make most profit off of aspects that don't translate to counter-service/delivery, such as drinks. But I would expect these type of virtual restaurants to complement existing restaurants, not meaningfully replace them.

Yes where I live in the UK this has been a thing for years one of the oldest Indian's in my town has had a delivery only kitchen for over a decade.

Generally, when we in the tech industry turn our gaze to something we know nothing about, we assume that the first thought we have about it is revolutionary.

Which is actually a good way to raise money, because most VCs don't know much about other industries either.

This first sentence is so on point and frustratingly correct, I don't know what to do other than upvote it :-(

100% agreed. I look at these cloud kitchens / no front facing kitchens to only be an efficient, cheap, clean food option like for office lunch, etc. I would much prefer a fine dine / full service front facing restaurant for celebrations and special occasions (even if I'm just ordering in).

However, I can imagine a subset of full service restaurants to be affected because of losing users that are on the fringes.

That misses a major purpose people go to sit down restaurants is for the atmosphere. Whether it be for casual dining, or celebration, or a date, or business meeting. The point is not the food, it’s to facilitate a social interaction under the common setting of needing to eat.

You’ve always been able to get good food without a front of house.

> That misses a major purpose people go to sit down restaurants is for the atmosphere.

Also the contextual break (from your desk or your home), or as a "neutral ground" (for dates or less formal meetings).

Have you? Until fast-casual restaurants became popular in the 2000s there wasn't much for "good food without a front of house". I remember when most grocery stores were mostly groceries and not very much pre-made meals.

I meant restaurants without waiters and whatnot.

Automats were a thing until the 1970s or so.

And you also had delivery services before the Internet. Delivery services would hand a book full of menus along with a page containing their phone number. You call the number, order off the menus, food gets to your door, and you pay. Works just like ordering a pizza used to.

Honestly, if we're bringing back no-FOH restaurants, can we get automats again? I've heard stories about them from my parents and seen a re-creation of one in Agent Carter, but I'd really like to actually get to experience one.

https://www.eatsa.com/

> There are already many "delivery only restaurants"[1]

"Delivery-only restaurant" sounds self-contradictory, a restaurant is by definition a place where you can eat.

These sounds more like takeouts, or traiteurs.

While I understand what you're saying, I think the distinction is useful because "takeout" has more of a specific meaning and association with more 'casual' food. Whereas these 'delivery only restaurants', or 'dark kitchens' are existing restaurants that people enjoy, but with an offsite, delivery-only location.

'Delivery-only takeout' would also be self-contradictory, wouldn't it.

Kinda, but way closer still: you're not eating on premise, however the shop brings you food rather than having to get food from the shop.

That sounds overdue.

Restaurant food is massively overpriced compared to raw materials (despite basic dishes like pasta and sous vide steak taking basically no time and effort to prepare), and mass producing it along with mass delivery using vans might fix that.

A price of an item is rarely if ever based on its raw material cost. With restaurant food even more. You pay for location, rent, heating, staffing etc etc etc

Not really rebutting GP’s point.

More importantly, the price of an item comes down to how much people are _willing to pay for it_. Price does have to cover overhead(unless you're WeWork and care more about revenue than profit), but a comparable competing product can have the same overhead and charge way more if its audience is willing to pay more or it.

If it takes no time or effort why not just do it at home? The results will be better.

It most certainly takes time and effort to have kitchen infrastructure, inventory, cook to order, and delivery.

Cooking at home has many of the same costs beyond raw materials that a restaurant has, like kitchen infrastructure, inventory, and labour costs, driving the cost of cooking at home well beyond the raw material cost. The parent is suggesting that a business producing food at massive scale could bring the cost of preparing food much closer to the raw material cost.

It is not exactly a wild idea. The model has already proven itself to a limited extent. What we have really struggled with is maintaining quality at scale across a variety of foods. To be more specific, the parent is suggesting that there is room in the market for quality prepared food produced at scale.

Except you probably already have some semblance of a kitchen in your apartment. Preparing some simple meals--stir fries, steak, fish filet, etc.--has very little incremental infrastructure or skill associated with it.

That a portion of the cost of operating a kitchen at home is a sunk cost is the only thing that keeps cooking at home cost-competitive with eating out at restaurants. The price of eating at a restaurant that is well above the cost of materials is already operating at an efficiency that is above what one can achieve eating at home, all things considered.

If the hypothetical prepared meal service could deliver food for near-material cost, it would quickly start to be difficult to justify cooking at home. At least on a cost basis; there are certainly other reasons why one might want to cook at home, even if it costs substantially more money to do so.

Outside of a dormitory situation (and sometimes even then), how many people are seriously willing to dispense with even the most minimal kitchen (say, refrigerator, burner, toaster oven, kitchen sink, maybe microwave)? To a first approximation, no one wants to order out for an egg and a couple slides of toast in the morning.

So most probably can't/don't want to eliminate the kitchen entirely and that minimal kitchen is probably not that different from a lot of urban kitchens in areas like Manhattan.

> no one wants to order out for an egg and a couple slides of toast in the morning.

Why do you think that is? To me, having eggs and toast 'magically' appear in front of me when I get up in the morning sounds wonderful and I am really not sure why everyone wouldn't want that if the infrastructure to provide it was there.

While the actual act of making an egg and some toast is not terribly difficult, everything else that goes along with it, like having to plan the meal ahead of time such that you have the supplies on hand, starts to add up into a big job. A big job that I cannot imagine why someone who doesn't love cooking would want to take on unnecessarily.

I can see how it may be necessary under the status quo as we lack the technology to really deliver on the vision, but our discussion is not about the status quo, but rather a hypothetical future where industry has figured out to produce quality prepared food at scale such that the costs start to approach that of the raw materials.

Off topic, I just videos on cooking sous vide steak and I'm totally sold on the technique. Where has this been all my life???

Raw materials aren't the reason restaurant food is expensive, the biggest cost of running a commercial kitchen is labor. And that is even after considering that kitchen staff are often low-wage positions. How, exactly, will this save money? Sure, you don't have to pay waitstaff the ludicrously low rate of ~1.25/hour, but the delivery drivers need paid and the app will take its middleman cut of the profits.

And have you ever eaten hospital food or other cafeteria e? That is the quality to expect from a industrial scale kitchen. Delivery is convenient, but nothing about this business is very revolutionary, and I certainly don't see the restaurant industry being 'disrupted' anytime soon.

Take a look at what Deliveroo is doing with their "Editions" brand. They get some space, set up small takeout only kitchens and enable a restaurant to expand their delivery range (different neighborhoods or even cities).

https://foodscene.deliveroo.co.uk/promotions/deliveroo-editi...

I tried it twice, back when I had Prime.

Amazon's mapping system puts my house in the wrong location, and to make matters worse, in my experience the drivers are utterly nasty about it.

I have stood in front of my house as I can see the driver go by multiple times. I will jump up and down and wave and try to flag them down, and they just speed by. I call them to give them directions, and they ignore everything I have to say. I was often talking to them on the phone when I see them speed by, and they're not even paying enough attention to see me flagging them down with one hand while I have my phone at my ear. I ask them to open Google Maps because that has my address in the right location, and one guy shouted at me "This is Amazon Prime! We don't use Google!".

Both times, I complained to corporate because my food was an entire _hour_ late, and it was ice cold by the time it got here. The first time, I got credit for my next order, which is the only reason there was a second time. There was never a third time, and I let my Prime subscription lapse without renewing it not too long after that.

>Surprising that Amazon didn't go that way.

Maybe customers can over look Amazon workers not getting bathroom breaks and being forced to urinate in plastic jugs so they can get their online orders next day...but customers might not overlook those working conditions when they find out the people handling their food are urinating in the kitchen because they don’t get bathroom breaks.

Not to mention the stories of 100 degree warehouses so amazon can save on electricity, I wouldn’t put it past them to not keep food as cold as it should be to save a few bucks.

There’s lots of competition and it’s a low margin business. Probably just didn’t see it as a market worth fighting for.

So the goal is to be like a food court, but cheaper and/or better because, due to delivery-only, the location can be cheaper, and the space can be more efficiently used (no customer seating)?

Right. The location can be cheaper, and better laid out for a volume business. Like having a loading dock. If you can handle big trucks, you get to cut out a layer of restaurant service middlemen.

I can see asking Alexa to bring me a three meat pizza, and the delivery drone places it on my personal robot, which grabs a beer from the fridge before it brings it to me at my recliner. That's Prime delivery!

I wonder if Amazon would ever dive into the home real estate market. With modern day search, realtors provide very little value above doing the paper work, and that seems very automatable. There's just no reason to pay 6% of every house sale to middle men, but that's the way it currently works. A large company like Amazon or Google could make a ton of money at a much lower rate. I think this makes a lot more sense than going into the restaurant delivery business.

They already have trucks and people used to moving things around. They could sell you a house and have your stuff moved in 2 days. I even have the branding figured out for the moving service: Amazon Prime Movers.

give you a discount on furniture/moving/house if you sign up for prime

then onboard your entire life into amazons ecosystem, get great exclusive prime deals on the echo/whatever smart shit they want to dump on you

There's already lots of healthy competition in moving companies. Imagine if the movers wanted a percentage of your home price instead of few hundred for the day's work.

The problem with realtors is that they've got a lock on the bureaucratic side, and the existing realty sites (Zillow, Trulia, etc...) are aligned with them. There are upstarts in some cities, but the existing realtors in those places collude to keep the process inefficient. It'll take a behemoth to crack it open, but there'll be a lot of reward for someone big enough to pull it off.

How does the collusion work? Just curious since it seems like such an inefficient market (our realtor was a good friend of ours, he /did/ have good local market knowledge and things to say, but no way did he have to do more than 4 or 5 hours of work total for us...)

As an example, buyer's agents will not show, or disparage, homes where the agent's get less than their approx 3%. For instance, Trelora in Denver offers a discount to the seller, but they'll offer full rate to the buyer's agent because they know they'll get more traffic that way. You can kind of read that between the lines in their FAQ:

https://corporate.trelora.com/faq

Even if the buyer finds one of these homes on their own, all the buyer's agent needs to say is something scary like, "I've seen deals like this fall apart, and I wouldn't risk tying up your money if you're not dealing with a responsible realtor".

Then they'll say something like, "besides, the seller pays the closing costs!" ... which is a huge lie if you consider that the buyer is the only person bringing any money to closing.

I thought about this a lot during our home buying process. Our agent, too, wasn't asked to do much... because we found the house we wanted online, and had our financing, so the agent didn't have to show us any houses or help us along in any way. She just submitted our offer and that was that.

I have heard that realtors, like for instance car dealers, simply have a vested interest in middleman-ing the inventory by way of commission and there are powerful lobbies that protect that interest. I've heard that there is cartel-like control over the MLS listing service, which requires you to be a member of the Realtors Association for access, and is a shared venture between all the major real estate companies -- which, if you aren't a part of, basically means you can't even know what house is for sale. I don't know if any of that's true.

In this day in age, it's hard for me to fully trust a process like buying property that is just so opaque. Purely for conversation purposes, an anecdote of mine: we bought a house and we were willing to pay a certain amount over, no more, because we had a hard budget. So we told our agent, we want this house for list price. The agent says, we can do that, but "the seller is expecting multiple offers and they are reviewing them tomorrow". Okay, fine, whatever. So we put in our offer, with an escalation clause going up another $15k to our theoretical max. Lo and behold, we have two offers on the table that beat ours. "But they really liked your letter, so is there any way you could make your offer better? Borrow money from your family? Take an employer loan from your 401k?" So I say no, absolutely not, I won't be doing that. We'll just wait til next year when we have more money and do this again. Thanks.

So a week later, we get a phone call. Oops! Guess what? The top offer bailed unexpectedly, and the 2nd best offer wants time to reconsider. "If you resubmit your offer tonight, I'm sure the seller will accept". Okay, fine, resubmit it. Thirty minutes later, the offer was accepted and we closed in about 20 days from then. It was a crazy ride! And we are definitely happy with the house we got for the price we paid. But at the same time, I'm left to wonder... how do I know those other offers existed? How do I know they weren't just trying to get more money out of us? I suppose I could ask for proof, but even those types of documents have been faked before. I trusted our people and the process seemed above board, but it's one of those things that is so convoluted and human that I felt weird about it then, and I still do to some extent. Perhaps I'm just cynical. It really doesn't keep me up at night, though. Like I said, I'm happy with the place.

But the reality was clear: in that industry, it seems so clear that collusion COULD easily exist... and if that's the reality, I'm sure it does exist in at least some instances.

> so the agent didn't have to show us any houses or help us along in any way. She just submitted our offer and that was that.

Why didn’t you submit it yourself and save all that money?

Offering without an agent doesn't necessarily save money. It depends on the details of the seller's listing agreement. It could require dual agency or even without dual agency the listing agent could retain the full commission if there isn't an agent representing the buyer. The commission amount and split details are set in that agreement and the laws vary per state.

If the seller had a real estate agent then the seller already signed a contract to pay a fixed commission to the buyer's agent when the house is listed. Depending on the contract the seller signed, if there's no buyer's agent, usually the seller's agent's gets both the buyers agent's commission and the seller's agent's commission.

So you don't usually save money by not having a buyer's agent.

The buyer doesn't pay the agent, both agents' commission comes from the seller. Also, the agent we ended up with was a direct recommendation from the selling agent, and we figured this would give us a little extra "boost" with her by using her friend.

> the agent we ended up with was a direct recommendation from the selling agent, and we figured this would give us a little extra "boost" with her by using her friend

Huh what? So what incentive does your agent have to negotiate a good deal on your behalf if she’s earning a price commission, and she’s friends with the selling agent?

> So what incentive does your agent have to negotiate a good deal on your behalf if she’s earning a price commission

That's a great question, but it's not unique to my situation... it's standard that agents split the commission. You could say that any agent or salesperson is never incentivized to give any buyer a deal on anything as long as they collect commission.

Secondly, we paid what we thought the house was worth. We're in a competetive market and had a hard budget. The house price came in below budget. As far as I'm concerned, we got a fine deal.

The buyer pays everyone - no one else brings any money to the transaction.

The person selling to you pays the person who represents your interests? How is this not a conflict of interest?

Really, it's just part of the scam. Most people actually believe the seller is paying the realtors. It's how the buyer's agent can say, "Don't worry about my rate, the seller pays it!", as though you're sticking it to the seller. I've already seen three people repeat/believe that lie in this thread.

If what the realtors said was true, there would be a conflict of interest. However, there isn't really a conflict here because the buyer and seller are both splitting the loss. One is paying too much, and the other isn't getting paid enough.

The real conflict comes because both agents want you to compromise your price for an easy sale. If you sell your $500k house for $20k less than it could, they only lose a few hundred dollars. That agent will play various tricks to try and talk you into losing $20k so they can get a quick sale and be done with you. Similarly, they don't care if your loan is a bit larger when you're buying. They're not looking out for your best interests.

If the middlemen/parasites were out of the loop, the buyer could pay 3% less, the seller would get 3% more, and some reasonable agency could get a fixed fee for doing the paperwork. Hell, the title agency could do the work trivially, but I'm guessing they don't want to risk rocking the boat. Maybe the current system was reasonable when all you had was newspaper listings and for sale signs, but it's corrupt now.

Well, yeah, sure. Money goes from me, into the "middle of the table", and then everyone takes their share. It's important to say, though, that with or without my agent my buying price was going to be the same regardless... however, the seller may receive slightly less. I think in practice you'll find it difficult to approach the process with a mindset of "if I don't use an agent, the owner will give me a 3% discount".

Let's not forget the associated scams like 'title search/insurance', 'appraisal', and 'home inspection'.

I'm hesitant to concur with you on the home inspection. The home inspector I've used several times has discovered termites, and other massive problems that would have cost me upwards of $40,000 on one specific house I was interested in buying. I paid a few hundred bucks to save myself from that headache.... The realtor on the other hand did almost zero

In Arizona, every stick-and-stucco house has (or will have) termites. The inspector already knows the answer before he shows up. You pay for "treatment" each time the places changes owners.

When I sold my first house, The buyer's inspector "discovered" termites which would need treatment. However, I had preemptively paid a professional to do treatment just two weeks earlier. When I told the new inspector this, he called the previous inspector. After talking on the phone for 2 minutes, they agreed that I was termite free!

As long as someone got paid for treatment, they were happy. I doubt the buyer knew it went down that way.

Redfin is already in that market and it doesn't seem to be doing very well. I'm actually fairly surprised how slow redfin is able to grow and expand their market. Their website felt second to none in terms of usability.

Redfin looks like they're trying to be a "discount agent". Here is a quote from their front page:

> We're full-service, local agents who get to know you over coffee and on home tours, and we use online tools to make you smarter and faster.

This isn't what I had in mind at all, and I'm not surprised they have trouble getting traction with that approach. If they save you 1.5% on your half, but the other agent still gets their 3%, you'd only save 25% of the thousands you spent in middle man costs. Meanwhile, all the 3% agents out there are applying pressure to see it fail.

In the ideal case where they get both sides, Redfin is only saving you 50%. There is no reason home sale paperwork should cost thousands of dollars to process. Someone like Amazon could eliminate agents altogether.

Here is another analogy - imagine TurboTax charged you a percentage of your yearly income instead of a hundred dollars for the "Deluxe" version. That would be insane.

> There is no reason home sale paperwork should cost thousands of dollars to process. Someone like Amazon could eliminate agents altogether.

It’s a mistake to think that the real estate commission is primarily for paperwork or executing transactions that would have happened anyway.

I brought my house to our agent and pushed the sale through. That’s probably a rarity when I think about all the time friends of mine have spent with agents “house hunting”. That time costs money and to a great extent, the fat commissions are paying for a lot of “no commissions”.

People seeking to disrupt the “fill out the final transactional paperwork” part of real estate need to figure out how to disrupt the whole value chain, not just the part that looks outrageously overpriced.

In Sweden agents that help with house hunting basically don't exist outside the very very top end of the market. Everybody finds their own houses via ads, book their own viewings with the sellers agent and handles the bidding process themselves. When it comes to paper work the buyer and seller "shares" the same agent who has a fiduciary duty to both parties (even though they're paid by the sellers). With the internet being what it is people should be able to "hunt" their own houses and set up their own viewings.

Not everyone is internet savvy. Not everyone knows what they want. Not everyone knows what they can afford. Not everyone comes from a history of property ownership. Some people need assistance on things that others can self-serve.

Yes, not everyone can read or use a computer. And yet almost everyone pays for all those realtor services they don't need or even use.

Real estate agents, even the so-called "buyer's agent," are the house equivalent of "used car salesman."

Just like you shouldn't trust a used car salesman to tell you what car would fit your needs and you can afford, you shouldn't trust a real estate agent to tell you what house would fit your needs and you can afford.

I've bought 3 homes now and sold 2. There was no "house hunting" process. I went online, looked at photos, and made an offer - same as you.

On my second home, I told the realtor exactly what I wanted and where. She failed to find it in her search (she did a zip code search instead of looking at the map), so I showed her the listing I wanted to see. There was no extra value to justify 3% of a sale for hundreds of thousands of dollars.

As for the seller's agent? They put the listing on MLS and have a token "open house" for a couple hours on one day. If you're lucky, they get a professional photographer and print a few brochures for the walk throughs.

> People seeking to disrupt the “fill out the final transactional paperwork” part of real estate need to figure out how to disrupt the whole value chain, not just the part that looks outrageously overpriced.

Why is that? Why not focus on fixing the worst part of the problem?

Because the transactional paperwork can already be filled out, even by real estate lawyers, for a couple grand today. No one is paying 5% for that, even though would-be disrupters talk about it that way. Think about what it would take to transfer your house to a family member, assuming it was paid off. That paperwork would be ~$500 per lawyer involved. Anything more that you're paying for an arms-length sale transaction isn't related to the paperwork processing part of it, IMO.

What's really being paid for is access to MLS, advertising, labor to drive people around, maintaining the brokers office, people on both sides who talk crazy people off the ledge and keep deals together when someone is flipping out over a $1000 repair one way or the other.

Even when you "went online", I bet you found the house via a paid insertion into MLS (most likely) or a real estate advertising site. Why did you go there? Because that's where the houses for sale are. Why do people pay so much to put their house in MLS? Because that's where the buyers go to search to come up with their short-list of houses to go visit. Why should MLS listings be so expensive? Because they've built the marketplace. Same as why Amazon or Ebay can charge so much.

Access to MLS? Driving people around? You think any of that should cost the $25,000 the buyer and I paid agents for the house I sold last year? We could've bought a new car for those commissions! Are you an agent, or related to one? I can't see any other way you could defend that nonsense.

Someday one of the big companies is going to figure out how to put the parasites out of business. Amazon could pull it off, so could Google.

I'm not involved in real estate and agree that the services are over-priced relative to the value. (I have a friend who's an agent; he and I pretty regularly get into it.)

I don't think it's defending the nonsense, but rather explaining that there is some value there and it's not predominantly in filling out paperwork. It's a sales job, selling people the most expensive and leveraged thing they'll ever purchase and the place they're going to live/raise a family, with all the good and bad that comes along with that.

FlyHomes is doing something interesting by actually buying and selling houses, not just facilitating transactions. It takes a lot of the risk and uncertainty out of the process. I hope they can succeed at scale.

What rate do they charge? It looks like they provide a cash offer and then find financing so you can buy it from them. I didn't see anything about how this eliminates middle-men and egregious fees.

I'm not sure though, because I got a "Oops, something went wrong" popup when I tried to use their site.

I just found their quote:

> Flyhomes makes money through the commission paid by the home’s seller.

This is the same lie all realtors love to throw out. "You don't pay - the seller does!". Never mind the buyer is the only person who brings money to the transaction.

Unless that commission is much smaller than a traditional realtor, I hope they fail.

There are more ways to innovate than just offer the same thing for less money. You can offer more things for the same money, which is what FlyHomes is doing. That is actually the more common and more financially viable form of innovation.

You're right, of course. However in this case, I'd like to see someone fix the problem instead of just making it more palatable. To me FlyHomes looks like just another realtor who screws you for too much money, but they give you flowers before they start and candy when they're done.

It's expensive to have boots on the ground in every zip code. RedFin hires their own agents full time. OpenListings and Zillow refer online buyers to their affiliated agents who cut them a deal on commission in exchange for leads. You can always list a place with photos and all on Zillow or CraigsList and mention that seller will not pay an agent's commission. End of the day there's a "For Sale by Owner" sign for those driving or walking by.

But considering that in the US it's the seller who pays both agents, there are no immediate savings for potential buyers, and some, being new to the home-buying process in general or new to that zip code, would prefer some hand-holding and chit-chatting provided by their agent at no cost to them.

Among some not so obvious valuable tidbits that the buyer's agent can provide:

* general feel about the neighborhood, whether it's on the rise or in decline

* previous scandals and issues, like contaminated water, city attempting to pass an additional levy or tax, house being on the airport path, etc.

* potential future improvements, like a light rail station planned nearby

* referrals to various local professionals, like inspectors, surveyors, painters, or movers

* any other new developments in town or neighborhoods that the buyer might not have considered, especially when shopping remotely

Theoretically agents could do these things, but most don't. They want deals to close. Giving you reasons not to buy doesn't close deals. If it turns out you don't like the house they'll be happy to sell it for you later.

It probably varies by the agent, but I have had good experience with a real estate agent being on the buying side. His reasoning was that the seller's agent was on the clock to close the deal on that one property he got assigned, whereas the buyer's agent would make roughly same amount of money on any property I would end up purchasing, so he had no reason to pressure me into closing.

A good conman leaves you feeling that you weren't cheated.

> But considering that in the US it's the seller who pays both agents, there are no immediate savings for potential buyers [...]

This is all part of the scam, and I'm surprised more people can't see through it. Five people walk into a room at closing. There are two agents, a title agent, the seller, and the buyer. Only the buyer brings any money - so it's pretty clear who is paying.

Put it another way - if the seller goes with a lower percentage agent, then the buyer keeps more of the offer price, and should therefore accept a slightly lower offer. This saves the buyer money too.

> Among some not so obvious valuable tidbits that the buyer's agent can provide: [...]

And you think that's worth 6% of a house that costs hundreds of thousands of dollars? I think that's insane.

This all sounds like a pitch from a realtor.

Fair enough. Those commissions do compress as the house prices climb into 7- or 8-digit ranges, and there are always discount agents. The one in my area buys billboards that promise selling the house for 3% flat.

I was hoping perhaps someone from the industry could comment on why those agents haven't overtaken the market by storm.

Has an agent ever told a potential buyer that a neighborhood is in decline?

When they feel they can nudge the buyer into a more expensive neighborhood.

No reason to start on all zip codes at the same time.

For the last few weeks they’ve been hitting me with exactly the same offers as Bite Squad - including free delivery for both last month AND this.

Despite the convenience of purchasing with Amazon, it’s just an expensive way to buy food!

At least they never just threw it over the gate like tonight’s Amazon delivery!

I'm not surprised. Amazon's entire MO is a relentless focus on the customer. They do that by methodically optimizing and controlling every aspect of the supply chain right up to the moment the product is handed off to the customer. And they get better at it every day.

Restaurant delivery breaks that model. There is too much variability. Too much can go wrong outside their control, and they don't have enough leverage to change it.

If they can't win (even at zero margin) and can't make customers consistently happy, why be in it at all?

Mac donald's seems to do exactly that.

McDonald's delivers?

In some countries yes.

McDonalds been delivering in Asia for years. They deliver in USA with UberEats. Taco Bell partnered with GrubHub and Wendy's partnered with DoorDash. The future's already here.

Yeah, and it is like the best delivery service ever. In urban areas in Asia, it is always less than 20 minutes. Occasionally it arrives in less than 10 minutes. Which is as close to instant as is possible. Mind blasting.

I don't even like the food but find myself ordering as it is just too convenient.

KFC too

They do it through uber eats now, but they've always done it. At least for some locations depending on the manger and market. Honestly, I preferred it back then before Uber. The food was better packaged and it came faster without having to que my order up from a driver picking it up at an order window.

Ah, this is too bad. We used it at home occasionally. Everything we've used has either gone out of business, cut ingredients to an embarrassing portions, or raised prices way too high (probably to where they need to be to be sustainable).

It's not a viable business, I think. Not without some big leaps forward.

Amazon has heavily invested in Deliveroo. Will probably buy them out eventually

Disclaimer: Amazon investor

I’m glad. I didn’t see this going anywhere. I’ve tried the service several times when I was living in Seattle. Pretty much every option had terrible ratings and everything I tried was generally a bad experience. Delivery was always on time, but paying $15-25+ per person for a soggy, wet meal just wasn’t worth it. We ordered a pizza one time arrived completely cold with soggy crust.

Not surprising. I got a number of promotions for this but every time I went to see what restaurants were available it was just fast food. Nothing that wasn't already available from Uber eats or Caviar.

This seems to be a trend with big tech companies - they try to get into a new domain under their name and then when it succeeds half-heartedly kill it off.

It looks very dysfunctional and inefficient even from a venture capital "recycle it and risk it for another moonshot again" perspective and makes it look like they have lost their ability to innovate entirely once they start posting positive income to justify their stock cost. I am not sure if it is as dysfunctional as it looks or I am missing something.

This biz unit kept spamming me. I had to complain multiple times to Amazon about their dumb emails. Sorry but good riddance.

Shame, they were the best restaurant delivery service I've used.

The market is already crowded with Uber Eats, Deliveroo, etc.

All of the incumbents are bleeding money.

Amazon decided to invest in Deliveroo not to miss the boat but it seems sensible not to pursue their own platform.

This is bad news, it was one of the best food delivery services in the U.S

I've been an Amazon customer (via my parents) since late 1995 or early 1996, this is the first I've heard of a restaurant branch.

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