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Comment by drawkbox | Hacker News Reader

The private equity leveraged buyout play by the cash and value extractors.

Careful leaving too much cash or value creation lying around, the extractors will come seeking it, and take it if you aren't vigilant.

Sears lost that battle long ago. In an alternate dimension, a value creator is in charge of Sears decades ago, and there is a nice competition of Amazon, Walmart and Sears in that place, making pricing even better for consumers. In our current dimension, Sears management got too comfortable counting the beans.

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My guess is that they tried to make money on it. Failed. And tried to minimize their losses.

That and risk taking was muted because they were scared to take a big hit. Typical HBS MBA-itis not risking enough in R&D and new markets, too comfortable counting the money in the current market while the road heads towards a cliff.

Sears knew a major change was happening and did not become a top player in that change, it was inevitable.

Amazon will never get lazy like that, Amazon is a pure R&D machine.

Which is interesting because Sears was closer to Amazon than Walmart was for a time.

I’m starting to see Walmart delivery trucks everywhere now so they must be doing something right.

Saw a tweet the other day. Walmart is a true behemouth; and they spend on R&D (anecdotally, have met some great data scientists from Walmart Labs).

For perspective:

Walmart makes ~58.7m an hour

Amazon / Macy’s / Best Buy / Sears / Target / Gap / Big Lots/ Kohl’s / J.C. Penney / Nordstrom / Dollar Tree / Barnes & Noble / Bed Bath & Beyond

... make ~57.3m/hr combined

To get the whole picture, multiple metrics have to be looked at. Along with revenue, I would also look at margins. The other companies might be foregoing revenue intentionally because they are prioritizing margins.

Well, Amazon certainly isn't.

Sears used to be just like Amazon, one day Amazon will be just like Sears.

Yep. Sears was infamous in its heyday for selling homes (some assembly required), among other things, at reasonable prices to black people when that just wasn't done in large sections of the recently re-united US. Its catalog was a true innovation.

A nice thread on the subject: https://twitter.com/louishyman/status/1051872178415828993

It's already worse. Even their "legit supplies" are full of counterfeits and frauds.

At least Sears has been consistently crappy for the last 20 years.

Yes, but it helps that they are not weighed down by the requirement to carry inventory, have brick and mortar stores, and are primarily in a services business (logistics as a service, compute as a service, etc). This is, of course, by design, but comparing the two models would not be appropriate. Sears does some of this pass-through badly on their website, but they also used to own a huge chunk of real estate and still manage their own warehouses, in-house brands, etc.

Amazon sells you counterfeit goods comingled with whatever manufacturers drop-ship to their warehouse. It's a totally different model.

Personally I think there's still room for brick and mortar retailers with some expertise and services that are reliable. Not sure it will scale the same as non-cog people / expertise are involved but not everything has to.

I feel like Amazon is getting lazy on the customer side of retail products. The experience has been eroding for me. They are usually not the cheapest quickiest or best quality. The return policy with 3rd party vendors and the product switching reminds me of sears in the early 2000s.

Name one novel thing Amazon has done for those buying products over the last few years?

The interface really needs an overhaul. That enormous drop-down that pops out when you click the "Account and Lists" button is a mess.

Amazon's focus has really been on faster shipping and same day, more on fulfillment. I am sure they will be working on product quality eventually, right now that is up to the user. They are also heavily pushing Alexa/Echo. They'll no doubt be first to drone delivery.

Amazon though makes most of their money from AWS, they found a way to reap ROI on R&D for their own supply/services chain. That is what really nailed it, this only came from an engineering focused research and development push that reinvested every dollar for a long time back into it, breaking all the rules of showing profits for a long time.

Walmart also is very good at supply chain and fulfillment. They have always been early to technology improvements there including pushing suppliers to EDIINT/AS2 and digital purchase orders and invoicing, up until 2003 everything in retail ordering was still really fax or e-mail orders. They were doing RFID in warehouses really early on. They got tons of improvements early on Target and other retailers moving on this early. Walmart Labs knows you have to reinvest in research and development.

Sears, without a competitor for a long time, and a lack of product/engineering driven leadership, got fat, happy and nappy, eventually was decades behind before they woke up.

Shipping for non-prime users is my biggest issue. They always wait until the last poasible date to ship. Weeks / months for some products. I'm outside of the US so that may be a factor.

Feels like most of their focus went to aws.

That and risk taking was muted because they were scared to take a big hit.

I really don't know what the plan was if it wasn't to just bleed it dry. Because, as you point out, if they're scared to take a big hit, then they'll just survive and never go after a market or a competitor. You want to sell shitty tool-shaped objects and hope no one notices, or how about you got after Snap-On with your new Professional line that's 30% less but just as good (Craftsman ain't the only one riding on reputation)? And, yeah, Sears actually sort of did that about 20 years ago. How about "fuck Viking, Sub-Zero and their shitty, overpriced appliances. We make better ones, and they cost less. 'cuz Kenmore is back, bitches."? Or something, I dunno. What I do know is that I don't need a fancy MBA to tell you the end result of gradually eroding quality and not maintaining your stores.

Business is about extracting money, not abstract ideas like providing quality products or services. Just ask an MBA.

...not while Jeff Bezos (the founder) is in charge, because he knows he will only have one Amazon in his life. Sears and JCPenney probably did well while their founders were in charge, as well.

But, once it's run by somebody who could move on to somewhere else next and has no particular attachment to this particular CEO job, it can go downhill no matter how high the hilltop you're on.

We haven't seen what Facebook, Amazon, or Google look like when a non-founder is in charge, but we know Apple nearly got run into the ground after they kicked out the founder. They are doing better now, but I notice that it took the return of the founder to put them back on track.

When it's just about the money, and you can move on to another company to loot it later, the company has very little protection from its own CEO.

That's exactly what happened. When Lampert bought Sears there was (now hilariously wrong) talk of Sears becoming his Berkshire Hathaway and Lampert becoming the next Warren Buffet. I think it became obvious very quickly that that was never going to happen. Berkshire Hathaway, afaik, had solid underlying fundamentals. If only the business could be run more efficiently could it then become a cash cow that could be leveraged into bigger things. Sears did not have great fundamentals when Lampert bought in. If anything it was a financial engineering play that didn't work out.

Also, iirc, everyone thought that the real estate alone could bail out the investment if everything else went to hell. I think that is still yet to be seen.

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