Amazon Says Labor, Fulfillment Costs May Wipe Out Holiday Profit | Hacker News Reader

Amazon Says Labor, Fulfillment Costs May Wipe Out Holiday Profit

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36 pointssamizdis24 comments

Or it could be the lack of change in top ranked inventory for toys and other holiday sellers year over year. The same SEO gamified titles and descriptions are keeping the same products on top and once kids get the gamut parents have to go look elsewhere for holiday gifts. If that happens in the toys section, it likely happens elsewhere as well. The attractiveness of top products on basic search has gone down substantially.

All the hot toys are sold out. Have been for months. They get picked up by bots and go ebay and such

Of all of the monopolies and oversized tech companies out there, Amazon/AWS should be the first one to split. It's feels bullshit that Amazon retail can undercut the entire industry because AWS is essentially subsidizing it.

Last time I checked, Amazon retail breaks even and AWS has ~20% margins.

So say it was separated, and the first order effect is that AWS inc is wildly profitable, and Amazon retail is not, and they have to raise prices or lose market share to others. Is that going to result in a better outcome?

I don't think I've formed an opinion on whether breaking them up is better. On one hand, amazon driving competitors out of business seems bad, on the other, you could think of it as subsidizing innovation in retail with profits that otherwise would just go to the shareholders. I don't entirely buy that either, but neither do I buy the idea that we should break them up so those maintaining the status quo can be competitive

Yes, that is better because it is more competitive and gives other ecommerce a better chance to grow.

But do you want to pay for their learning curve? More competitors is only helpful if the price goes down or more products are available. If prices go up as a result the consumer pays.

Yes, I do. I could move to China any moment I wanted, if I wanted to live in an economy where the people who were previously in power remain in power and get nice things and promise everything works out in your favor.

I plan to live and purchase products for at least half a century more. In that time, it is pretty unlikely that Amazon will continue to be better than competitors, in much the same way that Sears-Roebuck isn't better than competitors today. I would like there to be good competitors, on a level playing field, as fast as possible.

In other words - the choice is between short-term inefficiencies and long-term inefficiencies. It seems fairly clear that it's better to have short-term inefficiencies.

Is there any difference between Amazon, Target, Walmart, Home Depot, Lowes, Staples, Best Buy, Costco, etc?

Amazon is better for small electronics and other knick knacks, and has an aliexpress with 2 day shipping bolted on, but I do not understand the fear of Amazon retail.

All the other stores have better pricing, product curation, and local availability. They all ship to you in the same time Amazon does.

If anything, having Amazon retail as a competitor to these other retail stores gives customers one more option.

Do you want to be stuck in a local minima forever? Increased competition will lower prices in the long term.

> More competitors

... are helpful to workers and producers.

I'd be OK with it losing share to others. Currently the situation sucks: you have very few alternatives when shopping online. That is not a normal situation in any kind of a "competitive" economy. I'd go further, and break up Amazon's retail into two companies as well. 2 Amazons, 2 AWS-es, fighting each other to the death would be the ideal outcome.

No problem. It's already atleast 3+ vs. 3+. Amazon vs. Walmart vs. Home Depot, AWS vs. Azure vs. GCP. Market cap doesn't really lie too much.

Notably, there's a cartel-like coordinated pricing situation between the big three cloud providers, which manifests in the lack of price competition, and which we need to bust somehow.

Usually the victims of coordinated pricing are unsophisticated consumers. In contrast, the customers of the big 3 cloud providers are organizations employing specialists in cloud computing. So I am surprised to hear this.

20%? Try 60% margins.

Not 60% for sure. According to the latest Amazon's Q3 2021 report AWS Operating Margin is around 30% (page 15 of the pdf) [0]

[0] https://ir.aboutamazon.com/quarterly-results/default.aspx

Amazon retail breaks even, despite similar goods selling ~15% cheaper on eBay and ~30% cheaper on AliExpress.

Amazon has the advantage of scale and integration (which is a big advantage in the logistics world), yet somehow still can't seem to outprice these other platforms.

You're paying for convenience. Or I am at least. Knowing you're going to get the item in ~2 days makes the difference and without needing to pay for the cost difference anyway (+ some usually) when you get to the shipping page.

Yet fast shipping doesn't inherently cost much extra. The human effort involved to pack the box, load the van, and ring your doorbell is exactly the same if they do it tomorrow or next week.

And most delivery companies drive around every neighborhood every day, so they can't exactly say "we save money by only delivering on Mondays, Wednesday's and Fridays".

From a naive perspective it might. It doesn’t work like that in practice though, as it wouldn’t be cost effective since it’d require lots of extra overhead. Most any complex system will face a trade off between latency vs throughout. Shipping isn’t much different mathematically from a system of queues much like a database or network. There’s plenty of math for it: http://www.cs.binghamton.edu/~dima/ep01.pdf

Optimizing costs requires keeping work queues as full as possible which requires increasing latency.

Amazon isn’t a retail company or a server company. They are a company that figured out a way to combine those two things.

A comparison that came to mind is movies before and after Star Wars. My understanding is the big innovation was recognizing the value of merchandising through t-shirts, action figures, etc. Then came video, cable, DVD and streaming, all also not part of the original “movie business”.

I have this notion Tesla is really a precursor to creating a huge “partially used large batteries” business.

Charge customer a little more?

Demand curve isn’t flat.

That may be but if you aren't making a profit then what is the point?

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