The Trouble with Amazon

The author treats the fact that they don't have a physical storefront as just a minor quibble. As if it wasn't the fact that Amazon didn't have a physical presence, was accessible from the comfort of your own home, and had incredibly reduced labor costs, that didn't end up being the disruptive change that put Amazon on the map.

To survive in its present form, it badly needs to acquire an Airborne Express (except that AE has already been acquired by DHL), or maybe a railroad and a package delivery company. Ideally, it also needs to acquire a payment-processing system (a PayPal). Why not just admit the obvious? Amazon needs to acquire eBay.

This is ridiculous - what business reasons does Amazon have for acquiring these companies, saddling themselves with physical infrastructure and additional labor costs, which may only earn them marginally more income?

Why would Amazon rush to acquire a shipping company and more labor costs, when shipping companies like FedEX are trying to reduce their labor costs by shifting the burden of local delivery to the United States Postal Service? (http://www.fedex.com/us/smartpost/).

There are so many differences between physical retail businesses and an online retailer, that the analogy cannot account for.

There are many cases to be made for challenges that Amazon faces, but this is not one of them.

I don't get it. The author doesn't provide enough rationale for this prediction at all, other than the vague notion that Amazon's trying to do too much. (Given they've successfully move into cloud hosting services, it's hardly a stretch to suggest they can move from selling books to selling garden equipment.)

And 40% of the business is not in EGM. Compare that with 5 years ago, when 0% was not in EGM. I call that the opposite of being stagnant. I call that lateral growth.

Does he not realize how much freaking money they will make on the backend of that selling digital stuff like apps and ebooks and also more physical stuff I bet.

Doesn't mention anything about Amazon Prime. Is in Australia so possibly doesn't know much about it, but yeah Amazon is a beast. Consumers don't wanna search the web they want 1 click buy.

Amazons other meaty asset is all its reviews. Take any so called obscure category he mentioned and you will probably find more reviews in there than all other ecommerce sites combined.

Consumers want easy, fast, trust, peer reviews, cheap prices. Amazon does all that. Article a good reminder to get me some Amazon shares and short sell on traditional retailers.

If Amazon were to extend their product models to better express the "qualities" of the products, and extend their search and recommendations for products, I believe their web storefront can easily double or triple in sales.

Our business wouldnt be possible without AWS, they are still innovating which is good (and often lack of innovation is another sign of a company in big trouble)

I have never found Amazon.com particularly useful, nor have i bought anything from it. My girlfriend buys books a fair bit, but also admits the library is cheaper.

Why? Has he heard of payments.amazon.com? It's tiny compared to PP but also isn't hated.

Shareholders like high margins. Amazon made some moves last year that depressed their margins, specifically releasing the kindle fire, which they're selling at a loss, and price-beating brick and mortar stores with gift cards over the holidays to lure away customers. These moves have nothing to do with a loss of efficiency in their EGM business, but they do produce the smaller profits we see.

What the author mistakenly sees as a loss of efficiency is actually amazon future-proofing their business. Knowing that the market would punish them for taking all this profit and reinvesting it in growth, they went all in and took all the punishment at once.

Amazon has bright days ahead.