Amazon - Threat or Thrive?

[Phi for All]

Retailers often claim Amazon is going to put them out of business. They also said that about Costco and Home Depot, but even those big box retailers complain that Amazon eats too much into their brick and mortar business market. 

Part of me loves Amazon, since it let's me (seemingly) disconnect from the mainstream consumer train, only buying exactly what I need without having to mess with travel to a bunch of brick stores, being inundated by the general marketing once I'm there, and having to deal with all the people who dislike their jobs because of poor pay (because their employer has to compete with Amazon?). It pleases me to think Amazon knows who has just what I'm looking for, and is happy to introduce us so everyone is happy with their purchases. 

And part of me hates Amazon. I enjoy talking to people, and want people who work hard to see the benefits. I like supporting local stores, but they have both Amazon and the big box stores to compete with. It seems like the more business my neighbors and I give to Amazon, the less likely it is the businesses around us will survive. The delivery vans also bring more commercial hustle to my quiet residential neighborhood. I'm not a rampant consumer, but I like people, and I miss a lot of human contact by shopping online. It's too easy these days to be reclusive, and I think that attitude set the stage for opioid addiction, increasing suicide rates, and the fear of others many experience these days. As Amazon's competition shrinks and their market share grows, their prices grow as well. They passed the 50M mark on Prime membership recently, and promptly announced a price increase. Will it just get worse as competitors die off?

What do you think?

[StringJunky]

35 minutes ago, Phi for All said:

Retailers often claim Amazon is going to put them out of business. They also said that about Costco and Home Depot, but even those big box retailers complain that Amazon eats too much into their brick and mortar business market. 

Part of me loves Amazon, since it let's me (seemingly) disconnect from the mainstream consumer train, only buying exactly what I need without having to mess with travel to a bunch of brick stores, being inundated by the general marketing once I'm there, and having to deal with all the people who dislike their jobs because of poor pay (because their employer has to compete with Amazon?). It pleases me to think Amazon knows who has just what I'm looking for, and is happy to introduce us so everyone is happy with their purchases. 

And part of me hates Amazon. I enjoy talking to people, and want people who work hard to see the benefits. I like supporting local stores, but they have both Amazon and the big box stores to compete with. It seems like the more business my neighbors and I give to Amazon, the less likely it is the businesses around us will survive. The delivery vans also bring more commercial hustle to my quiet residential neighborhood. I'm not a rampant consumer, but I like people, and I miss a lot of human contact by shopping online. It's too easy these days to be reclusive, and I think that attitude set the stage for opioid addiction, increasing suicide rates, and the fear of others many experience these days. As Amazon's competition shrinks and their market share grows, their prices grow as well. They passed the 50M mark on Prime membership recently, and promptly announced a price increase. Will it just get worse as competitors die off?

What do you think?

In a nutshell: Amazon will screw us all, the more it becomes a monopoly. The plain fact is that it is a shareholder-driven business and in order to keep those shareholders and, hence , its market value, it must perpetually show growth. The trouble with this model is that there is no level where the business can be satisfied with just ticking over, making a steady income. I've lately come to think that family-owned businesses are better because they don't have so many internal competing needs for more growth. .. generally. Contrast this with shareholders that just want to maximise their investment. They don't give a shit how the money is got. Bitcoin is a classic example of the naked greed of people; it's meant to be a trading currency but actually has no stability. I've noticed Amazon is getting ugly, like Facebook. I find myself using Ebay more... it's a less intrusive experience

 

Edited June 18, 2018 by StringJunky

[zapatos]

Companies are learning how to compete with Amazon. I've found that every time I find an item from Amazon I need that is also at Home Depot, Home Depot has it for the exact same price, with free delivery. If a company has a successful business model, there will always be another company who will make moves to share in that profitable market. I imagine that Amazon's lead will level out after a time.

[StringJunky]

3 minutes ago, zapatos said:

Companies are learning how to compete with Amazon. I've found that every time I find an item from Amazon I need that is also at Home Depot, Home Depot has it for the exact same price, with free delivery. If a company has a successful business model, there will always be another company who will make moves to share in that profitable market. I imagine that Amazon's lead will level out after a time.

Amazon isn't a marketplace, like EBay, anymore. It's a shop and all the listings are suppliers to the Amazon brand. Amazon has lost several  sales from me because of their £20 minimum spend for free P+P. and all the extra clicks you have to make on a purchase to refuse their services, like Prime.

[Phi for All]

10 minutes ago, StringJunky said:

In a nutshell: Amazon will screw us all, the more it becomes a monopoly. The plain fact is that it is a shareholder-driven business and in order to keep those shareholders and, hence , its market value, it must perpetually show growth. The trouble with this model is that there is no level where the business can be satisfied with just ticking over, making a steady income. I've lately come to think that family-owned businesses are better because they don't have so many internal competing needs for more growth. .. generally. Contrast this with shareholders that just want to maximise their investment. They don't give a shit how the money is got. 

The plastic arm on the toilet handle in my master bedroom broke recently. It's a small part but necessary for flushing if you like dry hands. 

The big box hardware store solution? A non-OEM company product, with adapter parts to ensure that it works on 90% of toilets. The store saves rack space by selling a single solution. It's about US$19, and I'd end up throwing away the adapters I don't need. 

The Amazon solution? Several companies had the exact handle I needed from the original manufacturer, with nothing extra. It was about US$12, with free prime shipping (which isn't free but built in, but still less in this case). 

I LOVE family owned businesses. I think the strategies are much more long term, as parents are likely thinking the kids should inherit a good business. They're usually word-of-mouth driven, and they pay attention to what the consumer is actually looking for, rather than how much profit they can make from each transaction. They live and work in their communities, and fostering an inviting climate comes naturally to them. 

I think many modern retail practices pretend to take the consumer's side, but in reality the retailers are helping themselves much more. Remember how we used to buy coffee pre-ground in steel cans with a plastic lid on them? Now we pay 3x as much for a paper bag of beans we grind ourselves. 

[Scott of the Antares]

As long as they pay the same tax as their competitors in the local markets they are competing against.

There are some strong feelings in the U.K. that companies like these do not pay 19~20% corporation tax on profits generated here and that is simply not fair on all the companies that have to. Make the playing level please!

However, Amazon are useful for finding that rare book or particular item and I do use them as a last resort. If I buy from a family business, I am helping finance local families. That has to be better than financing shareholders (although I hear some of them have children too!).

Further reflections; Wasn’t Jeff Bozos in the news a few weeks ago saying he was planning on building a moon base? When humongous global cooperations amass huge wealth and turn it to something good rather than just sitting on it, then that is a great thing. The Bill Gates Foundation has done plenty of fantastic work, Elon Musk is investing in space travel when others seem to be cash-strapped atm. 

Edited June 18, 2018 by Scott of the Antares

[OldChemE]

it's also worth noting that Amazon fills a niche that many stores don't.  In our small town we have three grocery stores, one hardware, one ranch store, and three auto parts stores, and a number of tiny specialty stores.  The small stores cannot viably carry a large inventory of less used items.  There's just lots of stuff that we can only get by dealing with an internet connected supplier, such as Amazon.  I gladly go to the local stores when I can quickly get what I want, but do a lot of online shopping for the rest.

[Ten oz]

4 hours ago, Phi for All said:

What do you think?

It is inevitable. If not  Amazon some other company would be cashing in on the internet retail business. Brick and mortar retail is dying all over the place but that is no more Amazon's fault than it is the fault of Nikola Tesla that gas lampmen can't find work in 2018. Internet sales make direct to consumer products more accessible. So much so that  I suspect in 10 years one might start a thread asking whether or not independent direct to consumer online sales are a threat the Amazon. Change is constant.  As thing like 3D printers become more accessible I believe the next wave of consumer products will focus on customization which isn't a areas where Amazon does not have an advantage. 

 

Edited June 18, 2018 by Ten oz

[iNow]

6 hours ago, Phi for All said:

What do you think?

I’m reminded of the concept of creative destruction and how cars replaced blacksmiths or ATMs caused bank tellers to lose jobs.

The West Wing covered this in an episode years ago. It was in context of free trade, but IMO applies here in this discussion of market dominance and paradigm shifting competition:

 

[MigL]

Call me old fashioned but, although I have ordered things from Amazon ( mostly the British, French, Russian and American Secret bombers/fighter Projects book series ), ALIExpress and eBay ( mostly watches for my collection ), I prefer to 'feel' the heft of things I am about to lay down hard-earned cash for.

[iNow]

We have a recognition program at work wherein when someone does you a solid, you can formally recognize and reward them. You craft a nice thank you note, assign a monetary value, and send. Their manager sees it and most commonly the person gets $50-$100 to spend on a gift card as they see fit. 

I’ve been in a role where I help people answer the most challenging questions. Basically, everyone and everywhere else they went failed and they have an angry customer so they come to me. I’m their bulwark and fortunate to be a resourceful problem solver, so I have received a good number of these recognition rewards from people managing high pressure massive contracts.

I ALWAYS use them on Amazon gift cards. They’re easy. They’re flexible. They let me get what I need. 

Sure. I could get a Home Depot or Walmart or restaurant gift card, but amazon gives me the most choices and options. It makes UPS / FedEx my personal concierge. It’s a higher return on the same investment, plus incredible convenience (so an ROI on my time and ability to be with family). 

I support mom and pop shops, but they’re an old model that can’t support my desire to buy an angle grinder, reading lamp, swimsuit for my toddler, book on the history of populist uprisings, socks, fishing line, and the exact right size engine air filter for my car all within one single transaction. 

Edited June 19, 2018 by iNow

[Ten oz]

8 hours ago, iNow said:

I support mom and pop shops, but they’re an old model that can’t support my desire to buy an angle grinder, reading lamp, swimsuit for my toddler, book on the history of populist uprisings, socks, fishing line, and the exact right size engine air filter for my car all within one single transaction. 

Absolutely much as possible, even when it is inconvenient, I nearly exclusively eat at family owned restaurants when I dine out. I desperately work to avoid franchises and chains. The service is always better as the employees own the place and are just there while looking for something better and the food tends to have a more authentically homemade feel.  Additionally I know the money I spend is staying in the community and not going to someone in Utah who own 50 stores or whatever. I am also all about public transportation. I only ever use Uber or Lyft if I am with people who insist and I can't convince them the Metro is just as good. From the bus driver to the maintenance public transportation supports a large network of  quality jobs for people living in the local community.

I don't feel support for local business translates the same way when it comes to retail and technology. When I buy a pair of Adidas ultra boost running shoes I know those shoes are not produced locally and the local store I can buy them at isn't owned locally. Shopping retail locally helps the real estate and a handful of hourly wage retail jobs. Then there is the fact that buying items on Amazon is a superior experience. Amazon always has the exact item I want rather than last years model or the next best thing which can often be the case when shopping brick and mortar. Amazon also always has my size. 

As I mentioned in my previous post I think customization is the next big thing. Brick and Mortar stores will need to evolve by bring something to the table other than factory line produced items. I mentioned Adidas above specifically because they have developed a customized laser printed shoe called Futurecraft 4D. They will have scanners in store that measure your foot and then actually 3d print a sole true to shape and size of your foot in store. I believe customization like that will give people a reason to go to brick and mortar locations. along the customized products I have all the shelving and closets in my home custom install. I live in a small place and wanted to retain all the space I could so I needed things which were designed specifically for my home. It was no more expensive to do than buying quality bookcases and desks would have been. 

[iNow]

You raise an interesting point. Many stores are just delivery interfaces for products made elsewhere. Cutting out the middleman seems more efficient and more convenient. If there were an added service (such as custom designed footwear) that would change things. I also think restaurants are different, and like you try to go to those which are special. They taste better, I enjoy them more, and it's not just giving more revenue to some corporate giant.

I realize another thing about Amazon I like... The reviews and Q&A sections. One has to be careful to avoid the fake reviews, but often there's helpful nuggets of info in there I can get about product use or ways to get slightly better versions for little change in cost. Hard to do that in brick and mortar (at least, as of today).

[YaDinghus]

40 minutes ago, iNow said:

One has to be careful to avoid the fake reviews

I actually get monetary offers to astroturf on Amazon. I think this shows how important internet retail has become. Amazon in particular is important because it offers its logistical infrastructure to its market participants. But while Amazon is in an open rivalry with other internet retail platforms, they also cooperate with the other retail platforms on the logistical infrastructure. In Germany for instance they rent Warehouses from Otto Group and use their Hermes delivery system; both retail platforms profit from this practise because it cuts down delivery costs

[Ten oz]

1 hour ago, iNow said:

I realize another thing about Amazon I like... The reviews and Q&A sections. One has to be careful to avoid the fake reviews, but often there's helpful nuggets of info in there I can get about product use or ways to get slightly better versions for little change in cost. Hard to do that in brick and mortar (at least, as of today).

If a brick and mortar store offers expertise I am in need of I still prefer them over Amazon. I recently bought a new bicycle and went to several local bike shop in search of experienced cyclists who could provide me quality feedback. One on one conversation with an expert  is superior to online reviews in my opinion. Not only did I purchase my bike from a local store but I even paid nearly double what I had planned to spend and felt totally okay with it after going over the pros and cons with the people at the bike shop who I felt genuinely knew what they were talking about. 

[StringJunky]

16 minutes ago, Ten oz said:

If a brick and mortar store offers expertise I am in need of I still prefer them over Amazon. I recently bought a new bicycle and went to several local bike shop in search of experienced cyclists who could provide me quality feedback. One on one conversation with an expert  is superior to online reviews in my opinion. Not only did I purchase my bike from a local store but I even paid nearly double what I had planned to spend and felt totally okay with it after going over the pros and cons with the people at the bike shop who I felt genuinely knew what they were talking about. 

Local aftersales care  is worthwhile with big ticket items like bikes or things that you have a long term interest in..

[Phi for All]

13 hours ago, MigL said:

Call me old fashioned but, although I have ordered things from Amazon ( mostly the British, French, Russian and American Secret bombers/fighter Projects book series ), ALIExpress and eBay ( mostly watches for my collection ), I prefer to 'feel' the heft of things I am about to lay down hard-earned cash for.

"Heft" should have its own category in this discussion, because it's a factor in the differences between online and in-store shopping (at least for bigger ticket items). I use heft and precision as quality indicators for products I know I'll use a great deal, and am therefore looking for the best quality I can afford. It's often hard to tell online how much precision went into making something to give it that satisfying heft I'm looking for. Occasionally the reviews will reveal someone who speaks heft, and they'll talk about the appropriate weight of the piece, the way it fits perfectly to hand, and the precision of its workings. 

Of course, once I know how important heft is to a certain manufacturer, I can trust their products just about anywhere I can buy them. Even online.

The feel probably should be less important to me since we can return most items if not satisfied, with both Amazon and the brick store. But I hate returning merchandise. It sucks having to ship Amazon stuff back, and store returns suck since I'm more likely to stay and shop more because I invested in the drive.

1 hour ago, Ten oz said:

If a brick and mortar store offers expertise I am in need of I still prefer them over Amazon.

Maintaining a physical shop of any kind requires a level of service within the community that online retailers can't match, imo. You have to go above and beyond when you're part of the landscape of your town and its citizens. The sellers on Amazon can change their name and keep selling if they get too many bad reviews, but signing a five-year lease on a shop tells me this seller has a plan to succeed that includes pleasing the community they're part of. 

[Ten oz]

1 hour ago, Phi for All said:

Maintaining a physical shop of any kind requires a level of service within the community that online retailers can't match, imo. You have to go above and beyond when you're part of the landscape of your town and its citizens. The sellers on Amazon can change their name and keep selling if they get too many bad reviews, but signing a five-year lease on a shop tells me this seller has a plan to succeed that includes pleasing the community they're part of. 

Expertise is hard to come by though. I remember as a small kid going TV shopping at Sears with my parents and their electronics section had dedicated sales reps that actually know a lot about the products. I recall them walking my parents through everything from how the remote control worked to the different how one would hook up a VCR and Cable box. Last time I went into the electronics section of a large brick and mortar store I had to wait around for several minutes to get helped and the kid helping me didn't know anything about the products I was interested in nor was he willing to give me more than 30 seconds of his time. So it is sort of on them (brick and mortar) to make it worth our time.

For a long time brick and mortar stores saved money by cutting staff and limiting pay. When I was a kid we lived in what was a quality middle class California suburban neighborhood and I had neighbors that worked at department, grocery, and home improvement stores. They were decent middle income careers.  I understand that inflated real estate costs and having to compete with inexpensive products from overseas played a role in stores freezing out career employees in trade for shorter term, less experienced, lower wage employees but greed played a big role too. They put cost cutting for the sake of profit over the costumer experience not realizing the internet was coming to take over. Look at Blockbuster. They late fee'd themselves right out of business. Those late fees made people so angry with the brand that when they tried to move into online sales no one was having it. Many consumers celebrated in their demise. 

[Phi for All]

2 hours ago, Ten oz said:

Expertise is hard to come by though. I remember as a small kid going TV shopping at Sears with my parents and their electronics section had dedicated sales reps that actually know a lot about the products. I recall them walking my parents through everything from how the remote control worked to the different how one would hook up a VCR and Cable box. Last time I went into the electronics section of a large brick and mortar store I had to wait around for several minutes to get helped and the kid helping me didn't know anything about the products I was interested in nor was he willing to give me more than 30 seconds of his time. So it is sort of on them (brick and mortar) to make it worth our time.

For a long time brick and mortar stores saved money by cutting staff and limiting pay. When I was a kid we lived in what was a quality middle class California suburban neighborhood and I had neighbors that worked at department, grocery, and home improvement stores. They were decent middle income careers.  I understand that inflated real estate costs and having to compete with inexpensive products from overseas played a role in stores freezing out career employees in trade for shorter term, less experienced, lower wage employees but greed played a big role too. They put cost cutting for the sake of profit over the costumer experience not realizing the internet was coming to take over. Look at Blockbuster. They late fee'd themselves right out of business. Those late fees made people so angry with the brand that when they tried to move into online sales no one was having it. Many consumers celebrated in their demise. 

The moment when pay decouples from productivity is heartbreaking. Every business that did this made more profit at the expense of quality workers, and the country as a whole loses people who can participate in their own economy so some wealthy folks can be a bit wealthier. 

It's bad in most businesses. When the butcher cuts too close to the bone, or when the manufacturer decides to replace steel with plastic so things wear out faster, or when a job is dumbed-down to make it a least-paid position, the commitment to what the business was all about is reduced to profit only. In those cases, we see the quality of the consumer experience suffer greatly. 

 

 

Amazon gives me a much greater selection, and that means I get more opportunities for deals I'd never be aware of if I had to drive all over town or watch mailed circulars. I found a great water bottle for my wife, the kind with a small spout for drinking that unscrews to reveal a wider opening so you can add ice (we also add lemon, and some mint from the garden). They usually sell for around US$20, but I've seen them in stores for about the same, so I held off for a bit. The following week the price on three of the colors went down to $13, so I picked one up for my wife. Then I looked at a larger size for myself, and they were all $25 except for the red one, which was also marked at $13! Not sure if it was a mistake, overstock, or something else, but it's mine now, and we've been using these every day since.

I'm not a huge consumer, but I appreciate quality and great service when I shop. I worry about what to do with all those brick and mortar stores going out of business as the big guys consolidate and merge. I know it's always changing and developing, but I worry that we're losing opportunities for socialization and not replacing them with anything. I think many folks these days would be happy never to leave the house, and just have everything they need delivered to their door. 

[Ten oz]

39 minutes ago, Phi for All said:

I'm not a huge consumer, but I appreciate quality and great service when I shop. I worry about what to do with all those brick and mortar stores going out of business as the big guys consolidate and merge. I know it's always changing and developing, but I worry that we're losing opportunities for socialization and not replacing them with anything. I think many folks these days would be happy never to leave the house, and just have everything they need delivered to their door. 

I am hopeful. I actually think this is all a great stimulus for innovation. Like the in store printed shoes Adidas has developed I referenced early retailers will need to innovate their practices to improve service. Also retailers which maintained the quality of their customer service and treatment of employees over the years like REI are currently be rewarded as their competition are closing doors. While REI isn't the greatest paying job they provide their employees loads of perks like free rentals on the equipment they have in store. It is enough attract and keep individuals that reflect their stores brand and are familiar with the products they sell. 

Of course I live in a major metropolitan. Access to service and products isn't an issue and I see stores close and new ones open in their place every week. In places with less robust economies I can imagine it is a much more pressing issue. 

1 hour ago, Phi for All said:

The moment when pay decouples from productivity is heartbreaking. Every business that did this made more profit at the expense of quality workers, and the country as a whole loses people who can participate in their own economy so some wealthy folks can be a bit wealthier. 

This one of the many reasons I never support politicians who say they want to see the govt ran more like a business on champion their business experience as a meaningful qualification. 

[iNow]

I was thinking about this thread earlier today and the idea of farmers markets crossed my mind. Fresh, picked that same morning, fruits and vegetables from the local farmers. I considered, "Now THAT'S a space where Amazon will never have an impact!" But then, I realized, they acquired Whole Foods a year or two ago and I was suddenly much less confident in that thought.

[Ten oz]

9 minutes ago, iNow said:

I was thinking about this thread earlier today and the idea of farmers markets crossed my mind. Fresh, picked that same morning, fruits and vegetables from the local farmers. I considered, "Now THAT'S a space where Amazon will never have an impact!" But then, I realized, they acquired Whole Foods a year or two ago and I was suddenly much less confident in that thought.

They can't beat the experience of a farmers market. Beyond the fresh produce farmers markets often have local artists and musicians. It sort gets to the customization I referenced. Buying local original art can't be massed produced. It would defeat the the point of buying original pieces. Plus farmers markets are normally set up in or near parks and attending serves as a way to get out an enjoy the day. 

[Sensei]

Many on-line internet shop are just catalogues (in the more or less percentage), what they can deliver. Not exactly what they have for real in warehouse.

Basically, people see item on the page, they're interested, click "Buy Now", and then internet on-line shop is ordering that item from producer..

It's such optimization of required warehouse area.

None the real off-line shop can beat it- they must have item in the shop so customers can immediately see it and get it with them.

 

23 hours ago, iNow said:

I was thinking about this thread earlier today and the idea of farmers markets crossed my mind. Fresh, picked that same morning, fruits and vegetables from the local farmers. I considered, "Now THAT'S a space where Amazon will never have an impact!" But then, I realized, they acquired Whole Foods a year or two ago and I was suddenly much less confident in that thought.

It would only work reliable like my above mentioned on-line catalogue..

Imagine: now fruits, vegetables, are cut from trees, plants, in advance, then delivered to shop, and they wait for customers. Some of them, if customers are not interested, or if demand for them is overestimated, are ending up in trash..

But if customer is clicking "buy", then can be cut from tree, or plant, in the moment of clicking. Exact amount of them is cut from trees, no more than needed. So there is no waste.

Edited June 20, 2018 by Sensei

[Ten oz]

On 6/18/2018 at 1:19 PM, Phi for All said:

They passed the 50M mark on Prime membership recently, and promptly announced a price increase. Will it just get worse as competitors die off?

Something which occurred to me this morning while reading an article about the former Cambridge Analytica CEO's testimony before parliament in the UK was that Amazon potentially could do far worse than those who mine social media. Amazon is able to collect data on what you buy, eat, own, watch, read, and etc. Amazon's potential to manipulate the general people grow exponentially by the day. 

All companies do this of course. Netflix has algorithms which attempt to predict what I might like to watch. For the most part its convenient. However when a company is as diversified as Amazon they aren't just influencing which movie you watch. 

Edited June 24, 2018 by Ten oz
Corrected occurred

[StringJunky]

33 minutes ago, Ten oz said:

Something which accorded to me this morning while reading an article about the former Cambridge Analytica CEO's testimony before parliament in the UK was that Amazon potentially could do far worse than those who mine social media. Amazon is able to collect data on what you buy, eat, own, watch, read, and etc. Amazon's potential to manipulate the general people grow exponentially by the day. 

All companies do this of course. Netflix has algorithms which attempt to predict what I might like to watch. For the most part its convenient. However when a company is as diversified as Amazon they aren't just influencing which movie you watch. 

"Hi Alexa". I know at this point in my life I'm becoming a Luddite. Over my dead body am I having listening and watching devices in my home just because I can't be bothered to do some things I've been doing all my life.. There's enough of them out in the UK streets atop traffic lights and elsewhere.

Edited June 24, 2018 by StringJunky