
What Is Amazon? - Brajeshwar
https://zackkanter.com/2019/03/13/what-is-amazon/?=hackernews
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Aloha
I think this raises an interesting point, the raison d'etre for Walmart is
providing _value_ to customers above all other metrics, low prices, wide, but
not infinite selection, and a modicum of convenience.

Conversely raison d'etre for Amazon is _convenience_ , you can get anything,
order it at any time, and have it within a couple days - it may not be the
lowest price, or the best value you can buy - but it will end up being your
first choice because of the low friction interactions Amazon offers.

As soon as interactions with Amazon start to exceed the combined
convenience/value metric offered by other outlets, business will move to those
other outlets - particularly more so for those with disposable income
(particularly notable with the issue of counterfeit of fraudulent items).

As a note, while I don't fully disagree Walmart is one of the 'most successful
social welfare institutions ever implemented' \- I would never frame it in
that context, because Walmart pushes the costs for the value it creates
externally - in essence Walmart is subsidized indirectly by the state and its
various welfare organs, it passes much of that subsidy back onto its customers
- but like any indirect subsidy, its highly a highly inefficient way of going
about this, and creates all sorts of undesired effects at the same time - for
example, it undermines the whole point of many of the social welfare programs
it benefits from thru indirect subsidy.

~~~
skookumchuck
Even though I don't save money on Amazon's prices, I save substantially by
shopping at Amazon:

1\. don't pay for gas and car wear&tear going to the store. (Amazon aggregates
all this by driving one truck replacing 30-40 car trips.)

2\. spend 5 minutes of my time buying rather than a couple hours going to the
mall

3\. I have access to the used market on Amazon, meaning I pay a LOT less for
many items like books

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tracer4201
Very lengthy article. This part about Walmart made me raise an eyebrow, and
I’ll admit, I kept reading to see if the author addresses this further because
at that point I felt biased against this article but didn’t want to pass
judgement and stop reading prematurely.

>It is the most successful social welfare system ever implemented, saving
billions and billions of dollars for everyday Americans without costing
taxpayers a dime.

I stopped reading half way through. I fundamentally disagree with that
statement. A good chunk of Walmart’s workforce were scheduled to work part
time hours to avoid receiving any benefits, and of course they were subsidized
by the tax payer.

I would know - in the mid 90s, I was one of them! Tencare provided my health
coverage, my 6 year old received free lunch, I had reduced rent, and I had
assistance for groceries.

~~~
Veelox
The author's claim is that Walmart is "most successful social welfare system
ever implemented" because it saves Americans billions of dollars every year
due to the cost savings it provides.

Your claim is that this is wrong because Walmart intentionally structures
their employees hours so that they do not need to pay for certain benefits.

I don't think the two claims are mutually exclusive. While I might not go as
far as to say that Walmart is the most successful social welfare system every,
I have not problem saying that Walmart has meaningfully improved the lives of
medium and low income Americans over the last 40 years.

~~~
aidenn0
You left off "without costing taxpayers a dime" in your quote. It may have
been a net positive, but they specifically structured their compensation plan
for their employees to extract a maximum value from the social welfare system.
Even if Walmart employed more people than the smaller stores they replaced, if
even 1 employee of Walmart would have otherwise had a job that provided
healthcare, then "not a dime" is overstating things.

~~~
Veelox
The author implied "without costing taxpayers a dime" to mean "without
directly receiving tax dollars" which is true. Taking "without costing
taxpayers a dime" to mean "ensuring their employee's received no government
benefits" is quite a stretch.

> they specifically structured their compensation plan for their employees to
> extract a maximum value from the social welfare system

While the outcome of Walmart's actions might have been this, I think it much
closer to Walmart's goal to say that they worked to minimize the total cost of
labor. The two are very different ideas of what Walmart's obligations are.

>Even if Walmart employed more people than the smaller stores they replaced,
if even 1 employee of Walmart would have otherwise had a job that provided
healthcare, then "not a dime" is overstating things.

This is a really tricky standard. By this standard. Imagine if Walmart
employed 50 people, 40 at minimum wage, 10 with full benefits, and drove out
of two smaller stores that provided 25 full benefit jobs. There is a net loss
of 15 full benefit jobs, you say this is really bad. But, 25 more people have
jobs. This very well could net decrease government welfare to the area.

The details get really tricky and the truth could be one way or another. I
personally have no data to inform an opinion one way or another.

~~~
ewzimm
Costs to taxpayers also go beyond their employee policies. Walmart was a
leader in moving shopping centres outside city limits to avoid paying
expensive taxes. By moving tax revenue from retail business away from cities,
the tax burden on residents near them has increased. There are many other ways
in which they've managed to minimize their taxes, like getting cities to pay
for extra roads and infrastructure or receiving special deals, which is
arguably how any profit-maximizing business should be expected to act.
Ideally, governments should use this data to continually analyze the
effectiveness of tax laws and make adjustments to avoid any potential
exploitation.

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pagutierrezn
>And so, circa 2002, we start to see the emergence of a pattern: 1) Amazon had
encountered a bottleneck to growth, 2) it had determined that some internal
process or resource was the bottleneck, 3) it had realized that it could not
possibly develop and deploy enough resources internally to remove that
bottleneck, so 4) it instead removed the bottleneck by building an interface
to allow the broader market to solve it en masse. This exact pattern was
repeated with vendor selection (Amazon Marketplace), technology infrastructure
(Amazon Web Services, or AWS), and merchandising (Amazon’s Catalog API).

This is exactly what The Theory of Constraints by Goldratt states.
[https://en.m.wikipedia.org/wiki/The_Goal_%28novel%29](https://en.m.wikipedia.org/wiki/The_Goal_%28novel%29)

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sarcasmic
The author is clearly passionate and brings a lot of detail, but it was always
my amateur impression that Walmart won primarily on footprint. They covered
the country in stores, and not just the suburbs, but also rural America where
the likes of Target and Kmart never ventured, and shops with much smaller
selections and different formats were the norm.

I don't perceive Amazon as an 'unbounded' Walmart like the author does, but as
an aggregator as thoroughly analyzed by Ben Thompson of Stratechery fame. They
bootstrapped a destination with undifferentiated products, a broad selection,
and convenience, and later bolted on a marketplace to further capitalize on
the traffic. But the dynamics of customer-facing marketplaces are very
different from those of internal ones like those of Walmart and McDonald's.
McDonald's puts out specs and has suppliers compete for restaurants' buys, and
Walmart and Costco have immense purchasing leverage with suppliers, this
process results in optimizing the desired quality-to-cost ratio the retailer
wants to target.

Amazon, on the other hand, is a free-for-all, where selection is overwhelming,
products with obscure branding appear to rip each other off to the point where
no obvious choice rises above, human curation is absent, reviews frequently
appear gamed, prices change arbitrarily, products are gated behind Prime and
are subject to obscure shipping math, and despite being long perceived as
having low prices, pricing on products is now being used as a signal. Amazon
is hardly anything more than a digital flea market, where Amazon is the
landlord and some of the vendor booths are staffed by them directly. A wildly
successful and profitable one, and one that draws marketshare away from
traditional retail, but it diverges so far from the formula of retail that
comparisons with them are of questionable value.

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savolai
Please help me understand.

I'll type a dramatic sentence or two. I don't mean to provoke anyone. I just
wish to learn what I'm missing in the big picture.

Hasn't Amazon effectively optimized a machine to make sure humankind consumes
all the natural resources it has and beyond? That's how this piece reads to
me. All bottlenecks again and again removed on the road to self annihilation?

I guess I'm asking what limits or inhibiting factors still do exist that might
make a difference?

~~~
paulcole
> humankind consumes all the natural resources it has and beyond

The system will collapse well before the limit of all available natural
resources is reached. We're well on our way already.

Amazon isn't the machine it's just part of the machine. Think about Sears
being perhaps the first significant iteration of the machine and Amazon
removing one of the "bottlenecks" and being the current phase of evolution.

It's very clear to me that there's no going back to the way things were
"before" without a significant drop in human population. The problem will
solve itself far better than we're willing/able to.

~~~
savolai
Thanks. The collapse of which system are you referring to?

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lotsofpulp
>It is the most successful social welfare system ever implemented, saving
billions and billions of dollars for everyday Americans without costing
taxpayers a dime.

Ignoring environmental costs of pushing low quality plastic products that
don't last.

~~~
jimktrains2
> pushing low quality plastic products that don't last.

It also feels like it's killed any mid-tier options. Everything seems to be
"cheap stuff made overseas", "same cheap stuff with a brand name wholly or
mostly made overseas", and "expensive, but nice stuff".

E.g. go try to find a set of combination wrenches made in the USA for even
triple the price of what you can get at Harbor flFreight.

~~~
burger_moon
Wrenches is a weird example to use, there's well defined tiers in hand tools.

harbor freight < craftsmen/kodiak < mac/matco < snapon

Each tier gets a little pricer and quality is different at each level.

However I do understand the point you're making and it is valid.

~~~
jimktrains2
Craftsman, Husky, and even Channel Locks combination wrenches aren't made in
the US anymore. I guess I just don't give them much more credit than the
"higher end" harbor freight ones.

The price difference between Craftsman and matco isn't an option for most
consumers.

Wrenches also aren't the best example because they're less likely to fail as
well.

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moab9
Amazon is Borg.

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jackstraw14
> Retail is my universe, and Amazon is my obsession.

> It is the most successful social welfare system ever implemented, saving
> billions and billions of dollars for everyday Americans without costing
> taxpayers a dime.

And people try to say the American Dream is dead. This article shows we're
still very much dreaming.

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AdmiralAsshat
"A miserable little pile of secrets."

------
amelius
The end-game of capitalism.

~~~
max76
I always feel like there is a lot of optimism in the term end-game capitalism.
I don't think we are close to a fully mature capitalistic society.

~~~
Finnucane
At the rate we're going, can we survive that?

