

Fear of Amazon Pushes Retailers to Take On Risks of Same-Day Shipping - pragmatictester
http://www.nytimes.com/2012/12/28/business/fear-of-amazon-pushes-retailers-to-take-on-risks-of-same-day-shipping.html

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tptacek
This is a bell Matt Yglesias at Slate has been ringing for the last year;
specifically, Amazon is financed by the public markets to an extent no other
retailer is or can be (look at their P/E), enabling them to compete at a loss
against established businesses. People like Charlie Stross ding Amazon for its
predatory marketing in the media industry, assuming that it's part of a plot
to dominate the market and collect rents.

Yglesias has an even more sinister theory: that there's no real rhyme or
reason to Amazon's strategy, that it's acting on the assumption that having
beaten the market into submission there will somehow, in some way, be a way
for Amazon to capitalize on the resulting chaos --- but that it's equally
likely that Amazon will itself crater, having destroyed everyone's profits in
the process.

I like Amazon (we're Prime subscribers), but I have to bear that in mind every
time I prepare myself to complain about Wal Mart (which I do not like).

In any case: it's close to impossible for a small-scale retailer to compete
with Amazon once Amazon decides it's competing.

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tedunangst
Most of amazon's business is profitable last I checked. The losses come from
write downs and investments, but they aren't strictly operating in the red.
The business they've built right now is sustainable just as it is.

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tptacek
Sure; the issue is that the outsize valuation they receive in the market gives
them enormous leverage to compete at (or I suppose near) a loss; they simply
have more opportunities to buy market share than other companies. As Yglesias
would have it, it's as if the public markets are paying for Amazon to buy up
that market share even without any coherent plan for how to profit from it.

The issue Yglesias seems to have with that is that the market can profit from
volatility even if, over the long term, Amazon's actions are a net negative
for the larger economy, and would fail without their intervention.

I don't know how much of that I buy. I'm just pointing out the hugely
privileged position Amazon has.

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tedunangst
Meh. Where are the tears for all the mom and pop ISPs who can't afford to
blanked a city in fiber? How will they ever compete with market funded google?
:)

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sarvinc
For some reason I don't want to like what you've written. I up voted because I
agree with you.

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prostoalex
Looks like retailers who kept complaining about Amazon's sales tax advantage
got what they were asking for - local nexus.

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cm2012
We sell on Amazon, eBay, Sears, buy.com and newegg, and have been almost
dounling our sales year over year. Weve learned this year that the shipping
cost advantage of fulfilled by Amazon is just insane - and we already get
significant UPS discounts.

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pclark
Tired. Cold. Sick. Not yet unpacked. Apartment barren of foods. I fire up
Instacart – for the first time ever – and order groceries to make a stew. An
hour later, with free delivery, the foods arrived.

Living in the future.

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edwardy20
Not that impressive (to me at least). Food delivery has been around since
forever- pizza gets to my house in 10 minutes. I don't see why groceries
should be different.

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wlesieutre
Pizza places have maybe 20 ingredients in stock that all get used at a pretty
predictable rate. Keeping something like a much larger selection of fruits
available and fresh when you can't freeze them is a somewhat harder problem.

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sksksk
Does Walmart or Target not deliver? In the UK all the large supermarkets
(Tesco, Sainsbury's, M&S, Asda) let you order online and deliver to your
house. They actually just get someone to go round a supermarket and pick the
stuff off the shelves.

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ig1
Online grocery shopping is more developed in the UK than any other major
market. A large part of it is the London effect where you have a large number
of middle-class shoppers who don't have cars in close proximity to each other,
that makes the economics vastly better for the supermarkets.

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dalke
Perhaps, though I know Oxford also has home delivery so it's not just London.
I've not understood how Oxford could have it but San Francisco doesn't.

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arkem
Safeway has done home delivery since at least March, so it's not an unknown
service here in the US.

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tommccabe
Amazon can (possibly) pull this off due to their scale and their warehouse
technology. I think the other retailers that can be successful are those brick
and mortar retailers with thousands of physical locations across the country
(Walmart, Target, Staples, Kohl's)- imagine a reverse brick and mortar model
where the customer orders from the site but it is fulfilled directly out of
their local store.

The luxury apparel market is going to be the next wave of retailers who
explore this offering and, could be, successful with it. Shoppers who are
spending hundreds and thousands of dollars online expect an elevated level of
customer service- same day delivery (like Net-a-Porter offers) is the next
step in this personalized service.

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storborg
Some numbers of this in action: [http://www.reuters.com/article/2012/12/24/us-
usa-retail-ecom...](http://www.reuters.com/article/2012/12/24/us-usa-retail-
ecommerce-idUSBRE8BN03J20121224)

"292 of Macy's 800 stores have been doing double-duty as mini-fulfillment
centers that assemble, pack and ship online orders"

"since 40 percent of bestbuy.com orders are now picked up."

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FireBeyond
Best Buy, when I need something "now", though it has gotten better, has had a
nasty, at times outright dishonest history of issues relating to its online
experience - at one time they were caught having different pricing when the
site was browsed in store ("But online it was $x-20" "Sorry, sir, I'm looking
at it here on our website and it's $x" "But I can pull it up on my cellphone
and see that it says $x-20")...

So I don't support them, but if I need something, ordering for pickup a)
ensures the price, b) minimizes upsell, and c) ensures stock (I'm sick, too,
of times when there was a display model out but nothing in stock).

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zwily
Heh, I wish it "ensured stock". Twice now I've ordered for pickup, gotten the
email telling me it's ready to be picked up, and gone to the store only to be
told that they don't actually have it. (?!?!)

It made me swear off ever shopping at Best Buy again, but I broke that promise
when they started price-matching Amazon prices...

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timjahn
"but I broke that promise when they started price-matching Amazon prices..."

I've yet to try them on this. I'm curious - do they actually match Amazon
every time, no matter what? When they first announced this, the press releases
seemed to indicate that each store could independently decide not to honor on
a per-situation basis.

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zwily
They have the 3 times I've tried, and one of them was about 35% off of a $400
item. I think it ends in February.

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pazimzadeh
Isn't this what competition is all about?

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2pasc
I have experienced myself different types of offerings from different
startups/Companies (ebay now, Get it Now, Instacart, etc...) and I would say
the following:

\- For groceries, it is really awesome. Instacart prices are 10-15% above
Safeway prices, but their customers don't care on average, and that's how they
make money. Delivery fees are a necessary evil.

\- For premium pizza, "get it now" is really great, but their business model
is not sustainable: I never paid for delivery, and they only charge 5% out of
which they pay 2.5% for CC processing. The fact that they want to scale now
and expand to further categories without having nailed their primary suppliers
(fancy restaurants that do take out but don't deliver) seems crazy to me.

\- For other types of goods, one hour delivery is a bit too much, and you feel
bad the first time. But then, hell it is practical, and in many ways it seems
much more relevant and ecological that having an item shipped from a random
warehouse in the middle of the country, boxed specifically for me, etc...Same
day/next day would do in 99% of the cases though.

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robryan
I think at the moment you can probably charge enough to at least break even on
same day. As the article says most people don't need it so those that really
do will probably pay a premium or depending on the item will go to the store.

Prime with amazon is pretty much next day/ 2 day shipping on everything? Which
is likely already very fast for most people an most purchases.

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frozenport
I wonder if we will see Amazon as a competitor to FedEx, UPS, USPS, DHL?

