
Amazon, the world’s most remarkable firm, is just getting started - gpresot
http://www.economist.com/news/leaders/21719487-amazon-has-potential-meet-expectations-investors-success-will-bring-big
======
mabbo
I've said before on hackernews, but people never seem to grasp the scope of
Amazon. They aren't an e-commerce website anymore; that's just the tip of the
iceberg. Bias: I spent a good five years there.

In logistics alone: hundreds of warehouses in a dozen countries; hundreds of
delivery stations, a fleet of drivers (independent contractors all) in the
tens or hundreds of thousands; a fleet of airplanes (and an airport I hear?);
and I read an article a while back saying they were buying a big ol' container
ship because why not? Oh and the drones of course, whenever they get off the
ground (eh? see what I did there?)

Then you add on AWS, Kindle, the prototyped no-cash-register stores, and
whatever else they've got cooking that no one knows about. This company is my
best bet for "Weyland-Yutani" from the "Alien" series.

~~~
replicatorblog
100%. It's also arguably the most irreplaceable. Just go through the thought
exercise of imagining if a big tech company just vanished overnight. We'd all
remember what they did and how the services work so companies could try to
recreate the value proposition. This is how I imagine it playing out among the
"Big 4."

Apple: If Apple vanished tomorrow I could get an Android phone that lacked
some of the polish of iOS, but my day-to-day would be largely unchanged. Their
laptops are still the best IMO, but could deal with a Lenovo if needed.

Google: Bing is fine. There are no shortage of online collaboration tools.
Their dominance in AI is impressive, but it's not hard to imagine Microsoft
reasserting themselves in Google's absence. Self-driving cars and life
extension startups are well-capitalized. Their services are amazing, but not
unique.

Facebook: Social media will find a way. If FB vaporized, something would fill
the gap. Twitter would be given a new lease on life.

Amazon: It's almost impossible to imagine any company filling the gap they
would leave. Who has the tech chops, willingness to deal with the grimy
logistics and poor margins of retail, build out the cap ex of distribution,
and deal with the politics of it all. Amazon is the most untouchable,
irreplaceable company in tech. If I had to bet on one of these four companies
existing 100 years from now it would be Amazon without question.

~~~
edgyswingset
Jet.com/walmart is something I use already, and often prefer it to Amazon's
own shopping. The website is cleaner which appeals to me. Shipping isn't quite
as fast, but it's easily something I can live with. Half of what I get via
Amazon doesn't ship via Prime, anyways.

I already use Netflix for my video streaming. Spongebob is on Amazon Prime, so
I watch that. I use YouTube, XBOX, and Google Play for other stuff (other
videos, some movie rentals, games, music).

I use OneDrive for storing files on a company's servers. Works great.

I normally just get books from a bookstore or library. Tried a Kindle, didn't
care much for it. Truth be told, I'm not that big of a reader.

Azure is a perfectly suitable replacement for AWS - VMs, storage, functions,
etc. So is GCP, but I'm not familiar enough with it.

I don't really do food delivery, though I game the coupon system a bit with
Blue Apron from time-to-time, since they keep sending me $30 off a delivery
when I cancel. I mainly just go to the grocery store.

Amazon is absolutely _not_ irreplaceable for me, nor do I think it's
irreplaceable for others.

~~~
ar0
> I already use Netflix for my video streaming.

To be fair, though, if AWS were to disappear your Netflix wouldn't work
anymore. And given that it took them seven years [1] to move to AWS, I guess
it would take them quite a while to move to Azure or Google or their own
hardware.

For the logistics / shopping part I agree, though: I live in Switzerland,
where Amazon doesn't ship much except for books and I have to say I don't feel
I'm missing much. In fact, many local online stores which could develop
because they weren't drowned by Amazon work better IMHO and at similar prices
than the Amazon website.

[1]: [https://media.netflix.com/en/company-blog/completing-the-
net...](https://media.netflix.com/en/company-blog/completing-the-netflix-
cloud-migration)

~~~
mercer
I seriously doubt Netflix wouldn't find some way to rapidly move to some
alternative if AWS were to disappear. But by all means correct me if I'm
wrong!

~~~
qaq
You seriously think there is a provider somewhere sitting on 20 empty
datacenters with all the hardware procured and hooked up just waiting on an
off chance Netflix might switch?

~~~
cgio
I don't think the AWS datacenters would disappear in thin air either.

~~~
qaq
Well neither would warehouses and other infrastructure they built but that was
not the premise that is being discussed.

------
chiph
Amazon needs to solve the counterfeit goods and scammer seller problems it
has. I reported a scammer on Wednesday and in the span of time I was in the
chat with them, 3 more scammers appeared for that same SKU.

I've been a customer since the late 90s and if they don't get this fixed, I'm
going to start looking for another e-tailer to use.

~~~
menacingly
For me, this problem went away when I started dealing exclusively with items
"shipped from and sold by" amazon.com.

Do you still experience counterfeit stuff if you do that? Hopefully not, or
I'll have to revise my strategy.

I love Amazon, but the ebay side of their retail business is total shady junk

~~~
bratsche
I've been seeing some items that are ONLY sold by 3rd party sellers. For
example, go search on Amazon for Nintendo Switch. I get it, there isn't much
stock out there.. but on Amazon there is no way to say, "Pre-order for
whenever you get more in stock."

Instead you're forced to buy from 3rd party sellers. Now go and look at some
of those sellers. There are tons and tons of sellers who have either 0%
positive feedback, or they just started and have no feedback.

I'm worried that more items are going over to this Ebay-like model of shady
sellers.

~~~
Arizhel
Amazon has gotten so bad about this stuff that I consider those "shady
sellers" on Ebay to be a better bet than the ones on Amazon.

At least on Ebay, I can tell right away if a seller is shipping from China. I
can't see that on Amazon until I go to the checkout, and see that it'll take
several weeks to arrive.

~~~
sharemywin
I goto aliexpress I paid $9.70 for a 1m micro usb cable. oh, wait that was 10
of them. versus $2.86 for one on ebay or 4.99 on amazon. versus $10 at the
store.

not affiliate with them, but if your going to by cheap shit from china why not
go direct and get it the cheapest.

~~~
makomk
Plus, when you go to look at reviews on Aliexpress you know they're from
people who bought from the seller you're buying from, not some unrelated
supplier whose genuine listing a scammer has subsequently latched onto.

------
toddmorey
My family has migrated more purchases to Amazon than I even realized. I got
tipped off when I noticed that now the recycle bin fills up so much faster
than the trash can.

Which brings up the main issue I have for to-the-door delivery: the packaging.
The insane amount of boxes inside of boxes really makes me feel guilty. There
was a project at Amazon in 2008 to have consumer friendly, "frustration free"
[1] packaging, as most packages are optimized to stand out on store shelves
and prevent theft. (Of course that makes them bulky and hard to open. With
posed toys that secured with wire and screws, it's even more maddening.)

Where has that effort gone? Did it fall out of favor with manufacturers and /
or consumers?

I would love to have Amazon drop off my order in as little packaging as
possible and even collect & reuse special durable bottles and such for
frequently used items like laundry detergent.

This seems like an opportunity as they increasingly build local warehouses and
take ownership of the supply chain and delivery logistics.

[1] [http://www.adsavvy.org/amazoncoms-new-frustration-free-
packa...](http://www.adsavvy.org/amazoncoms-new-frustration-free-packaging-is-
eco-and-customer-friendly/)

~~~
ape4
I would like a returnable box. You can hand it back to the the delivery guy
next order.

~~~
Lost_BiomedE
The problem with re-using a box is that it loses a lot of integrity after the
initial shipment. Its crush rating is reduced and chance of tear increases
sharply. Many damaged and ripped parcels at the post office are due to box
reuse or bad packaging combined with incorrect crush rating.

~~~
ape4
It would have to be inspected to make sure its ok to re-use. Does not have to
be cardboard.

~~~
Lost_BiomedE
Agree, that would likely work or a solution could be found.

------
gdulli
I've had an account since 1997 and I'm close to canceling, not getting
started. I've weaned off, only making a few orders a year, which I still do
because I get Amazon credit card rewards.

I was okay with missing out on fast free shipping unless I paid $100/year,
because I could still get slow free shipping. But now that I don't get the
best price on a given product without Prime, shopping there feels like a bad
value. The competition competes well on price now without extracting an annual
fee.

As of a few weeks ago my Amazon rewards card gives me lower rewards than if I
paid for Prime, so I'm looking for a new card. I'd chosen a card without an
annual fee for a reason.

For the first 15 years Amazon trained me to buy online from one place. But in
the last 5 it trained me off of that behavior. I have the added motivation to
reject Amazon because of its treatment of employees and its business
practices, but as just a customer and not an activist it's become a bad deal
anyway.

~~~
coding123
I haven't yet seen any online retailer compete on time to ship compared to
prime. One of my few online purchases OFF Amazon was some Vet-only cat food -
and it took them 2 weeks. Not only that but I ordered it on a Thursday, and
there was a label that was generated that day, but watched thet tracking - it
didn't get into UPS' hands until Tuesday. I would have shit a 1000 bricks if
Amazon did that.

I do get however that the company itself has a lot of internal problems to
fix.

~~~
nommm-nommm
Chewy.com ships prescription cat food in two days for free. It's free shipping
if you spend more than $49 (easy with prescription food...) or sign up for
auto-delivery (which also gets you 5% off). They also have excellent customer
service, easy to use website, and great prices. Auto-delivery is stupid
convenient too since my cats eat exactly the same amount each day so my usage
is very constant.

I'm not affiliated, just a happy customer. I didn't even know about it until I
got an AMEX offer for them a few years ago.

Amazon "free" shipping seems very costly to me amortized unless you impulse
order a whole bunch of cheap stuff very often. Paying for upgraded shipping on
an as-needed basis seems like a better value. Or simply reduce consumption...

You're also comparing apples to oranges.

~~~
getpost
Can confirm. Chewie also handles subscription deliveries in a much more
predictable way than Amazon. Amazon monthly deliveries occur on unpredictable
dates (+- 5-7 days). Chewie schedules a shipment on a particular date and
sends you an email before the shipment in case you want to make changes.

EDIT: Chewie's prices are lower too. So it is possible to compete with Amazon
if you're focused. I do wonder why Amazon is so bad at stuff like this though.
Chewie's procedures seem to be the "obvious" way to do things from the
customer's perspective.

For scheduled monthly deliveries, Amazon does not notify you of any price
change. In one instance, there was a 30% price increase month-to-month, and I
just happened to notice it out of sheer luck. The same product did not change
prices on Chewie.

~~~
areyousure
Thank goodness chewie.com redirects to Chewy.com -- the discrepancy between
your comment (which says "Chewie" five times) and your parent's (which says
"Chewy" once) was worrying me.

------
tabeth
I know this problem isn't unique to Amazon, but what are people's thoughts on
the potentially unsustainble levels of e-commerce. I know plenty of people who
are in serious debt (primarily student and credit card) and still blow tons of
money on Amazon.

Given that the general levels of debt are approaching 2008 levels [1], is this
something to be worried about in general, or is it irrelevant? The main reason
for asking is that if large percentages of Amazon's growth can be attributed
to a rise in consumer debt, then wouldn't Amazon be disproportionally damaged
by another recession and/or some sort of debt bubble burst?

[1] [http://money.cnn.com/2017/02/16/pf/americans-more-debt-
in-20...](http://money.cnn.com/2017/02/16/pf/americans-more-debt-in-2016/)

~~~
TulliusCicero
> I know plenty of people who are in serious debt (primarily student and
> credit card) and still blow tons of money on Amazon.

I don't think this is specific to Amazon. As a whole, Americans seem to be too
lax about taking on consumer debt.

~~~
notheguyouthink
Yup. I've never really had a problem with debt, but i feel likewise to debt,
Americans (myself included) spend without forethought.

A few months back i decided to sign up for Simple.com Bank _(a Bank, not CU
unfortunately)_, as they let me preallocate all my purchases.

Every single bill, and every single purchase i pre-plan by several weeks. Want
a new game? Mark it on the goals, and save $1/d for it. I don't limit myself
on what i can buy, just when. This little mental change means that 3 weeks
from now i likely won't care about what i was so excited for 3 weeks prior.
It's worked wonders for me, especially with large purchases.

I wanted an Amp, to which i was aiming for around $600 for. Now, weirdly
enough i can easily afford this and am willing to draw from my buffer to spend
this $600. However i preallocated the money a while ago, and now i'm sitting
at this special $600 which i _could_ spend, but something is urging me not to
spend it. Part of me feels like i could _gain_ $600 if i just simply don't
spend it.

It's quite the bizarre assertions i feel like. The number of pre-saved goals
i've later removed because i wanted the money more than the item.. it's weird.

Anyway, i'm deviated like hell. Apologies.

~~~
magic_beans
Spend the money on experiences! Travel, go to shows, hit the road...

$600 is worthless in and of itself.

~~~
vkou
For a lot of Americans, $600 is life-changing.

~~~
magic_beans
Of course when you spend it, it is valuable. But OP had mentioned enjoying the
feeling of simply collecting the money, a notion which I can't help but
challenge.

~~~
notheguyouthink
Assuming the OP you're referring to is me, i may have mislead you a bit. It's
not joy in saving money exactly, but building good habits/etc. I've got a
_lot_ to save up for, retirement, investments, dental work, etcetc. So it's
not that i enjoy the dollars exactly, but i want to have security in finance,
for the long and short term. Building good habits is really crucial to being
happy there, imo.

------
RcouF1uZ4gsC
I am reminded of the story of Sears.
[https://en.wikipedia.org/wiki/Sears](https://en.wikipedia.org/wiki/Sears)

When times are good, it seems impossible to imagine how a company could fall,
but it can happen to anyone.

~~~
dmix
Considering they had a great catalog business and totally missed the internet,
I don't think that really applies here. Amazon is very well situated to be a
part of multiple different industries developing on the horizon.

It's media business alone could be huge if they figure out the marketing
angle. They are really doing a poor job of pushing "Prime Video". I just went
to the website and couldn't figure out how to get back to
[https://primevideo.com](https://primevideo.com) which I found last time. They
have two different interfaces for browsing videos.

I didn't even know they had such a great selection of original content either.
I would have tried them out over Netflix for a couple months long ago.

This may be their weakness. They are good at building products and the
infrastructure that goes with it, but they are bad at marketing. Largely
because they didn't have to develop this internal skillset with their
ecommerce business.

So if anything it will be that that hurts their ventures. I doubt they are
going to be a Sears given that they have diversified and future-proofed
properly,

~~~
beamatronic
I think what they were trying to say is that some day a historian may state,
about Amazon:

"Considering they had a great Internet business and totally missed the
_________________."

Something will perhaps come along after the Internet, which none of us can
imagine right now. Sears had been on top of their game, had everything figured
out and optimized, but they didn't adapt.

------
tehabe
For me as customer, Amazon is almost the best, some times I think it could be
better. The UX for their video service is awful, but okay.

For its employees I hear only bad things, like that Amazon won't talk to the
union in Germany or what The New York Times wrote a couple of years ago.

I'm so conflicted about this company. But it matters. Both sides matter.

~~~
dokument
Wasn't that NYT article found to not be very accurate?

~~~
pnathan
No. While one or two data points may be fuzzy, and it's the case that Amazon
gives teams a lot of leeway in culture definition, it's wholly internally
consistent with the quiet conversations you get with people in Seattle.

------
vxxzy
What is the consensus here on HN? More and more I feel like Amazon is becoming
the next Standard Oil. In the case of Amazon, they are leveraging technology
in all spaces and optimzing _everything_. Could they be the next Standard Oil?

~~~
pnathan
Generally, HN is bullish on Amazon, with the usual bear crowd.

IMO: Amazon has not turned the screws in ways that are causing signficant
complaint. I would guess, based on the usual history of duchies, founders,
etc, when Bezos starts checking out, Amazon's behavior will begin to
significantly alter, and that will trigger a very interesting time. I'd guess
that by 2025 (8 years out), enough pressure will have built up for antitrust
and similar to be applied to the online giants. "Why is Google a virtual
monopoly in search? Facebook ubiquitus in social media? Amazon in
retail/online services", and the pressures from society will begin to force
hearings and so forth. I would _guess_ that the end game will be that the
definition of utility services will be expanded and an load of regulation will
be piled on them to ensure that it's not exploitative.

~~~
phreeza
Just in time for Mark Zuckerbergs run for the presidency then...

------
dgudkov
Sometimes I'm afraid to think what would happen if Amazon merges with Google.
No other combination would be so terrifying: neither Google+FB, nor FB+Apple,
nor anything else. Amazon and Google control so much nowadays. It's probably
very good that they're still independent companies and sometimes competitors.

~~~
intopieces
Speaking as someone who works at one of these companies, we're happy about it
too. The "other guy" is what excites me about my work. I would dread being the
only player in the market.

~~~
droopyEyelids
Not to be a dick, but someone who works at a company doesn't really have an
important opinion with regards to that company's competition in the global
market.

The owners of a company are who count, and they're generally investors who
would be happy to form a monopoly and perform an innovation-free rent
extraction on the planet for the rest of time if possible.

------
gordon_freeman
As per the article their PE ratio is above 172 and it already reflects their
"would-be" profits after 2020. Isn't this too much risk to invest in AMZN?

~~~
dood
Amazon always reinvests most of their profits into growth, so the PE ratio is
somewhat irrelevant, or at best misleading.

Edit on downvotes: this is not a controversial opinion, see this respected
analysis from 2014: [http://ben-evans.com/benedictevans/2014/9/4/why-amazon-
has-n...](http://ben-evans.com/benedictevans/2014/9/4/why-amazon-has-no-
profits-and-why-it-works)

~~~
greedo
Whenever someone says that an established metric is irrelevant to discussing a
publicly traded company, I think they're mistaken.

~~~
snovv_crash
Whenever people optimise for metrics at the expense of what the metric is
supposed to be a proxy for, I think they're mistaken.

~~~
greedo
Agreed. P/E ratio shouldn't be the sole metric used to evaluate a public
stock, but it is a useful proxy for evaluating its current price. And when a
stock has an outlandishly high P/E ratio, there needs to be an outlandishly
compelling story behind the stock. I don't see that with Amazon; I see a
company that does the majority of its business in the US, has trouble overseas
with some of its offerings, and that has plentiful competition worldwide.

~~~
snovv_crash
How about if we made an improved metric, which takes Amazon's story into
account? Something like static-profit/equity, with static-profit being the
profit they would be making if they weren't investing in growth?

I suspect this is difficult to get exact numbers for since separating per-item
costs vs growth-investment costs won't be separated. But I don't think it
would be hard to estimate given a slightly more detailed breakdown of
operating expenses.

~~~
greedo
Sure, if Amazon was forthcoming with any detailed sales breakdowns, but they
aren't. Try to find any specific Kindle sales etc. It's always vague "Best
sales ever" type comments.

My biggest issue with the Amazon crowd is the idea that Amazon is such a
special snowflake in terms of operations that investors need to disregard P/E
completely, because of the theory that Amazon can just "turn on profits" at
will instead of redirecting cash flow to expansion.

Retail isn't a new business model, nor is AWS. The only thing that is
relatively new is selling over the Internet, and the barriers to entry for
that are lower and lower each day; and it's not as if Amazon is lacking
competition in each of its business areas.

It's similar to the hype around TSLA; that somehow TSLA will be able to
achieve an Apple like model where they skim all the profits off of the EV
market, and that their competitors are incompetent in comparison to TSLA. I'm
a huge fan of Musk, and I hope his multitude of endeavors succeed, but I'd
never invest in any of them long term.

------
sidcool
The growth trajectory of Amazon baffles me. In its early days, I had heard a
lot about Amazon's failure prophecies from luminaries of the Tech world. Their
real power is behind the scenes, far away from their shopping apps. There's no
doubt they will be in the forefront of many initiatives over the next decade.

~~~
udkl
The real power is behind their culture.

Amazon has incredible 'leadership principles' that are the cornerstone of it's
culture.

This strong culture keeps the company innovating and relevant.

------
cafebabbe
And not a single word about climate change and sustainable growth. Oh well.

------
saosebastiao
Amazon has one of the most phenomenally dangerous vulnerabilities of any
company I've ever seen. All it takes is a mildly critical look at how they
fund their growth. Amazon requires massive amounts of employees in order to
grow. They throw increasingly-more-expensive new employees at increasingly-
less-viable new businesses. These businesses are _always_ massively cash-flow
negative, and with the right amount of luck some of them might one day turn a
profit. They fund this growth in three ways: 1) Issuing new shares of stock,
2) Paying employees with stock, and 3) Funneling cash flow from mature
businesses back into the business.

Because of accounting difficulties and not-so-explicit public reporting
requirements, Amazon gets away with hiding how much they use #1 and #2, and
can make people believe that #3 is the dominant source of funding. But the
fact that they don't tell us how much #3 contributes is indicative of the fact
that it doesn't; if you can't prove positive information, you hide negative
information.

Now here is the vulnerability: A moderate negative impact to their stock price
sets off a chain of events that could _destroy the company_. The most critical
employees holding the ship together are paid mostly via stock...with 2 year
vesting times. As long as the stock prices keep growing, they overdeliver on
compensation. But if stock prices fall, everybody gets a paycut. If the stock
were to drop 50%, these employees would get a 25% pay cut. And they'll jump
ship in massive numbers, as you would expect any time a company cuts pay by
25%.

Without a cash reserve, all the potential remedies make the problem worse.
Amazon could respond by offering more stock to employees. This lowers the
stock price through dilution, and people rarely consider stock offers with
falling prices to be an incentive. They could respond by selling more stock
and making up for the pay in cash, but they would kill their stock price if
they needed to sell enough to offset a 25% cut in pay. They could kill off
unviable businesses that suck the most cash, but their stock price hinges on
the existence of those unviable businesses to make investors believe there is
growth potential. They could try to spin off businesses, but the high growth
businesses prop their stock price up and the low growth businesses are worth
less to the market than the value amazon receives from their cash flow.
Everything they could possibly do will reinforce the drop of the stock price
and flight of talent.

In other words, Amazon can't just reset expectations and lay a few people off.
They're sitting on a classic example of a runaway positive feedback loop[0].
Amazon knows it relies on stock speculation of growth potential to not die,
_that 's the reason why you're reading this PR fluff right now_. Amazon is the
death star; the visible parts make it look like a tool for universal
domination, but it's just a small torpedo blast away from nonexistence.

[0]
[https://en.wikipedia.org/wiki/Positive_feedback](https://en.wikipedia.org/wiki/Positive_feedback)

------
faragon
Amazon is too big to fail.

------
npguy
Ethereum will be a solid threat to AWS. Overall.

------
brilliantcode
Amazon, the world's biggest net unprofitable website, kept afloat by investors
expectation of turning on net profits in some distant unknown future.

It's like, the laws of gravity doesn't apply to American tech firms but
ruthlessly expected from the rest.

It's only a matter of time before Walmart kills Amazon. Walmart has enough
cash to copy Amazon and steal their market share. The unchallenged status of
Amazon will signal Walmart to enter it's turf and steal away the competition.

Whether I buy a box of condoms on Amazon or Walmart need not matter. Whoever
gets it to me quickly and cheapest wins.

Short AMZN and long WMT

~~~
pgrote
"It's only a matter of time before Walmart kills Amazon. Walmart has enough
cash to copy Amazon and steal their market share."

I am intrigued by your statement. How do you think Walmart can accomplish this
task?

~~~
brilliantcode
It's very easy, people have been buying from Walmart longer than Amazon.

edit: Walmart has enough cash to copy Amazon in everyway at a discount-Walmart
has been watching Amazon very carefully and is able to learn without failing
or expending capital.

When the capex fails to yield the returns investors were hoping for, it will
significantly hurt confidence in Amazon.

Amazon is built upon share price. When it goes down so does it's survival
prospects. Nothing goes up forever.

Walmart on the other hand is far more robust and stable. When Amazon trips,
Walmart would be in a very good position to put the final blow.

Yet the market continually overvalues Amazon. I actually saw someone comparing
Amazon to Weyland-Yuteni from Aliens!

~~~
sumedh
> Walmart has enough cash to copy Amazon in everyway

Reality does not work that way, sometimes a cash rich company just does not
get it.

Since you are so confident about the future I assume you have shorted Amazon
and gone long on Walmart.

