
Sears's History Predicts Almost Everything Amazon's Doing - kposehn
https://www.theatlantic.com/business/archive/2017/09/sears-predicts-amazon/540888/?utm_source=atlfb&amp;single_page=true
======
michaelt
I read an interesting forum post about Sears a few years back [1]

TLDR: In 1985 Sears had vast mail order experience, co-founded an ISP
(Prodigy), and had their own credit cards (Discover). All the components
they'd need to dominate online retail. In 1993 they closed their mail order
division. In 1995, Amazon launched.

[1] [http://www.metafilter.com/62394/The-Record-Industrys-
Decline...](http://www.metafilter.com/62394/The-Record-Industrys-
Decline#1742245)

~~~
jasode
_> In 1993 they closed their mail order division. In 1995, Amazon launched._

If one compresses the timeline, it does seem like Amazon killed off Sears when
in reality, Sears was already getting killed off in the 10 years before 1995.

In the 1980s...

\- Home Depot, Lowes, Builders Square, etc home improvement stores were taking
away business from Sears power tools (Craftsman)

\- Best Buy and Circuit City were taking the consumer electronics business and
appliances. Less customers buy Sears Kenmore.

\- Target, Walmart, Williams-Sonoma, etc were taking housewares (pots, pans,
etc) business

\- consumers (especially kids) didn't want "department store brand" clothing
from Sears/JCPenney because they were "uncool". They wanted the boutique
brands (Guess jeans, Calvin Klein, etc)

\- peak mall traffic was 1986 and malls started dying off after that. An easy
way for me to remember that point in time is the 1985 movie _" Back to The
Future"._ When you watch the DeLorean spinning around the parking lot of Twin
Pines Mall, remind yourself that you're seeing "peak mall".

\- credit-cards criteria were loosened and easy credit was expanded. Sears no
longer had a captive audience with the Sears credit-card that kept shoppers
within Sears' "walled-garden". Before 1990s, if a young person had zero credit
history, one of the first credit cards one attempted to get was the _" Sears
department store credit card"._ Once one built up credit history with it,
he/she could then try to get Visa/Mastercard. In the meantime, they used the
Sears card to _spend money at Sears_. To contrast the difference, today an
18-year-old college student can get a Visa/MC _without a parent_ as a
cosigner. That type of easy credit approval for a person with no job was
unheard of in the 1960s/1970s.

There were lots of competitive forces that Sears' management didn't respond to
long before Jeff Bezos arrived on the scene.

~~~
chipperyman573
>today an 18-year-old college student can get a Visa/MC without a parent as a
cosigner.

FWIW, when I was 18 I had to get a secured card[0] and I was barely able to
get it (I had to go to my bank twice to appeal the decision). It's definitely
different from 40 years ago but it's not super easy for most college students,
and a lot of it came down to the fact that I had a few grand sitting in a
checking account and a job that paid $12.50/hr. Some of my friends who didn't
have that got flat out declined multiple times (I have one friend who has
applied for three different cards and she's been denied all three times, with
no credit history at all).

[0]: Basically, the card had a $500 credit limit and you had to give the bank
$500 for a year, after a year if you've made all your payments they give you
your $500 back. It still sat in my savings account generating "interest", but
I couldn't spend it

~~~
aidenn0
When did you turn 18? I started college in August 1999 and nobody I knew had
any trouble getting a credit card. Many fraternities and sororities used
credit card applications to freshmen as fundraisers. It was typically a
$1000-$1500 credit limit. Some people I knew had $10k in credit card debt by
the time they graduated...

~~~
chipperyman573
I turned 18 about two years ago. Things might be different now because of the
credit CARD act of 2009 which makes it slightly harder to take advantage of
younger people (giving a $1500 card to people who have never had credit before
and don't know how important it is to pay off the balance in full seems
particularly evil)

[https://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009](https://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009)

>Consumers under the age of 21 must prove that they have an independent income
or get a co-signer before applying for a credit card. The Act also prevents
credit card companies from ... wooing students with T-shirts, free pizza and
other free gifts at university-sponsored events

~~~
aidenn0
Well at least the interest rate was only around 30% </s>.

[edit] The end of the story for me:

The credit card I got from that was amazingly bad. I had a bill put in the
wrong mailbox in my dorm, so didn't get it until 3 days before it was due. I
called up customer service:

Me: I can mail this today, but it is unlikely to make it there by the due
date, I've always paid my bills on time, can I get a 1 week extension

CS: We can do an ACH for $20 or you will pay a late fee if the check you mail
is even a day late.

Me: Seriously?

CS: Yes

Me: Okay, do that and cancel my account.

CS: Okay.

It's like they didn't even want me as a customer if I was going to pay my
bills every week. Not a single attempt to retain me when I canceled my
account. At this point, I had a Discover card, the CS reps for which were very
kind, and my bank had just gotten my debit card on the Mastercard network
(previously it was only an ATM card), so I had no absolute need for their
card. Had this happened a few months earlier I might not have been willing to
cancel as so many places don't take Discover.

~~~
jldugger
> It's like they didn't even want me as a customer if I was going to pay my
> bills every week.

I semi-suspect you know this, but if you pay in full every month, they don't
get to bundle your debt up and sell it off as a security. Interchange fees are
competitive enough that it's probably close to break even (and getting more so
every year), but the securities are comparatively pretty sweet for the
issuers.

~~~
stevekemp
While you're probably correct its worth remembering that credit-card companies
get their money from both sides:

* They earn money via the interest people way if they don't settle their bills in-full, and on-time.

* But they also take money for handling transactions at terminals, etc.

------
gorpomon
I often wonder what the story of Sears means for Amazon. I think at first, my
thinking was that what did Sears in was not noticing the shift to e-commerce
like Amazon did, and that to unseat Amazon, it will take another shift that an
upstart sees that they don't. Then however, I start to wonder what shift might
that be? Voice assistants, it seems like Amazon is leading the way, not that
it will be taken by surprise. Logistics? Seems like they are a logistics first
company. I guess I can't see the future though, like everyone else.

I think for now I've settled on that the similarities are just that,
similarities. Two things with some common history don't have to share the same
fate. And looking for lessons in the history of one to apply to the other
might be more of a false equivocation than we think. The times are
fundamentally different, so perhaps though their stories echo each other, they
are fundamentally different companies.

~~~
all_blue_chucks
Amazon is actually obsessed with NOT becoming Sears. Internally, companies
like Sears are referred to as "Day 2 companies." Day 2 companies are trying to
maintain the status quo. Day 1 companies, like Amazon, are constantly trying
to be disruptive and innovative.

Being called "Day 2" is one of the worst insults within Amazon.

~~~
lovemenot
So if and when Amazon is blindsided, their disruptor may come from such a
derided direction?

The only constant is change. Until it isn't.

More likely though, Amazon gets complacent eventually.

------
crispyambulance
Sear's, unfortunately, has become a sad shadow of its former self. In
particular their CEO, Eddie Lampert, has enjoyed a nightmarish rein-of-power
based on "Ayn Rand" principles that have been driving the once mighty store
into the ground. (see [http://www.businessinsider.com/how-eddie-lampert-set-
sears-u...](http://www.businessinsider.com/how-eddie-lampert-set-sears-up-to-
fail-2017-5) and [http://www.pbs.org/newshour/making-sense/column-this-is-
what...](http://www.pbs.org/newshour/making-sense/column-this-is-what-happens-
when-you-take-ayn-rand-seriously/))

~~~
wavefunction
Thanks for those excellent links.

The descriptions of applied Randian Objectivism in Honduras are
particularly... noteworthy:

"The greatest examples of libertarianism in action are the hundreds of men,
women and children standing alongside the roads all over Honduras. The
government won’t fix the roads, so these desperate entrepreneurs fill in
potholes with shovels of dirt or debris. They then stand next to the filled-in
pothole soliciting tips from grateful motorists. That is the wet dream of
libertarian private sector innovation."

~~~
DINKDINK
>They then stand next to the filled-in pothole soliciting tips from grateful
motorists. That is the wet dream of libertarian private sector innovation.

Probably a more apt 'libertarian utopia' would be an entrepreneur buying land
from consenting property owners (Converse to the government forcing people to
move and not respecting their property rights via eminent domain), build a
road (via a decentralized, competitive bidding process rather than a single
point of economic co-option opportunity such as a state) and then charging
access to the road (with guards in low-tech community, Toll-payment box in
medium tech community, and a Bitcoin Lightning-Network payment channel in a
high-tech society.) ;]

~~~
sjg007
Roads are built by competitive bids.

------
Treblemaker
1) "In 1969, Sears, Roebuck & Co. was the largest retailer in the world, with
about 350,000 employees. Sears executives decided to consolidate the thousands
of employees in offices distributed throughout the Chicago area into one
building on the western edge of Chicago's Loop. " [1]

2) "... Parkinson’s Law of Buildings. This he defines as follows; ‘a
perfection of planned layout is achieved only by institutions on the point of
collapse… Perfection of planning is a symptom of decay. During a period of
exciting discovery or progress there is not time to plan the perfect
headquarters. The time for that comes later, when all the important work has
been done.’" [2]

3) "Amazon HQ2 will be Amazon’s second headquarters in North America. " [3]

Now this is not the beginning. It is not even the end of the beginning. But it
is, perhaps, the beginning of the end.

[1]
[https://en.wikipedia.org/wiki/Willis_Tower](https://en.wikipedia.org/wiki/Willis_Tower)
[2] [https://johannesdeberlaymont.com/2016/06/10/c-northcote-
park...](https://johannesdeberlaymont.com/2016/06/10/c-northcote-parkinsons-
law-of-buildings/) [3]
[https://www.amazon.com/b?ie=UTF8&node=17044620011](https://www.amazon.com/b?ie=UTF8&node=17044620011)

~~~
sdrothrock
> 2) "... Parkinson’s Law of Buildings. This he defines as follows; ‘a
> perfection of planned layout is achieved only by institutions on the point
> of collapse… Perfection of planning is a symptom of decay. During a period
> of exciting discovery or progress there is not time to plan the perfect
> headquarters. The time for that comes later, when all the important work has
> been done.’" [2]

It seems like this would apply more to Apple's campus than Amazon... but I
haven't really seen anyone suggesting that.

------
flyinghamster
Don't forget the real estate shenanigans.

1\. Slowly but steadily run the retail operation into the ground.

2\. Sell the real estate to your own REIT, and use the proceeds to prop up the
stores - but now they're on the hook for rent.

3\. Continue running the stores into the ground, and when they inevitably
can't make the rent, shut them down. Your REIT now holds a lot of prime real
estate that can be sold or rented to others.

~~~
btian
Why would they do that?

If they want to run stores into the ground, they would have closed them all by
now.

~~~
jedberg
It cuts the shareholders out. It leaves the valuable part of the business in
the hands of a select few, and leaves the crappy part of the business in the
hands of the shareholders.

------
rando444
So is Amazon going to start getting into the housing buisness next?

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

~~~
shidoshi
Muji in Japan does this. I would not be surprised if there's at least one
6-pager in Day One on housing in some shape or form.

~~~
astrange
I was impressed to see how small a space Panasonic/PanaHome could build you a
house or apartment tower in Japan. The apartment itself was made from nice
material and pretty livable for being 50 ft^2. (Meanwhile in California, no
way to escape beige carpet and 80F interiors with no A/C.)

------
c517402
My Dad told me that the house he grew up in was ordered from Sears. They had
to build a foundation to set it on, but everything else was shipped to them
from Sears and they assembled it. That was about 90 years ago.

I wonder if Amazon will start selling prefabricated houses?

Go to Amazon and pick out the features you want in your converted shipping
container. Pour a slab to set it on. Free 2nd-day delivery with Prime.

------
SubZero
I think this article ignores some of the other tenants of Amazon's corporate
strategy. While Amazon is an online shopping behemoth, they are also expanding
in to AI, web hosting and Platforms as a Service, financing, robotics,
logistics, and lord knows what else. I think if you want a more accurate foil
to Amazon, you should look at Alibaba.

------
c3534l
I think it's funny the author referred to Sears' "everything store" was a
"genius marketing move." Back in the day, they used to call those "general
stores."

~~~
shimon
This does sound ironic, but the scope of what Sears Roebuck offered was
staggeringly greater than what you could get at any brick and mortar store.
For a time you could even order a house:
[https://en.wikipedia.org/wiki/Sears_Catalog_Home](https://en.wikipedia.org/wiki/Sears_Catalog_Home)

~~~
c3534l
Well of course they did. We live in an industrialized society and they had an
industrial offering of products. Actually, we live in a digitized society now
and that's where Amazon stepped in. General stores existed in an era before
branding, before supermarkets, before everything was made in a factories
halfway across the planet.

~~~
wavefunction
>Well of course they did.

Somebody has to do initially remarkable things first. You act like it's no big
deal!

~~~
shimon
Yeah - it's hard to imagine a world where rail shipment, parcel delivery,
industrial warehousing, and efficient processing of mail orders are recent
technological developments. But they were! And bringing tech into the domain
of consumer retail has been profitable throughout history.

------
Icedcool
This is an interesting article, but it doesn't talk about the pitfalls of
sears, or the failings that have lead sears to where they are at now.

------
polskibus
The difference is that nowadays, information and insight is propagated and
digested much faster than it was in the 80s. It is much easier for Amazon to
detect and react to threats than Sears was ever able to.

In my opinion, there's a threshold of information absorption and digestion,
beyond which a corporation can be sure to survive no matter what, as long as
it doesn't cease to adapt.

~~~
mgkimsal
> It is much easier for Amazon to detect and react to threats than Sears was
> ever able to.

True, but the competition of the 70s and 80s was also playing at the same
speed. Sears was able to react to 80s-paced threats just as fast as anyone
else could.

It might actually not be 'easier' today for anyone to keep up with and defend
against as many potential threats as there may be today. Amazon, however, is
mostly in a league of their own, and generally are the threat to other
companies, not so much the other way around.

------
greggarious
So does this mean Amazon will soon provide a section of the mall that always
have parking close to the doors? ;)

(In all seriousness, it does not bode well for Sears that my local mall, which
seems to not be dead at all, always has spots 1-2 cars away from the doors
outside Sears while people circle the lot out front)

------
ArchReaper
Title should be "Sears' History Predicts Almost Everything Amazon's Doing"

(or "The History of Sears Predicts Nearly Everything Amazon Is Doing" \- the
actual title of the article)

------
vs2
Yeah SWS (sears web services) was revolutionary in its day

------
sandover
I'm ready for my Amazon house kit!

~~~
zeep
Getting close: [https://www.amazon.com/Little-Cottage-Company-10x16-GPM-
WPNK...](https://www.amazon.com/Little-Cottage-Company-10x16-GPM-
WPNK/dp/B003VNXX2K/)

------
reacharavindh
The Adblocker blocker made me block the article and read something else.

~~~
mfoy_
Just like complaining about paywalls, complaining about adblocker-blockers is
pretty pointless.

Relevant C&H:
[http://explosm.net/comics/4729/](http://explosm.net/comics/4729/)

Except instead of $1, they just want to be able to display ads.

~~~
ashark
If we must use that analogy, it's more like they answer "yes!" to "are they
free?" but then a stalker follows you with binoculars, a camera, and a
notebook for months because you took the cupcake, and if you show up with
private security guards and ask for a cupcake they say they're free but only
for people without private security because they want to have a stalker follow
you around, which is obviously a weird and concerning thing for them to
require and would tend to make one turn them down for being such
creepy/threatening weirdos, and then tell other people that they're
creepy/threatening weirdos so those others don't take their cupcakes and get
followed around by a stalker as a result.

It would also tend to make one hope the business model of being creepy weirdos
is outlawed or otherwise destroyed.

------
TheRealPomax
Unfortunately, The Atlantic doesn't work on the free web, where users control
who gets to load content on _their_ computer, rather than having the website
dictate who to sell out to before seeing the text requested. Is there a
different source?

~~~
jedberg
Read their ads, pay them money, or don't read their content. Seems like a
pretty fair trade off.

~~~
viridian
The Atlantic doesn't actually provide the second as an option without
interacting with JS. There's no way for someone to subscribe if they are
running ghostery+noscript like I am.

