
Would you accept cheaper rent in exchange for a monthly Amazon purchasing quota? - prostoalex
https://alexdanco.com/2019/06/12/would-you-accept-cheaper-rent-in-exchange-for-a-monthly-amazon-purchasing-quota/
======
geofft
Thought experiment (I don't actually want to go down this road): can you out-
market Amazon in this scenario? If you have a $400 committed spend for a $500
rent discount, can you find people who would buy things from Amazon anyway and
offer to make purchases on their behalf at a 1% discount (which is, on paper,
obviously rational for them), such that you're now getting back $396 of the
$400? Now you're spending a mere $4 for the $500 rent discount.

And in turn, why would market rent for your area be N instead of N-$500 (or N
plus discount matching), if that discount is generally available? If
_everyone_ gets the $500 Amazon discount, then _everybody_ has the switching
cost problem, and so landlords would want to match what the market is actually
willing to pay, not what it looks like they're paying on paper. This is
basically the same scenario as early termination fees - when cell phone
companies decided to increase the switching cost, other cell phone companies
said they'd eat that increase in switching cost just to unlock locked-in
customers that they couldn't reach.

And ultimately all of these mechanisms are annoying and fiddly mental
overhead, but could purchasers band together and join an organization that
negotiates on their behalf, organizes boycotts, etc. for a relatively small
fee?

~~~
zwkrt
A more wild and outlandish thought experiment: would you become infinitely
indebted for infinite reward? Imagining some cyberpunk wasteland where every
commodity, pastime, medication, and media content is wildly expensive but
offset by huge subsidies from complicated conglomeration of other corporations
and government entities. Every action you take in your life adds wild
positives and negatives to a fantastically complex and intractable balance
sheet of funny money, credits, discounts, loopholes, taxes, rebates, free
services, restrictions, obligations.

Watch Spider-Man 87 for $1,340,233 but receive free Chex-mix for life, $3000
off each gas purchase at qualifying locations, in-home massages, the ability
to use highway 37 from 11:30-3:30 without charge from Nov 23rd 2043 to Oct 18
2067, increased inspections from police, tutoring for your next born child,
and 34 trees are planted in your name in Nigeria.

This obviously grows necessarily from an economy focused on increasing GDP and
maximizing the effectiveness of financial instruments :)

~~~
geofft
Are they fungible? Do secondary markets exist? The whole promise of money is
that you can just add and subtract the value of all those things to get a
number in a reasonable range. With money you can meaningfully compare "a pound
of gold" and "two pounds of silver," and you can settle a debt you owe Alice
via a debt Bob owes you instead of keeping both imbalances forever.

Maybe this is me being broken by working in finance (even if just SRE for
finance), but your example doesn't seem too far off from the problem of
valuing ETFs or options or currencies or cattle futures (in theory, if you buy
one and forget to sell it in time, some cows show up at your office...).

~~~
otakucode
In the future which is rapidly closing in, everything is a "license." You own
nothing. Nothing is transferrable or resellable by you. Things will feel like
you own them, but you will not. Despite all the marketing and advertising
telling you that you are "buying" something, you will actually only be able to
secure a license to possess and use it. These licenses will restrict how you
use the thing, and circumventing them will result in federal charges of
violating the DMCA. These licenses will also not obligate the seller to
anything whatsoever and be voidable at any time with no notice for any or no
reason. This is already the case with most peoples 'ownership' of most media,
and it is already spreading into other products. Farmers have had to fight
John Deere for the right to repair their own tractors (they won temporary
special exemptions which can only exist for 3 years at a time and have to be
re-fought-for every 3 years) but still can't prevent their own tractors from
reporting soil data back to John Deere which the company then sells to
Monsanto and other companies.

None of the things you 'buy' will be fungible because they will all be
discrete licenses locked to you personally and have no actual 'value.'

------
TheRealSteel
No. And I would expect anti monopoly laws legislation to outlaw this in any
halfway civilised country (altho I wouldn't hold out much hope for America).

"The toaster oven will only accept certain co-branded bread and other marked-
up food products: any attempts to cook other food will throw an error message;
“Unauthorized Bread.”"

Barely fiction: Keurig, Juicero.

~~~
ggggtez
Assuming it was in the form of: You pay the total value in rent, and each
month $500 is added to your amazon balance (I'm assuming that's how such a
plan would feasibly work in practice)... then, yeah sure. Of course, the devil
is in the details, but taking the deal just at face value, yeah it's
profitable why wouldn't you do it?

Even if you bought stuff you didn't need, but you could resell later for a 20%
loss after fees, that's still essentially a free $400 a month just for holding
onto some merchandise in your closet temporarily. That's probably worth it for
most people.

~~~
kwhitefoot
Minus the value of the time it costs you to sell the goods.

------
rlpb
> The thing is, moving apartments has a high switching cost. It’s really
> something you want to avoid being forced to do, both for economic reasons
> and for social & personal reasons. Now, Amazon has you trapped: however much
> you may be inconvenienced or disappointed by being effectively required to
> purchase Amazon’s stuff rather than other merchants, it’ll be less bad than
> the monumentally large cost of moving apartments.

Worse: in this scenario, "Amazon" competitors are unable to provide
competitive pricing any more because everyone else, like you, waited a few
cycles, and now they don't get enough sales volume for that. It is no longer
economical for you to leave for another apartment that doesn't mandate this
supply monopoly. The only way to break out of the cycle is if 1) a large
proportion of people in your situation agree to move at the same time, which
is particularly difficult because of individual circumstances as well as
political will; and 2) all of you can afford to prop up the more expensive
competing suppliers until volume discounts start rippling through the supply
chain.

* I say "Amazon" because this is entirely hypothetical, as the author admits, and I think it's rather unfair to use Amazon's name like this, which the author does not.

------
duxup
I would not want a house I own or rent to have microphones and or cameras
installed "for" me.....

Forget the math about rent, they're bugging my house.

~~~
megaremote
No smart tv or mobile then?

~~~
duxup
Hard not to buy a smart TV, but I do not connect them to the internet
(hopefully they're not up to something I don't know).

A smartphone seems like a requirement in life to some extent, but it isn't
added to any given homes that I'm aware of.

I'd love to see some improvements in that space as far as switches that
actually power off mics and cameras.

------
dhruvrrp
I don't think Amazon even needs experiments like this to increase its
dominance.

Take the apartment complex i live in as an example, last year there was a
marked increase in package thefts that the residents started complaining. The
management came up with a few solutions that all got shot down, cameras were a
straight no from most people because of privacy implications, increasing
rounds by the security was also shot down since its a huge complex and it
would require a lot more people (which they implied might lead to increase in
rents in the coming years).

What did everyone decide on? on-site Amazon lockers. So now the choices are
that you either buy from Amazon, or risk having your package stolen. Guess
what everyone does now?

~~~
chii
> on-site Amazon lockers.

why not general lockers that all deliveries could be put in? The pin could be
given as instructions to the deliverer.

~~~
notyourwork
Because tenets have to pay for those. My building has them and apartment
company offloads cost to tenets in form of a yearly fee.

~~~
arantius
FYI:

[https://www.merriam-webster.com/dictionary/tenet](https://www.merriam-
webster.com/dictionary/tenet)

vs

[https://www.merriam-webster.com/dictionary/tenant](https://www.merriam-
webster.com/dictionary/tenant)

------
paxys
Interesting thought experiment, but I don't think the economics work out.

Retail has razor thin margins as it is, so I can't imagine companies paying
customers enough to make a significant enough dent in their rent.

Also, the practice of buildings selling exclusive customer access to certain
companies already has precedent - cable providers. And as you may imagine,
profits or savings from such deals are never passed down to renters.

------
siliconc0w
It seems the premise of every rental or subscription service is that you will
send them more money, on average, than if you purchased the items a la cart
(on average). I'm basically betting against a company with way more time,
data, and expertise which seems like a fools agreement.

The flip side of this coin is that I get free stuff subsidized by investors in
hopes that eventually they get big enough or kill enough of their competition
to get to the above state.

~~~
chii
> you will send them more money, on average, than if you purchased the items a
> la cart (on average)

a properly functioning rental mechanism should produce a maximum utiliztion of
the object being rented. The savings to the consumer ought to come from the
fact that an object you purchase isn't 100% utilized at all times, but the
rental mechanism could make this the case, and therefore, produce a savings
for the renter (you don't pay for under-utilization like you would for
purchasing).

------
kevindong
With the right circumstances, I would actually accept such a deal.

Those circumstances would have to include clauses such as:

1\. reasonably low purchasing quotas (i.e. well under a few hundred dollars
per month)

2\. reasonably substantial rent discounts

3\. Amazon maintains its competitive pricing

4\. the "subsidized" rent has to be meaningfully cheaper than a comparable
"unsubsidized" competitor while maintaining substantially equivalent quality

However balancing #1 and #2 cannot actually be possible in reality in my view.

~~~
chii
in the short term, amazon may be willing to make a loss to acquire customers.

But in the longer term, the rental discount has to at least be balanced by the
extra profit from the sales quota. If amazon then turn a dial to increase
sales quota (or decrease the discount), they then stand to make significant
profit on the captive customer (who may no longer have an option to move away
at the same low cost).

I think this type of deal is anti-competitive, and should be prohibited under
monopoly laws (i.e., using dominance in one market to leverage another
market).

------
spodek
I don't like creepy, polluting, malevolent people in my home.

A creepy, polluting, malevolent non-human entity would be doubly unwelcome.

~~~
ilikehurdles
I’m really glad my wife and I are on the same page about “smart” speakers, in
that we know never to get one of these devices for the other as a gift or
otherwise. She is not at all a techie, but finds the technology creepy from a
privacy perspective. Knowing that people outside of our circles are
uncomfortable with it makes me a little more hopeful for the future.

------
Hasz
This "everything as a service" industry is a terrible deal for consumers. It's
a great deal for companies though.

Why should I pay a constant fee for things that should have been one time
purchases?

Why should I lock myself into a proprietary ecosystem?

Why should a pay a membership fee to Cos. who just want to harvest my data at
every turn?

Lawmakers, in the spirit of promoting competition, should seek to lower
switching costs, increase price transparency, increase interoperability,
reduce network affects, and lower barriers to entry for all fields, tech
especially. Generics, in every field, should be encouraged and widely
available.

1(see Spotify, Netflix, most terrible VC ideas(Bryd, Line) etc) 2(see Amazon,
Apple's walled garden of hardware and software, etc) 3(see Amazon, most
membership clubs)

------
isoskeles
> The elevators, for example, will only take residents from the lobby to the
> Poor Floors and back if there are zero outstanding requests from the Rich
> Floors; this effectively forces the lower income residents to either walk
> thirty flights up to reach their units, or else wait forty minutes at rush
> hour to use the elevators – a pretty thinly veiled analogy to what happens
> today with commuting inequality.

But here's the kicker: the people on the Rich Floors have to pay _more_ ,
effectively subsidizing the rent of the people on the Poor Floors.

------
gdulli
Privacy issues aside, all that does is rob me of the opportunity cost of
spending that money optimally and it forces me to spend it at a vendor that's
not always the cheapest or most convenient.

~~~
Apocryphon
The company store for tenants. Dystopic.

~~~
viraptor
That's my first thought as well. What's next? Amazon credit card with discount
on Amazon and minimum spend for even cheaper rent?

------
esotericn
I reject the premise that something simply being cheaper is an abusive
situation.

This is the sort of thinking that leads people to state that (for example)
smaller apartments shouldn't exist, because someone will be forced to live in
them. A purely theoretical person, of course, no-one they actually know - some
sort of downtrodden non-entity.

The entire economy is set up on the basis that negotiation is a thing that
people can and will do. If you don't do it, you're setting yourself up to get
shafted at every turn; this sort of thing is the least of your issues.

I wouldn't rent a flat like this because it sounds bloody stupid. It makes me
think of American sponsored things. 123 North Street brought to you by Coca-
Cola(tm) and Amazon(R). Weird unnecessary legalistic nonsense.

~~~
ianai
this would clearly have an income effect where instead of paying $x on stuff i
would normally buy elsewhere i would pay $quota at amazon. Down the road,
after plenty of competition has been destroyed, they can raise their prices
and quotas to their best needs, not mine. It’s the sort of thing that starts
out OK and winds up abusive.

~~~
esotericn
You choose to engage in it.

I would personally stay far away from any rental agreement that had weird
corporate subscriptions going on.

------
ken
So essentially a loan from Amazon? Why would I believe they can do better than
my bank or credit union? Or if they can, why is it tied to mandatory
purchasing?

I thought we invented money so we wouldn’t have to trade this for that.

------
dustinmoris
Really enjoyed this blog post! This is the type of critical thinking which I'm
missing a lot in recent years. The stuff which we are building in our little
tech bubble is increasingly shaping and impacting the entire world in ways
which many of us could have never imagined a decade or two ago. It's funny how
many things which have been mentioned in this blog post are literally only one
corner away from reality! In Singapore there are already lots of Grab only
parking bays where a Grab driver can stop for you but not an Uber for
instance.

------
usrusr
Basically why I haven't watched season 3 of The Expanse: I'm far from being an
Amazon boycottist, but I refuse to enter any form of ongoing agreement that
would make them a default choice or bring them closer to becoming one. I have
never put even remotely as much thought into this as the author, but the
central idea has been clear nonetheless: don't give away your wallet-vote in a
bulk transaction, nothing good can come from this.

~~~
mlthoughts2018
I don’t understand this way of thinking. I despise Amazon in a variety of
ways, but I think they do a great job in a variety of other ways. Wouldn’t it
be reasonable for me to spend money on the parts I think are good, like Prime
Video, and withold money from the parts I think are utterly stupid (anything
Alexa-related)?

Assuming Amazon reacts to spending habits of its customers, wouldn’t I be more
able to effect change that way (and also enjoy good services) than by a
complete boycott that doesn’t tell Amazon why I am diverting money from them
or which parts of their services I find deplorable?

~~~
usrusr
I wouldn't mind Prime Video as an alternative to Netflix if it wasn't bundled
with the manipulative free delivery subscription. Sure, I could use Video on a
secondary account and stubbornly keep my deliveries in the regular tier, but
that would be absurd, right?

------
aj7
Some unrelated (to each other) comments. 1. These trapping effects already
exist when people won’t quit an otherwise disadvantageous job because of
medical benefits. 2. A leasehold is not entirely one-sided in our system. It
is designed to confer the full benefits of property ownership to the lessor,
for a given amount of time, in return for the lessor’s paying of rent. All the
Alexa-like machinations described seem to be modifications of the way rent is
paid. 3. The book Surveillance Capitalism, by Shoshana Zuboff, attempts to
quantify various forms of forward value extracted from consumers by social
media and intelligence gathering platforms.

------
einpoklum
> I’m sure many of you either have an Alexa-powered device in your house

Yeah, lost me there, pal. I thought I was getting lower rent for not going
_over_ some quota - which would work great, since my quota is exactly $0, on
principle.

------
daxelrod
The apartment building I live in already has a business deal with Amazon. Not
for appliances, but for an Amazon Hub Apartment Locker.
[https://www.amazon.com/b?node=17337376011](https://www.amazon.com/b?node=17337376011)

I get an email with a pickup code to the email address tied to my Amazon
account whenever a package arrives that is too big for my mailbox, from any
sender. This means that Amazon presumably has a profile about my package
receiving habits, including size, frequency, and how long it takes me to pick
up a package after it arrives.

My building installed the Hub after I moved in and I was given no choice in
the matter.

~~~
einpoklum
Your choice: Stop using Amazon. Alternatives exist - for now.

~~~
daxelrod
My alternatives are to break my lease or get all of my packages at a P.O. box.
Even if I never purchase a single item from Amazon, all packages sent to me
from anyone go into the Hub.

------
kirykl
Apartments already have similar deals with cable companies in areas with
multiple providers, including the Tv/Internet/Phone fee as mandatory on top of
rent

------
rhacker
Talk to your bank, you may be more qualified to buy a home than you know -
stop renting.

------
PopeDotNinja
No.

------
sbhn
Would you pay tax out of pocket for this benefit in kind.

------
tru3_power
Sure I’d probably find a way to hustle around this.

------
jacobwilliamroy
I wish we'd just run out of oil already. At least then I won't have to worry
about my senator pimping me out to some faceless suit in a high-rise 4,000
miles away.

------
inflatableDodo
Only if the quota weighs 16 tons.

------
jldugger
Like, minimum, or maximum?

------
rocky1138
Can you buy from yourself?

------
jimmaswell
Buy all food, toiletries, etc. on Amazon and it's probably hard not to meet
such a quota

~~~
AnimalMuppet
Perhaps so. But would I really want to do that?

~~~
jimmaswell
Seems alright to me

~~~
AnimalMuppet
Well, some people in my household have various food sensitivites. We have to
be very careful about what we buy (different brands of milk, say, are very
much not equivalent.) I'm _not_ buying food from a vendor who's known to do
brand substitution.

------
kwhitefoot
Not unless they sold the things I would otherwise buy. And that is unlikely.

~~~
notyourwork
What do you buy that amazon doesn’t sell?

~~~
kwhitefoot
Most of what I buy these days are services not goods. I pay to have the wheels
changed on my car twice a year (winter versus summer tyres), insurance, house
painting and maintenance, servicing for my car, electricity, water, sewerage,
an internet connection.

As for goods, well I buy a new computer about once a decade and a phone
perhaps twice as often, fresh bread, fruit, vegetables, meat, butter,
biscuits, and tea, every few days or weeks.

No idea if Amazon sells all that but it doesn't seem so from a glance at their
web site.

~~~
notyourwork
Amazon sells food, computers, cell phones.

~~~
kwhitefoot
My point was that except for food the goods purchases are rare events and also
the food is not a lot so hardly likely to make much of a dent in my rent.

They sell fresh bread, real bread that is worth eating? Fresh fruit?

Actually of course in my particular case it's all theoretical anyway because
Amazon has no physical presence here in Norway

