
Amazon Strategy Teardown - asanwal
https://www.cbinsights.com/blog/amazon-strategy-teardown/
======
dkrich
I continue to be bearish on Amazon long-term. The notion that shoppers will
one day buy things simply with the push of a button or saying "Alexa, get me
some paper towels" seems extremely far-fetched to me. Most shoppers are
extremely price-sensitive and won't buy things before researching the price,
save possibly for a few low-price staples like toilet paper or soap. So this
idea that Amazon keeps suggesting where people are shopping with just their
voices, seems DOA. But even if people do prefer convenience over price,
there's no money in delivering groceries to people. Groceries are notoriously
low-margin, one of the lowest margin businesses there is, so delivering
groceries to people doesn't seem like it's going to make Amazon the trillion-
dollar company some people think it will eventually become.

Looking forward, 10-20 years, maybe the delivery cost issue will be solved
with self-driving vehicles and robotic deliveries. But then, why would Amazon
be the sole beneficiary of that development and not every grocery store? Sure,
they have distribution facilities, but so does every major grocery and retail
chain.

As for AWS, I'm not real high on that side of the business, either. Despite
being the runaway leader in cloud service, they make very little money in it
so I'm not very confident that their margins will increase as competition from
Microsoft and Google only intensifies.

I'm not at all suggesting that Amazon is going away, and what they've done to
this point is nothing short of extraordinary. I just think long term that they
will settle in as a large American retailer that reshaped the retail landscape
for other stores that will eventually catch up.

~~~
celim307
I don't have an Alexa, so maybe this feature already exists, but will it tell
you how much something is if u ask it? "Alexa how much is toothpaste". Also, I
would buy in if I could set a price threshold for previously ordered items
(aka, it would automatically warn me if toothpaste rose > 5% since my last
purchase)

~~~
cookiecaper
Voice purchasing is a major PITA. I've tried one or two times to order
something through Echo and never really felt comfortable with it. It takes a
long time to read the whole product name and description, it repeats elements
(e.g. "Colgate SuperFresh Sparkling White-Blue Toothpaste Now Without
Microbeads Per FDA Mandate is available for 5.55, would you like to buy it?" /
"No" / "Crest MediumFresh Shiny Blue-White Toothpaste...") and to "compare",
you have to remember multiple long strings like that, and know the difference
between MediumFresh and SuperFresh without looking, etc. It's not a pleasant
or desirable experience. You don't just say "Get me some Colgate for no more
than $3" and be done with it.

The Echo is also much worse at voice recognition than people make it out to be
here on HN, and it responds to a very limited set of questions/tasks.
Android's voice recognition (and presumably Google Home) is _much_ better and
it will provide useful answers to a lot of questions/tasks automatically.

Despite Amazon's fancy overtures, the Echo seems to be mostly valued for its
properties as a Bluetooth speaker. That's definitely the main value I get out
of it. Streaming audio by a voice command is a nice convenience over tapping
buttons on my phone to hook up the Bluetooth, but the core value is still in
being a speaker.

~~~
rajathagasthya
I haven't had any problems with Alexa's voice recognition (and I have an
accent), but I completely agree that voice purchasing is not a smooth
experience at all. I tried to do that yesterday with Alexa, but it just gives
you very limited options and it's optimized if you want to mostly reorder the
same items over and over again. Also, it doesn't remember your cart if you
interrupt the shopping conversation, go to an app and come back to order
again. So you have repeat the whole process.

Alexa is handy if you want news, weather or sports update, but it really needs
to step up its UX for voice purchasing.

------
deepnotderp
This article mentions that AI as a service (aka machine learning, OK, let's be
honest, Deep Learning) will be a major pillar of their business in the future.
However, the chances that they will be able to beat Google seems vanishingly
small.

EDIT: to justify why, let me make these points: Google has more machine
learning relevant data.

It has a strong brand image as "THE company for AI "

It has (at this point in time at least) better machine learning hardware. This
will change in the near future, but Google is far more likely to take a
competitor in this area seriously and acquire them.

Google has not one, but _two_ (Deep mind and brain) world class research labs.

Google's ML APIs are objectively better.

~~~
ryanSrich
I couldn't disagree more. The entirety of the internet runs on AWS. The rest
is an inconsequential rounding error.

> Google has more machine learning relevant data

Subjective. Relevant to what?

______________

> It has a strong brand image as "THE company for AI "

AI is so early there's isn't a recognized brand yet. Maybe to the HN crowd,
but that's astronomically small in the grand scheme of things.

______________

> It has (at this point in time at least) better machine learning hardware.
> This will change in the near future, but Google is far more likely to take a
> competitor in this area seriously and acquire them.

Competing on commodities? Doesn't seem likely.

______________

> Google has not one, but two (Deep mind and brain) world class research labs.

Again. Doesn't seem like much of an upper hand.

______________

> Google's ML APIs are objectively better.

AWS doesn't need better APIs or Developer UX. That's not what this is about.

~~~
pg314
> The entirety of the internet runs on AWS. The rest is an inconsequential
> rounding error.

None of the top 5 Alexa websites [1] (Google, YouTube, Facebook, Baidu and
Wikipedia) run on AWS as far as I know. I'm not sure what rounding mode you're
using.

[1]
[https://en.wikipedia.org/wiki/List_of_most_popular_websites](https://en.wikipedia.org/wiki/List_of_most_popular_websites)

------
rrggrr
I can't see how Oracle and IBM can compete long-term against the breadth of IT
infrastructure Amazon has built. I can't see how Walmart and Target can
compete with the distribution network and frictionless transactional model
Amazon has developed. I'm not sure any company has the same depth of real-
world data for training AI systems... 300 million users "liking" with their
wallets and not a simple mouse click for example.

Its been 127 years since the Sherman anti-trust act was passed. Its probably
time for a serious re-think.

~~~
cookiecaper
I wouldn't count out the likes of Walmart. They're making big strides and
taking ecommerce and digital marketplaces ever-more seriously.

It seems like it will be much easier for Walmart to close the gap against
Amazon than vice-versa; Walmart has already done the harder part of getting a
warehouse within 10 miles of most populated areas.

Californians or people in other anti-Walmart areas may not realize the nexus
that Walmart represents for many Americans. In most places that are not
actively anti-Walmart, it is one of the most frequent touchpoints for
virtually everyone.

Amazon's retail operation is being threatened from Prime-like shipping
offerings (free 2 day) from lots of online stores, including Walmart. Walmart
can also often allow same-day pickup at a local store, whereas the only hope
of getting something similar on Amazon is living within Prime Now range.

Amazon is also hurting its reputation as a retailer by allowing so much
counterfeit material through FBA.

When you take away the retail core of Amazon, I'm not sure what consumer-
facing value you really have left. They have Echo, but that's pretty meh. They
have a crappy Netflix ripoff, which may hold some attention, but without a
reason to shop at Amazon, the reason to use Prime Video is diminished. Google
has them nicked pretty good on web and mobile platforms. You sort of get stuck
with a group of loose things that are kinda good, but not really enough to
hold interest independently, IMO.

If Walmart et al go in for the kill, I think Amazon's prospects as a consumer
brand are weak. I suspect the only thing that keeps Walmart from seriously
weakening Amazon is a dissonance between corporate values that keep them from
competing on the same wavelengths (see Clayton Christensen).

Of course, AWS will continue to make gobs and gobs of money for the
foreseeable future, but there's nothing really inherent about that either.
Google is laying the foundation to plow over them in cloud via Kubernetes.
With the right marketing buzz, AWS can be cast as outmoded and overpriced and
hurt significantly on that front too.

~~~
Jb611
It's much easier (maybe too easy) for anyone to sell on Amazon compared to
Walmart.com. This allows Amazon to alway have a huge selection with a bunch of
sellers competing to offer the lower price. This is going to let Amazon stay
in front until the other companies catch up but it might be too late by then.

~~~
cookiecaper
Walmart has a third-party reselling program now too, and they recently
acquired Jet.com, which also has one. Most big online retailers are getting
one because it's very lucrative.

FBA is not unique, it's just the best known. Amazon's laxness is coming back
to bite them, as more and more stories proliferate about the receipt of
counterfeit Chinese goods from "official" Amazon inventory (due to
commingling).

At some point, and they're already working on getting there with their opt-in
brand controls, Amazon going to be as restricted as other retail outlets.
Legal intricacies around trademarks, warranties, merchantability, and the
meaning of a "New" product make it risky to allow any "unauthorized"
distributors for anything that people would want to buy.

------
amelius
I'm wondering why Google doesn't extend the functionality of their "shop"
button (it's right above the search bar), to compete directly with Amazon's
3rdparty retail strategy (?)

~~~
harigov
They tried that and even have a Google Shopping Express subscription that was
intended to complement that. It's just Google being Google and not being
focused in their efforts.

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faragon
"Hey Alexa, compute my weekly food/things purchase with optimized cost
alternatives"...

In my opinion, Amazon will be huge, and it is just starting. What worries me
the most is that they will have no competition.

Amazon is "killing" many small (and big) businesses because their customer
service is excellent. Times when the shop make you felt like a criminal when
returning defective stuff are gone, for good. And now, those small (or big)
business are improving customer service. So the customer win.

------
justicezyx
AI is the pillar for almost everything in the future. AI is the new Internet.
I cannot get it why people are still _analyzing_ that some big player is
investing in AI...

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phoneyphone
MG Siegler wrote a more exciting version of this on Medium. I'd link to it but
on mobile right now.

