Just 5 years ago, as a freshman in college, I was alternating between Amazon and eBay to find the cheapest price for textbooks. This was the first time I ordered anything off of Amazon, and it was their bread and butter; a book. Fast-forward to present day and I order almost everything off of Amazon, even if I can get it at a store nearby. Why? Because products reviews have grown to be essential in my psychology for buying, and it's very easy to wait just two days for the product to arrive at your doorstep. And I haven't used eBay in years.
Online reviews were a revelation for me, but they're increasingly being gamed on Amazon (fake reviews, people getting free products in exchange for positive reviews, etc.). I've bought some really mediocre products lately that had amazing reviews.
I've also noticed the quality control has gone down the tubes, with 3rd party sellers shipping counterfeit goods. Amazon doesn't seem to be interested in regulating this.
If there was a company with Amazon's shipping speed but without all the shady 3rd party sellers, I don't think I'd use Amazon again.
You can use a tool like http://fakespot.com/ to try and get a different view of the Amazon reviews.
But I often also find myself searching a community like reddit for product suggestions through google. query: "product name" reddit, and I may add in tags like BIFL (buy it for life) or frugal to try and trigger different results, so I can see what people who are less likely to be shilling have to say.
For example, while fan searching today, I learned more from https://www.reddit.com/r/BuyItForLife/comments/3ad5rl/bifl_r... than I ever could have from Amazon reviews, and it even made me realize I already have a fan that circulates, I'm just using it wrong.
5 star and 1 star reviews are usually garbage - either fluffed fake reviews, or reviews outraged about something unrelated with the quality of the product itself.
There's a lot of gaming on those low star ratings by competitors. The trustability of reviews on Amazon has sunk so low over the years that for many products, reading many (tens or several tens of) reviews across star ratings is what may help have some idea about the product's quality and the seller.
The problem with this is the expectation of a 5 star review for adequate performance. A lot of reviewers view 3 stars as "I didn't like it, but at least customer service didn't screw me and it didn't burn my house." I'm aware that this is terrible because it leaves no room for superior delivery, but it's just the way of things.
> 3rd party sellers shipping counterfeit goods. Amazon doesn't seem to be interested in regulating this.
Same here. I stopped buying commodity electronics items (cables, power supplies, headphones, etc.) on Amazon, because of all the fake products that claim to be 100% original.
Even the Amazon basics brand does not live up to its standards. I recently bought an Amazon basics USB/Lightning cable, "Apple certified". The lightning plug was so lose, it fell right out of the iPhone.
This was an eye-opener when I first heard about it. I cannot fathom the thought process that allowed them to do this. It's such a black mark on the brand. FWIW I order a LOT from Amazon.
There is always YouTube for reviews. It's a good place to check if the Amazon reviews seem sketchy. I understand not everything will be on YouTube but you would be surprised at the amount of items that are there.
In my experience YouTubers who review things are running little lifestyle businesses, getting free products (or possibly kickbacks) in exchange for positive PR.
I would consider a YouTube channel that primarily reviews things less trustworthy than a rando on the internet, not more.
Even if the YouTuber is totally trustworthy, "professional" reviewers are only going to give short term impressions, how its features and cost stack up in the market, etc. which I can research for myself. What I want to know about is long term experience, failure modes, etc.
Pretty much only Consumer Reports is in that business, and only for big ticket items like cars.
I wonder. I'd argue that watching an unboxing gives me a much quicker idea of what's really going on than trying to tease out what's the truth from the reviews. ("20 positive reviews. How many are fakes? Let me read the 3 stars, maybe they're better. I'll read the 1 stars and try to assign weight).
Maybe I'm just picky but I find reading/judging Amazon reviews a pain in the ass.
If you leave a bad review some sellers offer a refund if you delete the bad review and you can keep the product.
That's how you get good product reviews for bad products.
Incidentally, I'm working on a project to spin off the reviews piece of Amazon and making it first class, with an emphasis on community and trustability. I feel like this is a very important part of the ecommerce ecosystem and I'm not really sure why it hasn't been done already (very well anyway, see Epinions).
I'd like to see something "social", where you "follow" other reviewers (who reviewed something you bought and you trust their review) and build up a reviewer network and then factor in some sort of "trust" percentage (how much you trust the reivewer).
Trusting reviewers gets really complicated quickly, as someone I trust to evaluate what makes a good blender might really hate that genre of books I enjoy.
That's an interesting idea, almost in a meritocracy kind of sense, or in other words, reviewing the reviewer. Perhaps previous trust "points" can be used a weighted boost, kind of like PageRank, but for reviewers.
Yes. But for the reviewers _you_ follow, _you_ rank them based on how much you trust their reviews. Your trust rank is factored into the reviewers who are followed by the reviewers you follow, so as you go down the line the trust gets lower and lower.
All communities have to tackle these problems in various forms, although I believe it is possible to fix in a way good enough to be more valuable than without it.
I have some ideas on ways to tackle the fraud problem, such as with a trust-based ranking system, rewarding balanced feedback, purchase verification, looking for heuristics of fake reviews, and avoiding potential conflicts of interest.
It's not the primary concern of Amazon to make sure their reviews are authentic, where as it would be with a service dedicated to that very concern. In fact, positive reviews help drive more sales, so there's an inherent conflict of interest that I feel justifies the need to separate reviews from the place selling the things being reviewed.
I do the same, but as time goes by I'm inherently less and less trustful of all of it. The incentive to manipulate ratings and reviews is just too great for sellers to ignore, and it's not as though Amazon can reliably measure review honesty.
I always find it more interesting to look at the distribution of ratings that they have. It's usually overwhelmingly good, overwhelmingly bad, or polarising, with lots of good and lots of bad.
That to me is a pretty good quick-window into the level of quality of the product.
Similarly, I've switched almost completely from selling an occasional book or used item on eBay to Amazon because I can generally get a better price when I sell things on Amazon, and it's much easier to list things in that the description and reviews are already available for most of the things I have to sell.
When I changed cities a few years ago, I decided to sell the majority of my books so as not to have to ship them, and I made enough from those sales to cover about a quarter of my shipping fees for the rest of my stuff.
You can see when a company has built a stellar product when they can sustain return customers even without discounts and payback offers. See Amazon's rivals, in India atleast, Flipkart and snapdeal are biting the dust, and Amazon doesn't even give any special offers to the customer. They have perfected the thing they must do well to succeed in their business: fast delivery and returns. Amazon is the flagship bearer in e-commerce and is doing a good job advancing state of the art in this segment of human endeavour.
Absolutely! I find myself looking at items in-store to get an idea of what's available, then going home and comparing reviews & prices on amazon where there is more variety.
This is particularly true with what I've been buying lately--tools. The local home depot will just deal in a couple of brands for most tools, while amazon is virtually guaranteed to have dozens in all variety of size, power, options, price, and quality.
The price is usually better, as well, and then I don't have to load it into my vehicle, either. Poor UPS guy, though.
I find eBay a better source for tools, but both it and Amazon are head-and-shoulders better than Lowes and Home Depot if you don't need that tool right this minute. And if you do need it today and it can be used, Craigslist.
In my area (poor, very rural), craigslist is too slow for that.
I've been searching for a drill press for months, and I actually just hit one today. Assuming it's not sold out from under me by tomorrow, I'll have a new one in the evening.
The last one I saw was sold within two hours of listing, and that was over a month ago.
I do that too, and with the Amazon App you can even scan the barcode of the product you are looking in the market to compare prices and look at reviews right there. Don't even have to go home for that.
"For the second quarter, Amazon recorded an $857 million profit, or $1.78 a share, compared with $92 million, or 19 cents, a year earlier, as sales rose to $30.4 billion from $23.19 billion. Analysts were expecting a profit of $1.11 a share, according to the average estimate compiled by Thomson Reuters.
Amazon had forecast sales of between $28 billion and $30.5 billion.
Helping prop up results was the Amazon Web Services cloud computing division, which rents computing power to other companies. AWS increased revenue to $2.89 billion, up from $1.82 billion a year earlier. The unit appears on track to exceed Amazon Chief Executive Jeff Bezos’s goal of reaching $10 billion in sales this year."
Comparison: EC2 charges 9 cents per GB, linode charges 2 cents and starts with a much larger (2TB vs 1GB) free quota. Rackspace charges 12 cents, Azure about 9 cents too.
Those figures suggest that linode seriously oversubscribes their service and expects people not to really use it. EC2 and Azure are in the right cost range. And Rackspace's customer service is expensive.
Pure B.S. Cloud providers over charge for bandwidth because they can, they treat it like a luxury cost like RAM where if you need more bandwidth you can usually afford to pay for it. It's not the "right" cost, it's the price AWS set which Azure copied.
Bandwidth is dirt cheap outside of the Cloud, e.g. I'm getting 30 TB of bandwidth as part of my 64GB RAM / 500GB SSD / Quad-Core i7 Skylake for €39 /mo (https://www.hetzner.de/us/hosting/produkte_rootserver/ex41ss...). Which roughly equates to €0.0009 /GB that also includes the cost of hosting entire server with resources that would cost an order of magnitude more on AWS/Azure.
Enterprise level network equipment and infrastructure are extremely expensive. Unusually cheap BW rate usually means cheap equipment or over-subscription or not enough qualified support personnel. And in some cases under-selling to get penetration to a market.
The reason Google Fiber can sell cheaply because (AFAIK), in almost every town or cities that they deployed their network they negotiated special deals with municipalities or equivalent entity to get free access to existing infrastructure or get special deals. There is a reason why Google Fibre is not everywhere or they are not pushing it very aggressively. Because building networks are freaking expensive even for google.
BW may not have any value but building the network and maintaining it to serve you BW is expensive. Your BW cost is a reflection of the cost of your network.
> There is a reason why Google Fibre is not everywhere or they are not pushing it very aggressively. Because building networks are freaking expensive even for google.
I am not sure if that is entirely true. At least, Google owns the fibers between any 2 google data centers. It is probably only the last-mile that needs municipality support.
I was specifically referring to last mile fibers in reply to OP implying that outside the cloud business internet is cheap. In this context, I was not talking about cloud business and connectivity cost within data centers (which are also not cheap btw).
Oversubscribed means there's a chance you won't receive the rated speed. Just because tonight's results were good, doesn't guarantee you'll always achieve that.
Nope, they all just overcharge like crazy. Bandwidth from any traditional data center will cost you (at most) $0.0015 per GB. That's about 60x cheaper than what AWS costs.
AWS only kind of makes sense until your bill starts approaching that of a full time engineer's salary. Then you can slash costs like crazy by rolling your own infrastructure (at higher risk of downtime). Or pull a Netflix and negotiate wholesale prices.
Is that really true? In my experience, "real" data centers always charge by bandwidth, not traffic. You can get 10mbps, or 100, or 1000, but it makes no difference how much data you push. (95th percentile is also common, if you don't commit to a full link.) I've always thought of data quotas as a "consumer" level service. After all, the wires that make up data links don't care about the amount of traffic.
Yep, that's technically more accurate. I should have added the qualifier that, "for those centers that do charge by traffic this is roughly what they'll charge".
I think the other clouds are actually rather undersubscribed since most people run their stuff on AWS.
At least you can leverage Digital Ocean, Linode, etc to run varnish caches to offload bandwidth for things like static assets while keeping your main workloads on AWS. You can build this sorta thing in a couple days I'd say.
At the exchange levels, you don't pay for traffic... you pay a subscription membership for the IX and you pay for your hardware; you might have some contracts for peering and transit that could cost money, but no where is it done based on data flowing through the network... It's all just to extract money based on usage with the rationale that people who use more can pay more, but it's not like they get a higher bill when they have more traffic, therefore, you can't say that a provider is selling their BW to cheap; maybe they already paid for all their fixed costs via their compute pricing....
It's significantly overpriced, though most services don't demand enough bandwidth to make it a big enough cost disadvantage to turn them away from eg AWS. That isn't the case for all services, but it is the case for most. If you're big enough to run up a large bandwidth bill on AWS, more often than not you can afford it; if you're not big, you won't typically be running up that kind of bandwidth bill. There are cases that are the exception of course (high traffic services with poor business models, video heavy sites with weak monetization, etc).
I've seen good arguments that the cloud services keep bandwidth costs high on purpose to restrict the types of services that attempt to use (or abuse) their networks. I haven't seen any other great arguments that explain the massive gap between a typical large dedicated host and eg Azure / Google / AWS (all of which can command far cheaper bandwidth costs).
I can speak for Google, not AWS or Azure. Google's network is smart in several ways:
- If you are trying to send a packet from one Google AZ to another, it will traverse Google network only, never hitting the public web.. without a VPN/VPC setup
- If you are trying to reach a service on Google Network, you hit the Google frontend at one of the many Points of Presence around the world, from which point it's a straight path to nearest DC
- If you are trying to reach a customer from your VMs on Google, your packet will be taken as close to your customer as possible on Google backbone
For "cheaper egress" there are CDN providers, and both AWS and Google have their own CDNs as well.
This is the point where things begin to look really scary for every retail company not named Amazon. Amazon's previous two decades of tiny profits have all been in service of building a massive logistics infrastructure (and locked-in customer base, via Prime) that no one else can touch, and now it's paying off. It's going to be very difficult to catch up to them - even if someone was willing to spend a lot of money to do it, Amazon could easily go back to the old regime of just reinvesting more into its operations; with these last three quarters, they've shown the naysayers that it can be made to pay dividends, and so I think Wall Street would be patient if they returned to that route.
They still have tiny profits in the retail side from North America and actually lose money in rest for the world.
Taking all those orders in North America and shipping all that stuff made less money last quarter - $708 Million; than they made running AWS - $718 Million.
Time to spin off that loser business of shipping stuff to people's houses.
If they can bring down shipping costs either through their own trucks or drones, then the eCommerce business is quite a bit more profitable than it is now. Along with continued dominance in the public cloud business, Amazon investors are going to get a really nice payout.
So much for all those failed predictions in 2014 of amazon never being profitable, being a bubble, etc. Amazon's cash flows are very strong, they have huge growth, and market dominance..whats what matters.
Amazon is the online version of Walmart but much bigger and much more potential...they are taking over retail, both online and offline...just amazing
Their profit margin is 7% if you exclude AWS. That is similar to walmart. Amazon is worth almost 50% more than walmart right now Except Walmart generates 2x FCF when compared to Amazon. Even if you double profits they are trading at 50xP/E. Walmart Revenue 4-5X of Amazon.
The market is obviously betting Amazon is going to get a lot larger yet, at the likely cost of Walmart losing sales (Walmart stopped growing meaningfully years ago). In those types of circumstances, the company that is getting consumed is going to get a sizable discount applied to their earnings, as Walmart is today. And the company with growth almost universally gets a seemingly irrational multiplication given to their business. Same story repeats over and over again (IBM vs MSFT -> MSFT vs GOOGL > GOOGL vs FB).
That value gap between Amazon and Walmart - ~$130 billion - can be argued to be solely made up of the market's valuation now slapped on AWS, based on the expectations of the coming three to five years. I've seen arguments getting routinely made by leading analysts and financial press that AWS is already worth nearly as much as IBM today. Is that true? Who knows, but it's clearly extremely valuable, whether that's $60 billion in market cap equivalent or $130 billion.
Wmt is 500 billion dollar company. How do you expect them to grow? They start to asymptote with overall economy. Even if they grow 1% that's 5 billion dollars.
One way I think about Amazon's economic model vs WalMart's is: Walmart stores in rural areas are sometimes thought of as natural monopolies, that is the area only needs one superstore, so when Walmart is already there, it doesn't make sense for someone else to make the large investment necessary. So in those small towns, Walmart will always be the only name in town- a natural monopoly.
It remains to be seen, but I think it's possible that online retail might be similiar. Amazon is building huge, advanced distribution centers in many areas. Will this be enough to allow Amazon to have a natural monopoly, not just for one rural area at a time like Walmart, but for the entire country / world? I think it's certainly possible.
Their PE ratio is 300. That's not profit that's wishful thinking. I will be amazed if they ever get to 100. Today prices are based entirely on dreams. Sure someday they might make lots of money. Apple makes more profit every few days. With AWS they would have nothing.
That Amazon a "retail" company was able to roll out Kindle and popularise E readers (while handling distribution)...
That Amazon were able to roll out AWS, a highly profitable cloud platform...
That Amazon are in the process of launching automated drone delivery...
These facts are not coincidence, they are inextricable from Amazon being what it is - a tech company that happened to start with Retail as its cash cow. It's an innovative company that is not content sitting around getting fat the second it reaches some sort of comfort zone, and until running a company like this becomes the norm, they can afford to command higher PE ratios while people anticipate their next big blockbuster product.
To compare Amazon to Walmart, a company whose be all and end all is Retail, is missing the bigger picture.
(nb that's not to say that their current trading ratio isn't overinflated)
People were also skeptical about Facebook turning a profit and have a PE less than 100. Now Facebook is literally printing 2B per quarter with a more sane PE (~60) as growth continues to accelerate.
Only time will tell, but if Amazon continues bring users into their Prime ecosystem and AWS maintains its position, there's plenty of room to increase profits.
In the past year, they've produced 600 hours of new original content that earned 54 Emmy nominations, and you get it for less than the price of one premium cable channel.
Nobody, neither Netflix nor Amazon, is going to continue to have the kind of library Netflix did during its peak as a catalog of old movies. The lax and low-priced licensing deals they got back then are never coming back, not with the rise of online streaming as a mainstream channel for media: everyone's building their own content silos, everyone's aiming for exclusive control of something so you pick theirs, and everyone's asking an arm and a leg for their streaming rights since there's multiple bidders with big budgets involved now.
Netflix will have everything Disney puts out for the next few years; Amazon won't. Amazon will have all of HBO's back catalog for a while; Netflix won't. CBS All Access will have the new Star Trek TV series, nobody else will. Etc etc. That's the short-term future, and it's already locked up in contracts.
Based on my understanding of Amazon's strategy, this is bad news and it raises a lot of questions. The most charitable explanation is that they planned their spending poorly and were not able to match profits - an error which may be a fire-able offence since it could costs hundreds of millions of dollars.
Have they run out of ideas to invest in? Why are they suddenly changing strategy and forcing their investors to eat massive taxes on retained earnings?
Alternatively, are they saving up for some massive investment in the second half of the year?
I've worked at Amazon. Let me tell you, this is all part of the strategy. At an all hands sometime ago bezos took questions from employees regarding the worry around profitability. He basically said Amazon has to lose a lot of money to reach a massive scale and only then will they become profitable. However every once in a while they'll show a profit to check in with reality and Wall Street.
That would have been true if AWS had remained a simplistic hardware-focused server renting type business.
It's a software services business. Those rarely become commodities as a basic server business might. And once you have scale, your ability to sell your customers on an endless variety of new services becomes the real value, and that prevents the classic race to the bottom and it boosts customer lock-in dramatically.
AWS, Azure, Google are not primarily competing on compute / ram / bandwidth cost any longer, that's increasingly a meaningless sideshow (which is why AWS is no longer aggressively price cutting / matching). They're competing on what software services they offer, how easy they are to use and scale, etc.
This. There are other comments on this thread griping about the cost of bandwidth, and comparing it to competitors for EC2 (Linode and the like)...and that misses the point. If that's all you want, yeah, there are probably cheaper alternatives that might do. But for a one stop shop that offers the best selection of services from which to compose software solutions, mature and tested, with an aggressive roadmap for adding more...you're left with those three. And of them, AWS leads.
AWS continues to add new products that support new technologies like Docker etc. They can stay out of "commodity" space by continuing to do so. Tech moves so fast it's hard to imagine them ever really running out of new products to build.
The only accounting "trick" was using all of your profits to reinvest immediately into expansion. Bezos isn't a moron, this was intentional, and it's paying off now.
I've never heard someone saying that a company reinvesting profits into itself as "suppressing/hiding" profits. I guess all Warren Buffet companies are also suppressing an hiding profits. Are you calling those companies out too?
All I'm saying is "monster profit" doesnt mean the company is doing any better than it was before. It's generating the same cash, they just aren't spending it the same way
