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Sears has another chance to avoid closing down (cnbc.com)
773 points by craigferg501 70 days ago | hide | past | web | favorite | 535 comments

Sears had everything. Global supply chain, check. Top notch distribution operation, check. System and infrastructure to take orders and handling billing, check. Name recognition and established customer base, check.

They threw it all away, ending catalog operations in 1993 a year before Amazon.com opened in 1994. They owned part of Prodigy in 1984! Yet somehow thought it was a better move to expand into bigger box retail. Anyone remember The Great Indoors from 1997? It was going to have huge potential.

What a waste.

I thought this as well until I heard a counter-point [0] which was very convincing.

The reason Amazon is successful is not because you can shop online (from a catalog) and receive items in the mail. The reason Amazon is successful is because you can do those things and receive your items within two days. Before Prime existed, Amazon had very quick fulfillment, and after Prime two-day it became even better.

The Sears catalog ended in 1993 but the Sears Wish Book continued to exist after that. In 1999 I remember ordering something from the Wish Book required 3 weeks to receive the item. If they didn't have the desire to improve that, then they would never have become Amazon.

> If anything, Sears was the worst positioned to become Amazon. What they had was just completely wrong and more of a burden than a benefit. Had they tried to retool with their massive catalog it likely would have been a disaster. Amazon had a real benefit starting small with just books which let them learn the ropes on the cheap. [0]

I think this is especially relevant here on HN because it shows how startups are required to solve problems. For many problems, a behemoth company has no reason to improve, and a lean startup can rush to a solution faster in many cases.

[0] https://np.reddit.com/r/news/comments/a6nwj7/sears_bankruptc...

There was a significant gap between Amazon launch and having two-day shipping — it took years of behind the scenes development before orders started arriving notably faster than other retails. Sears' numbers include regular postal delivery in both directions so switching to online ordering would have cut them in half with no other changes (and don't forget the efficiency wins from orders arriving as validated electronic data rather than handwritten order forms).

The reason why Amazon was successful early on was selection and pricing. They had _everything_ rather than the generally limited selection most people had from local stores and the pricing, especially for things like technical books or genre publications, was often very favorable. Yes, some people lived in major cities with awesome bookstores but for most of us in suburbia the selection was what the local supermarket / drugstore carried or a non-trivial drive.

The pricing benefit really cannot be understated.

Amazon was 40% less than list for books -- which was a massive amount, even if you lived in Barnes & Noble markets (and B&N wasn't as pervasive in 1996/1997 as your average mall bookstore was), where there were similar markdowns.

And of course, you could get any book you wanted from Amazon.

And then Amazon very quickly moved into media like CDs and DVDs. I used to order DVDs from various online retailers in the late 1990s and although Amazon wasn't my go-to in 1999/2000 (there were plenty of startups that sold at ridiculous losses and coupons that 16 year old me took advantage of), I appreciated their selection -- not to mention the gift certificates.

I think a lot of us forget that Amazon wasn't the only big e-tailer in the late 90s, it's just the one that survived. There were lots and lots of bigger and smaller places that straight up went out of business after the .com crash, but Amazon, despite taking a massive beating, survived.

Price was a huge reason for its success -- but I agree with others who point out that Sears and other incumbents had a chance to take them on, if not on price, than on selection and speed, way earlier than they did.

Instead, many businesses chose to partner with Amazon (Borders, Toys R Us) for a time, to their ultimate detriment.

Very good points. I'd like to add that Amazon began in a time when the typical person didn't trust ANY online shopping options. To my recollection, Amazon and eBay were the two biggest players that found ways to give people confidence that they could safely shop online.

YES! That's an excellent point too -- though I think this is where legacy retailers really lost out because I know my mom for example, was more comfortable giving her credit card to a known brand than some random website. My first order from Amazon was in 1997, when I was 14, and I did it using a gift card I got as a holiday gift from GeoCities (as thanks for being free tech support -- this truly is the most 1990s story ever), because my mom wouldn't hand over her credit card and I didn't get a Visa check card until I was 16.

In 1996, Mom had been screwed over by phone reps for CompuServe's attempt at a true ISP stealing her credit card to order shit from Tiger Direct (told you this was a 1990s story) and was leery about anything online for years after that (and Tiger Direct was technically a mail-order catalog but it had a website).

But you're right that eBay and Amazon were two of the earliest trusted, in part because they were the two biggest/first to market. (And also, both proved themselves to be trustworthy, which was important in the age of fly-by-night e-tailers).

The same is true for PayPal.

Re: Trust; I always found it a bit ironic back in the late 90’s/early 00’s that people would not trust ordering things over the Internet, but happily call a mail-order number and give a complete stranger (and anyone within earshot) their name, address and credit card number.

Because the Phone Number, Mail-In Order Catalog and the Human Voice from other side of Phone are all Real World Interaction. With traces to be made that relate to Real World. On the internet Everything is virtual.

Were they wrong though? I'd wager far more credit cards have been stolen via the internet than by eavesdropping?

Absolute numbers don't mean much in this context.

Why not? I’ll happily dictate my credit card number into my phone, heck I’ll throw open my apartment window and loudly yell my credit card number into the street, along with the expiration and CVV2, with zero fear that someone or something will actually be listening and recording it / writing it down.

By contrast I refuse to send my credit card number in an email or post it on a non-SSL site.

Guess which way I’ve only ever had my credit card number stolen?

>To my recollection, Amazon and eBay were the two biggest players that found ways to give people confidence that they could safely shop online.

This so much. I remember people's fear of filling in their Credit Card info online. And people who thought sharing Uber with a Stranger would be a no no.....

How time changes.

Great observation. I remember eBay and PayPal’s partnership being extremely important in making people feel protected. As I recall, there was well-advertised buyer protection by using them. Good feedback systems for buyers and sellers in both cases have proven a valuable asset.

>Amazon was 40% less than list for books

Furthermore, it's easy to forget just how hard it could be to track down even an in-print book and how long it could take to actually get your hands on it. Some big city bookstores were better but, in many cases, (assuming the bookstore would special order books at all), it would basically be put into the next batch order from a publisher which might be a month or two.

Yup -- I remember in college (in the early 2000s) how slow it could be for a bookstore to get a book in that a professor required for class (there was a book of poetry I literally could not find in the state of Georgia and my professor let me photocopy the work she had assigned until I could get my copy from Amazon b/c she recognized that I had literally called every single major and minor bookseller in Atlanta and the publisher and none could get me a delivery time ahead of Amazon, which was still going to be after our test) and by the time I graduated, most of us just reflexively went to Amazon rather than trying to fight over 6 copies Barnes & Noble or the college bookstores would manage to get in.

That reminds me of the time I worked in the stock room of student book store in a major university on the west coast of US in mid 1990s. The stock room was in the basement of the school student bookstore. Before and beginning of each semester, we'd get crates of books, books that only college student taking a class would be required to buy.

The crazy thing was, once the semester was nearing the end, we'd pack up all the unsold books (some classes had many unsold books) and ship them back to the publisher, at a significant loss from what I remember.

The student union was run independently from the university as a non-profit and was running a big deficit. However, the office people upstairs had humongous 24 inch CRT monitors, ones that surely cost a pretty penny. In 1998, 17 inch CRT sold for nearly a thousand dollars. I just looked it up. But I digress.

> In 1998, 17 inch CRT sold for nearly a thousand dollars.


Which brings an unrelated point of how much understanding a typical university professor has for the idea that their course may not be the be-all-and-end-all of student's life. Making an unavailable book a requirement for a course? Ahh how much I don't miss those days of being at the mercy of every university prof or bureaucrat's whims :-)

Some profs just over ordered books. Some students bought books from other privately owned book stores across the street. Some students dropped out of class and hence did not buy books that were needed for 2nd half of the semester.

Above reasons contributed to quite a bit of the books not getting sold.

But yeah, I had to uncrate the dang books, and a few weeks later, crate the same books to ship back to publishers.

I bet I'm one of the very few of the student body who learned how to work with Pallet trucks.

I rarely bought books until I attended the first few classes. Some classes had books on the list that were never even used. Literature professors were the worst: hey go buy this book for 20-40 dollars, you will need to read about 10 pages of it.

> Amazon was 40% less than list for books -- which was a massive amount, even if you lived in Barnes & Noble markets (and B&N wasn't as pervasive in 1996/1997 as your average mall bookstore was), where there were similar markdowns.


But even for pure list, Amazon didn't pay sales tax so had a 5-8% advantage.

Amazon killed all the technical bookstores in short order because of that pricing advantage that they didn't deserve.

I don't remember that big of a price advantage, but they definitely had a HUGE selection advantage compared to the book stores in my city.

To a certain extent the price didn't matter much because it was the only way to buy a lot of books.

I agree here. I don't remember price being an advantage at all in the 2000s. I remember it being roughly comparable to local stores, and a refrain was often "but at least you don't pay the sales tax!"

Perhaps on certain things like accessories- IE cables that stores normally had huge margins on- you could find generic equivalents for cheaper prices, but not in a general case.

Until maybe 2009 or so, it was always about selection. I spent a good portion of the 2000s using their recommended book list to figure out what I was going to read next, and when I was almost done with my current book, giving my self a ~5 day lead time to order the next, because that's about how long it generally took. It was an easy tradeoff to make, since a few clicks was a lot less effort than going to a store. I was also reading a lot of somewhat specific programming books in those days that weren't carried by most stores.

I agree with your memory. I think they would undersell bestsellers, but Amazon has always been meh on price.

If memory serves it usually wasn’t that dramatic but there were significant outliers where it was 50+% cheaper and I don’t think I ever saw it go significantly the other way so there was a strong inertial tendency to just buy it on Amazon rather than put time into shopping around.

One other neat thing was international availability — Amazon.co.uk had Terry Pratchett books months ahead of the US release, so I could read them at the same time when people on Usenet were.

Yeah a brick and mortar book store could never compete with an online retailer warehouse when it comes to selection.

Eventually book stores started to create their own websites but by then it was too little too late.

Yup -- and some (Borders) made the strategic mistake to literally just use Amazon. When Borders finally broke off the relationship, not only was it too late [1], it was at literally the worst possible time it could have done it, from a business perspective -- given the financial crisis.

Toys R Us did this too and as a result, never built a really solid e-commerce strategy. In fact, when Toys R Us left Amazon in 2006 (after years of litigation to get out of the contract) [2], it had the unenviable position of being behind from a tech perspective in a massive way. Not only that, the experience was considerably worse than it had been under Amazon.

[1]: http://www.internetnews.com/ec-news/article.php/3749336/Bord... [2]: https://www.wsj.com/articles/SB113798030922653260

Borders tried early on - IIRC they had a partnership with IBM in... 1998 - again IIRC it was early 99 that their first public site went up. My recollection was that you had to register an account before you could search, which many in my office laughed out loud about. They (Borders) were a company down the street from us (a web company) and Borders had gone with IBM instead of us, so there was some bad blood there (but it had started before I got there I think).

Knew a couple other folks at Borders, and visited them at work a couple of times. Borders was just clueless at tech, and BN was starting to take a lead in tech, which helped them with sales a lot more.

> I think a lot of us forget that Amazon wasn't the only big e-tailer in the late 90s, it's just the one that survived. There were lots and lots of bigger and smaller places that straight up went out of business after the .com crash, but Amazon, despite taking a massive beating, survived.

It's my opinion that The Dot Com Crash is what created Amazon.

Here's how:

I worked in Redmond Washington during the crash, and there were thousands of people who lost their jobs due to that. I knew so many people who were struggling to find work.

This was Y2K, when Seattle wasn't the tech powerhouse it is today. T-Mobile didn't exist, Google hadn't opened any offices in Washington, and tech companies were failing left and right.

I think that the crash gave Amazon an opportunity to hire people. There was a lot of talented people out of work.

Arguably, this may also explain why T-Mobile has become so huge. I worked there before they were T-Mobile, and I can remember how tiny we were. You could fit our entire operations team into a conference room.

Nowadays, T-Mobile is HUGE and I think a lot of that may be a combination of geography and timing. In 2003, Sprint was bigger than T-Mobile, but they're based in Kansas and the Seattle area just has a much larger pool of engineers to support a company like that.

I'm not well versed on the subject but I recently learned that Amazon's share of a book's purchase price is HUGE at around 40% (21.60 on a $54 book)

I suppose the lesson is that there is a lot of value in being a distributor as I also know someone who is a part owner of a brewery and he says the same thing.

Source: http://fabiensanglard.net/gebbdoom/

That is the case at pretty much any retailer. Grocery stores, drug stores, clothing stores, etc.

Don't forget app stores, music distributors, etc!

> Amazon was 40% less than list for books -- which was a massive amount, even if you lived in Barnes & Noble markets (and B&N wasn't as pervasive in 1996/1997 as your average mall bookstore was),

The two main mall bookstore chains (Waldenbooks and B. Dalton) were, despite keeping their names, owned by and integrated with Borders and B&N respectively by the time Amazon existed.

In the late 90's and early 2000's Amazon was one of the few online retailers I actually trusted to buy things from. It sounds crazy now but the concept of ordering online was not nearly as consistent and as safe as it is now.

Don't forget the reviews! Buying the right one is often more important than buying one today.

> Don't forget the reviews! Buying the right one is often more important than buying one today.

Amazon itself seems to have forgotten this; reviews used to be very useful, but either they're not trying very hard to combat fake reviews or they're not up to the challenge, because they're almost useless now for big-ticket items.

In my experience the reviews are most useless for small items, where fake reviews can easily manipulate the reviews or are even the only reviews available.

> In my experience the reviews are most useless for small items, where fake reviews can easily manipulate the reviews or are even the only reviews available.

Yeah, 'big ticket' wasn't the right word; probably I meant 'commodity'. I meant to exclude things like reviews of obscure books, which sellers apparently usually don't bother trying to game, since they seem to be reasonably reliable (at least, last time I checked, which was a while ago …).

One way Amazon was able to compete on price was by not having nexus in most of the country. Consequently, Amazon didn't collect sales tax on behalf of states and consumers, on the whole, never declare use tax. I still see that mentioned on most deal-hunter sites: "tax kills the deal" or "order from X and you don't have to pay tax." It's tax-free in the same sense that all tax evasion is tax-free. But, sales tax is levied at the state level and states don't have the resources to audit everyone.

That's not to say that Amazon didn't execute well. And their selection was excellent. It's just really easy to compete on price when your checkout total is 5+% cheaper than an in-state competitor even when the items were priced the same. Of course, this only applies to states that levy a sales tax, but that's still a large portion of the US.

Mail order operations didn't collect sales tax either. Amazon didn't invent the interstate tax dodge. Sears did.

I've read your comment a few times and I can't really tell if you're trying to refute what I said or if you're agreeing with it. I don't think mail order operations ever amounted to more than a tiny fraction of what online purchases are today. They were certainly nowhere near as convenient.

Setting that aside, my point was Amazon had a built-in price advantage that brick & mortar retailers did not. Use tax really should have been the normalizing force there, but no one declares it and it's hard to enforce. So, all things being equal, consumers would shop where they could realize a price savings. The story of brick & mortar retailers transitioning to e-commerce is more nuanced than some titan resistant to change being taken out at the knees by some peppy up and comer. Amazon was quite aware of this and fought very hard against any change in rules regarding collection of sales tax.

Everyone is jumping over themselves to counter everyone else's memories and theories on "how Amazon became successful" so I hate to add to the ruckus but there is one factor everyone seems to be forgetting that is crucially important in my opinion. That factor was Amazon's approach to customer service, a factor that predates their earning the moniker of "The Everything Store" and was a necessary atep toward success as they first had to get people comfortable with buying things online.

There were several popular books written on the subject of Amazon's customer service model (or ones that used them as a key example to their thesis) that were written long before Amazon ever offered prime and even before they really started taking off. The Amazon of the mid-00's was a major player, but still small enough that they had to differentiate themselves from competitors (at the time) like Ebay and Newegg. Outside of selling media (books, CDs, DVDs, games etc), Amazon's inventory was still mostly limited to the kinds of goods one could also find on those sites (clothing, accessories, electronics) which had them stuck competing on price. What eventually began separating Amazon from the pack was the fact that they would go to extraordinary lengths to take care of the customer. Their return policies were why I stopped shopping exclusively on price well before Prime became a thing as the confidence that I could teturn an item in reasonable condition (as in I could still return something after discovering a flaw after opening it) for free (in almost all reasonable circumstances) and without having to do anything more than print a label and drop the box back by a UPS pickup location was a gamechanger in building my confidence in online retail. It was to the point that making s return with Amazon was easier than making a return to a store and thar was the edge they needed to convince consumers fo choose Amazon over not only other online retailers, but ohysical stores as well.

The rise of 2 day Prime shipping undoubtedly fueled their exponential growth and made Amazon what it is today. However, I doubt they would have ever had the ability to build the infrastructure needed to make Prime work if it wasn't for the initial wave of consumers becoming loyal customers due to their reputation for customer service.

In hindsight, Bezos was playing chess while the retailers were playing Uno. I'm generally suspicious of a CEO making that much of a difference, but in this case, clearly, his vision was worth billions in business advantage.

> In hindsight, Bezos was playing chess while the retailers were playing Uno.

Keep in mind, his long term goal is to put people on other planets. So he's definitely playing the long game. Blue Origin is a huge factor here.

That's a fairly recent mindset. When he launched Amazon his plan was to sell books online. That was it.

I think free shipping is the reason Amazon was successful. Nobody wants to pay for it. That and cheaper prices.

Not to be snarky, but there needs to be a name for selective amnesia when an idea that seems obvious in retrospect is ignored later on.

In this case, the thing that made Amazon so great, before Prime existed, was that it had the "Things you might also like" section.

AFAIK it was one of the first online stores that used machine learning to recommend new and related items you didn't realize you wanted and to have user ratings for each item.

It was especially powerful for books/movies/music just due to the sheer volume of different titles that makes it hard to find new content you might like.

There are a lot of retailers that had the logistics and infrastructure for online sales, but the kind of marketing that Amazon did for up-selling was wholly new and something that could only be done online. So even if Sears could do it, it wasn't obvious back then to anyone that they should do it or how to do it.

Even now, the Walmart and Target web stores recommendations are just ok compared to Amazon. Even eBay seems less comprehensive in its recommendations.

Is that really a primary growth factor? I've never once acted on an Amazon recommendation, and it's always felt almost entirely useless - "you just bought a vacuum, here's 15 more vacuums just in case you're a vacuum-obsessed lunatic"

That, and the ONLY analytics based feature I used was the "After viewing this item most people purchased" section WAS THE ABSOLUTE BEST for shoppers. It made me feel like I could look at a vacuum, but then be directed to the BEST one. It was like, I'm doing all this crazy research and stuff, but how could a billion other people's research help me here. It seems like they run experiments now where once in a blue moon you might see that section.

I know why they got rid of it - and Amazon has this problem all over the place, but some products just sit, while others, with really no difference just fly off the shelves.

This feature still shows up almost constantly for me... there are a few flavors (some of which appear contemporaneously on a single product page for me) including "after looking at this item people purchased..." and "similar items to this item..." and "people who bought this also bought..."

Wouldn't it be nice if you could just choose what information to get, unless of this dice-rolling and analytics and cookies approach?

True, I think like most market incumbents, Amazon has become lazier lately. The vacuum-obsession problem, the proliferation of counterfeit goods, and subpar third party sellers are all more recent problems.

But if you just bought 1984 for example, there's a good chance you'd also want to buy WE, Brave New World, Erewhon, etc. The algorithm made sense for the book store, but it makes less sense for the "Everything Store".

FWIW, I just got a better book suggestion from your comment than I ever got from Amazon.

I wonder if some of this is just....the very low average item quality on Amazon these days.

My recommendations right now have seven separate ten-dollar tire valve extenders, two screen protectors from the same brand (only one of which is for my phone- and that one I already bought!), a $1,000 drone i accidentally clicked an ad for last week, two more screen protectors from other brands, four Qi chargers, and five cases for my phone (I already purchased a case for my phone through Amazon).

Very persuasive!

Their book recommendations were generally relevant to your interests. Much like early Netflix, once they had enough data on what you liked they could correlate that against other customers with similar tastes.

I doubt it is. Recommendations can be great for certain kinds of purchases -- books, Amazon's original niche, being an obvious example: "people who looked at this book also tended to look at these books" can be a meaningful signal. But I don't think that's what helped Amazon to astronomic growth, particularly when we're comparing it to Sears.

The recommendations were useful to me while I was still browsing, not so much after I'd made a purchase. It made browsing a lot easier.

> I've never once acted on an Amazon recommendation

i have!


I would sacrifice so much karma for more upvotes for this

Worth it

The recommendations have never been the selling point for me.

Instead, the thing that got me to use Amazon was that it provided you with access to a long tail of books—and later, other stuff.

Bookstores and record stores did do "special orders", but there was a lot of friction in the process. You'd have to find out about the book, visit the store (twice!), and if what you wanted was even available, you would wait a few weeks for your order to be bundled in with the next shipment from the publisher.

Amazon removed all of that—and the reviews even made it less risky. Want to read the next book in a series? Check out the reviews and if you want it, done deal! Need some obscure technical title? It'll be AT YOUR HOUSE next week.

In a way, I miss the serendipity of browsing bookstores. There was a time when it was a circa monthly ritual to go into Harvard Square on a weekend (I think stores were mostly open on Sunday by then) and make my way through all the new and used bookstores as well as run other errands. But, really, although I still like going into a good bookstore now and then, having this vast collection of (however imperfectly) reviewed books that can be in my hands within a few days--or immediately via digital--is pretty magical.

I do wonder how typical your experience is, though. I personally never found much by doing that (partly I was paralyzed by choice without a good algorithm for narrowing things down), and consequently stopped the random browsing in bookstores long before the bookstores themselves mostly disappeared.

When I was much younger (pre-teens and teens), I was a voracious reader and would spend a lot of time at the library. But even there, I would mostly stick to the long-running series that I knew well, or prolific authors that I knew I liked.

For me, it depends on the store.

Some places feel "well-curated": they may not have a ton of books, but it seems like the books they do have were carefully chosen. Maybe there are "theme" collections (local authors, ghost stories for grownups, Russian authors", etc) or well-read staff members making recommendations. I love browsing these places.

Other places seem to go with the "pile of books" approach. There's a lot of them, roughly organised ('fiction') and many of them are obvious tat ('Lose Weight the Dr. Oz Way' or something. I find it easy to leave these places without buying anything.

Also, they let users review the products. Not very long ago, it was a novel idea to let customers tell other customers via the store's own website that this or that product is no good.

Amazon’s “recommendations,” complication and clutter are a mess. They are not a desirable feature for me. They also often don’t have the best prices. I still use them a lot, but feel ripped off by Prime. I have an Alexa, but wish I didn’t. Walmart’s online is good, uncluttered, low priced, and if you’re pissed, you can get in your car and physically return it immediately for a refund. I use it when I can, to try to dollar vote against Amazon.

Free 2-day shipping was an absolute game changer. Customer reviews was also a huge competitive advantage that brick-and-mortar retailers lacked since it let you quickly identify which specific product was most popular for what you were looking for: much better than asking a store rep for their recommendation.

I'd really be interested in a graph that showed some growth metric like revenue or number of orders plotted against a timeline of when Amazon introduced certain features. I remember seeing one for Facebook that was really illuminating.

In the early days of Amazon their book recommendations were much better than any other online source I knew of. I would often visit their product pages to find new books to checkout at the library. At one point I bought some books I didn't really need because I felt guilty about always using the site without buying anything.

These days I find the recommendations pretty useless and have a slightly different opinion of buying products there just to help out the company.

I would wager that had a very tiny impact on the ultimate success of Amazon, more likely you do machine learning and are inflating its importance due to self-involvement with the subject.

The word for "when an idea that seems obvious in retrospect" is "hindsight bias"

That's generally not a useful bias to base beliefs off of :)

They used mechanical Turk to build recommendation lists.

Hmm, I could be misremembering, but I think there was almost a decade between the point when Sears had all the legos but didn't know how to assemble them, and when Amazon really started using fast shipping as a differentiator. And I think the "Prime" account branding came still later into the picture.

Before shopping at Amazon ramping up, right around 2000, I remember Sears logistics starting to break down with kafkaesque calls into Sears service and parts departments. I guess the point is, I think the decline of Sears mostly had to do with internal complexity and breakdown of effective management than anything directly to do with Amazon.

HN user xigency is right, Amazon has always been light years faster than Sears.

Personal anecdote:

My mother, back in the late-nineties came to me one day and told me how she had figured out how to get stuff from the jcpenny and sears "even faster". Because she could just search Amazon, "and they actually deliver it to me by the end of the week!"

"I bet you thought they only sold books right? It's something new they have!" yada yada yada blah blah blah. She was pretty proud of herself to be telling me about the new stuff on the web, but I digress. Point is, she was like a kid in a brand new candy store. Only a candy store that sold toys and video games too, and opened up across the street from the kid's house.

Looking over the comments and replies here, it seems everyone has their own version of "the real reason Amazon was successful was X..."

My own conclusion reading this is that Amazon was just highly competent across the board. They were online in the mid-90s. They were quick with shipping (eventually, if not right at launch). They were competitive on pricing. They quickly had a huge inventory. They had the "you might also like..." algorithm that's impossible to get from a print magazine. They had online reviews. They offered Prime in 2005.

While this is generally true, imagine if Sears had honestly realized their competitors potential and tried to compete. They had the country covered in stores and could have easily cut shipping times down by shipping from the nearest one.

Their stores were also a hodgepodge of junk all randomly mixed, and they never made their store a desirable place to stroll.

We could say the same for other big box retailers. I don’t know any that even comes close to te amazon experience, short of Yodobashi.con in Japan.

I think it requires something very special for an organization to accept to canibalize itself. Apple is the only exemple that I would see at a behemoth scale.

What is "The Amazon experience"? Ads being served as the first few rows of results? A review system that cannot be trusted? The same item listed multiple times by different sellers? Extreme price variance when choosing different colors and sizes?

That's a relatively decent development AFAIK. 10 years ago I mostly trusted results and reviews. I suppose it's getting a lot worse lately because 1/ Amazon being hugely successful means that it's a prime target for advertisers and scammers and 2/ Amazon being hugely successful means that they have less of an incentive to solve the issue now than they did back then.

The experience today is not what made them great in the past. 10 years ago the negatives you list didn't exist.

Perhaps all of these too big to be good utility services- Amazon, Google, Facebook, even Apple should just offer “classic” slimmed down versions of their previous offerings, for a paid subscription in the case of the online services.

How would this help eliminate any of the current issues? Why would giving them money and/or building a slimmed-down version reduce fake reviews, fake articles, ads as search results, et al?

Use the subscription fees to cover up the lack of search result ads, to pay for better policing of fake reviews, moderating, etc.

These are all valid point. I’d add to that bad knock off items mixed with the real ones.

But most of these issues are plaguing every other major site. Ads that stick with you for days and days whatever site you look at are becoming the norm.

No ec site review system can be trusted in my opinion, they are usually way to easy to game. For anything that actually matters reputable and dedicated review sites end up to be the most useful.

Different sellers and different price are fine to me, it actually helps to mitigate the knock off issues in my experience.

All in all amazon has degraded a lot in these aspects, but I feel the whole industry took the dive and don’t see competing retailers coming up with fresh ideas.

apparently amazon can't even replicate it in their own Amazon Book stores. QR codes just to get prices? really?

Walmart is following this exact strategy right now.

How are they doing?

After years of getting many if not most things from Amazon, my last several big ticket tech items were bought from Walmart online. The prices on identical items were better at Walmart.

Other things I've stopped buying from Amazon are the frequently-counterfeited categories of items (USB chargers, etc etc). I'll just go to Microcenter or Walmart or wherever local whose supply chain I have more faith in.

Also you can do pickup at Walmart on a ton of items and have it in an hour or less—and usually at the same price or lower, now that Amazon charges sales tax; very few places have prime instant or whatever the same-day service is for Prime.

Lately I've seen WalMart labels on stuff I've ordered from Amazon. Feels kind of surreal.

At that time, they may not have had a central database of what items were in stock in which stores. Might not have been possible to route the order to the closest store that had the item.

Agreed that Sears never moved much beyond the 1970s in store layouts and merchandise display/organization.

TBH, I think there's a much better case to be made for Sears doubling down on some of its core assets and creating Home Depot before Home Depot did. Its store footprints weren't right, which is no small thing. But they were already a significant home improvement and major appliance store. They probably had a window when it was clear that discount retailers (and some high-end stores) were the future of "department stores" and if they couldn't go there--which they probably couldn't--their future lay in focusing.

Note that Target stores have always been entirely owned by Dayton's department stores. Some years back they realized the department store was much smaller and changed the company name to Target but there was never a big shift, just lots of little shifts that turned the department store into the discount retailer.

Fair enough. My main point is that the fact that Sears once had a rather famous catalog business seems a fairly tenuous competence on which to base "They could have been Amazon." As you suggest, challenged as segments of retail are in general these days, Sears under different management could presumably have taken things in a number of different directions that wouldn't have resulted in it going bankrupt. Whether that meant Target, Home Depot, or some category that doesn't really exist today.

They literally had the best tools in the world - my dad swore by Craftsman, told me never to bother buying any other brand. Then they threw it away on a demonstration of Randian philosophy.

Even while our dads were swearing by Craftsman, better tools existed. You're right that Craftsman was good enough for most people's needs. Craftsman is still an OK brand for hand tools (not power tools). It was just easier to get Craftsman, because they sold it at a store that wasn't too far away. Back in the day you could only get Snap-On etc. if you were affiliated with e.g. a mechanic's shop that was on a Snap-On truck route. Now thanks to Amazon, Home Depot, etc. there are more ways to get quality tools.

Snap-On may makes quality tools, but their prices reflect it. Unless you're actually a mechanic that uses those tools constantly, the prices are tremendously prohibitive. Enter Craftsman. Combined with the warranty, they were a FAR better deal with 90% of the quality.

Sear's return policy for Craftsman pro tools was exceptional; lifetime warranty. If it broke, bring it in to exchange for a replacement.

I was just going to mention this! The warranty is the real reason my father had quite a few craftsman tools. Well, at least the ones he used the most, anyway.

This happens so often, I would not be surprised if it was a widely accepted business process. The MBA's come in and run a good brand into the ground. It happened a lot with bike brands.

Honestly, I think both of those perspectives don't quite explain why Sears died.

Sears died because Eddie Lampert spent years systematically looting the company. If not for Lampert's dismanagement [0], Sears would be in roughly the same position as other department stores like Macy's or JCPenney. Yeah, sure, they're not doing super great, and Amazon is kicking their asses, but they're still keeping their heads above water.

[0] Sic. I'm trying to coin a neologism here. Dismanagement is to mismanagement as disinformation is to misinformation. Mismanagement and misinformation come from incompetence; dismanagement and disinformation come from malice.

> I'm trying to coin a neologism here. Dismanagement is to mismanagement as disinformation is to misinformation. Mismanagement and misinformation come from incompetence; dismanagement and disinformation come from malice.

I've seen “malmanagement” used the way you seem to be trying to set up “dismanagement”, by analogy to the distinction between misfeasance and malfeasance. (Dictionaries seem to view it as a simple synonym of “mismanagement”, though.)

> I think this is especially relevant here on HN because it shows how startups are required to solve problems. For many problems, a behemoth company has no reason to improve, and a lean startup can rush to a solution faster in many cases.

Pretty much. Jurvetson calls it the luxury of being a new entrant. It's very hard to steer the Titanic away from an iceberg.

Yes, first movers in general have a disadvantage. For example, this is part of the reason why Sega's hardware business died.

Admittedly, that was only part of it: there was some mismanagement behind Sega's decline too. Actually, you could say the same thing about Sears: the final nail in their coffin wasn't Amazon learning from Sears's lessons but rather Eddie Lampert's deliberately and systematically looting the company over a period of several years. If not for Lampert, Sears would just be another Macy's.

No question that they operated poorly on top of just being in an eventually bad position for the future. Sears could have innovated or had a separate department like Xerox PARC and others did that kept them alive a long time, but unfortunately fast movers and disruptors will always have that advantage no matter what you do. Hence why FB and others just buy out all the small companies.

> [For many problems, a behemoth company has no reason to improve, and a lean startup can rush to a solution faster in many cases.

This is 50% of the thesis of The Innovator's Dilemma, the book that introduced MBAs to the the word "disruption".

The other half if why this happens to behemoth companies, which is that they are listening to their customers. In this case, the customers are those who are OK with waiting 3 weeks and would just like a wider selection or lower prices. People who would but if delivery were faster by definition aren't customers.

Startups have to address the non-customers because otherwise they'd have to pry them away from their existing supplier -- generally a much tougher task.

And Amazon's return policy. I remember specifically buying clothes from an online retailer a few years ago and when things didn't fit, I got charged a 10% restocking fee. I'd mostly bought from Amazon but decided to go outside the box. Sure enough, I went back to Amazon.

When I lived in the UK, I discovered retail shop hours at 9 to 5, except Thursday and Saturday when you have to fight crowds. Also, things were more expensive. So Amazon won again.

All the monopoly complaints aside, the rest of the retail world doesn't compete very well.

Hell sometimes Amazon doesn't even require a return. They will just say keep it and send out the one you actually wanted.

I've had this happen on a Wal-Mart order as well.

Here in Germany Amazon had books and later other products. Fast shipping came way later. And even now their shipping is not really that impressive. 2 days most of the time with prime. 2-3 days is normal for most stores

It's normal now, it wasn't normal 20 years ago when Amazon started here. They also had free shipping from the start, also very rare back then.

Big companies have an extraordinary ability to overlook what small competitors are good at. Instead of thinking, "This company is setting a new competitive standard that we don't know how to meet," they attribute it to immaturity and lack of scale. I worked for a company that got acquired by a Fortune 10 company, and the people from the "mothership" were downright smug and condescending when they heard how fast we expected to do things, because clearly we were not doing things right if we thought we could them done that fast.

I bet when Amazon's fulfillment speed was brought up as a competitive advantage, the Sears execs looked at some spreadsheets, did some calculations, and said, "This is stupid. They're losing a ton of money shipping stuff so fast. They won't get far before some adults take over and force them to smarten up."

Ordering something on Amazon, while it can be fast, can take two months or more to arrive from China, and everything in between.

Amazon started as purely a book store in 1994 and stayed that way for a good while; it was not immediately obvious to sell every damn thing imaginable. Bezos was cautious about what to try selling online. In 1998 they announced they would move beyond books, but without specific.

Amazon did not turn a profit until 2001; they really took it on the nose in the beginning, and had to weather the dot com bust.

Before Amazon expanded into things other than books, the site most known for that was eBay. In popular culture, every meme and joke about anyone buying or selling anything online was about eBay for the longest time.

...and eBay didn't have to solve any logistics or shipping problems because they crowdsourced it.

So what I'm hearing is "so big they had to fail".

I wonder if Amazon will ever get to that point. It's hard to imagine.

Anecdotally, I've seen a significant perception shift regarding Amazon over the last year, even among my non-techie friends. When this group of friends starts talking about these things I know it's moving beyond the Hacker News crowd to the general public.

It used to be the place where you could get anything for a good price in 2 days and trust the quality.

Now the selection is getting iffy in favor of house brands, Prime has a ton of strings attached (add-on, pantry, now) if it's offered at all, Amazon delivery is awful, the prices aren't nearly as good as they used to be, reviews are mostly fake, and you have to work to avoid knockoffs.

Most people I know have dropped Prime and significantly reduced their orders. They haven't stopped entirely, but it seems to be more of a "Wal-Mart" in their minds - a quick and easy necessary evil, not something they particularly enjoy.

It probably doesn't signify their decline yet, but it certainly seems to be a new stage in their lifecycle.

I also see the same shift. There's too much garbage to sift through and too high of a chance of getting something counterfeit.

Whoever thought the operational cost reductions of "commingling" was worth the loss of trust in the Amazon.com was wrong in my opinion. I think people with disposable income would rather pay a little extra to guarantee they get a legitimate product, and it's not hard to google the model number or product name and select from Target or Lowes or Best Buy.

Over here in Europe when I hear something negative about Amazon from non-techie people, it's always about working conditions. I guess the recent Spanish strikes have helped to publicize that more. Some people are thinking of avoiding ordering from Amazon, but I doubt that actually translates to that much of real action yet.

Indeed. Conversely as a Frenchie Prime still offers next-day shipping and works as well as it ever did (that is, pretty well most of the time). It's pretty amusing to me that we seem to have a better deal with Prime on the old continent than on Amazon's home turf.

Bezos himself has stated:

> "Amazon is not too big to fail ... In fact, I predict one day Amazon will fail," Bezos reportedly said when addressing a question about Sears recently going bankrupt. "Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years."

> "If we start to focus on ourselves, instead of focusing on our customers, that will be the beginning of the end ... We have to try and delay that day for as long as possible."


As it grows larger, the "Amazon marketplace" is getting more and more filled with garbage knockoff products and fake reviews. There may eventually come a tipping point where they lose user trust.

I feel like every time there is a discussion about Amazon on the Internet, this point is brought up.

I spent about $9,000 on Amazon across 139 orders in 2018. I buy a lot on Amazon. I've never had a problem with receiving knockoff products. I don't understand how this can be such a prevalent issue when I've not run into it, given how much I use Amazon.

The only thing I can think is that, if I'm buying something expensive, I'll strictly only purchase items "Sold by: Amazon.com Services, Inc" or alternatively, I'll use a marketplace seller if the seller is the manufacturer of the item I'm buying.

> The only thing I can think is that, if I'm buying something expensive, I'll strictly only purchase items "Sold by: Amazon.com Services, Inc"

If you are trying to avoid counterfeits, that's not really helpful, since the problem with counterfeits is magnified by commingling, by which items sold by Amazon itself, and FBA sellers that do not opt-out of it are mixed and orders fulfilled with goods that may have been sourced by any of the sellers.

> I'll strictly only purchase items "Sold by: Amazon.com Services, Inc"

Most users don't think to check for that, though. I know my mother-in-law doesn't...

They intentionally don't offer the option to filter for it many times, otherwise, I would have that permanently selected.

Most people in my circle already won't buy anything they put in their bodies from Amazon, because the risk of Chinese counterfeits is just too great.

If that happens, I don't think the problem will be perceived as "Amazon" — people will say "online shopping" is untrustworthy, like how "social media" is responsible for the world's ills, not "Facebook".

My hope is that smaller, more focused online retailers and marketplaces emerge that can compete in specific verticals. For example, I already go to non-amazon sites where I prefer to buy music gear and computer hardware.

This is more popular in EU. In many countries Amazon even does not operate, and even in Germany people try to prefer different place if they can.

Unmentioned here as far as I can see is their attitude to worker’s rights. That’s massively off-putting for me.

For many things that is an issue.

But I still buy laptops and other electronics from Amazon.

I'm almost there now.

For many it is here. If I can get the same product from walmart I do because returns onstore are easier and the product comes quickier without prime. Products always come at the very end of the fullfillment date but with walmart they fill the order before the expected date.

Even with Prime, the couriers Amazon uses to service some areas take long enough to deliver that most other online retailers are preferable.

For me, they’ve “fixed” that. I finally got their amazon couriers blacklisted, so they are shipping usps.

But, if i order from an account without prime, they wait 11 days to ship, thus giving me 12 day delivery (just within their promised 2 weeks). If i order from an account with prime, it alternates between next day and two days.

Editing to add:

Last order without prime, Dec 28. “Shipped” yesterday (usps shows it arriving to them at 4:35 this morning from amazon, out for delivery today).

I had to do the opposite because USPS is so bad about delivering packages. The Amazon branded couriers basically saved me as a Prime customer.

There was an article [1] from 2017 about USPS couriers lying about packages being delivered to keep up their Amazon delivery statistics. This routinely happened to me.

[1] https://www.aol.com/article/finance/2017/12/05/postal-worker...

How'd you manage that?

UPS/USPS do great in my area, while if it's Amazon or FedEx I'll get it a week from never.

Constant complaining to customer support when the package kept being marked “building closed” when they decided they didn’t want to deliver (this is a house, not an apartment, so no building to close).

After 3-4 packages arrived a week or so late because of the same issues, they finally blacklisted amazon delivery. Since then, it’s been usps.

Yeah, I think you're completely on point. Sears has been on verge of folding for at least a decade, and they've done little to nothing to implement any innovation that would give them another swing. It left plenty of opportunity for smaller startups to swoop in and stay ahead of the market Sears lost out on.

Obviously (to me), Sears could have easily re-tooled to make Amazon stillborn. But, like Kodak, they were a bit too protective of their own business model to want to compete against themselves. That's why disruption even works.

Google may have a strong position driven by search, but disruption will come for them, too.

For me it's the speed of Prime, plus the fact I don't have to bother entering my card or PayPal details. It's almost annoying when I can't find what I want on Amazon and have to go elsewhere.

Removing friction is tremendously valuable. Same reason people use Uber even in cities like New York: not having to pay at the end of the ride.

This is true. Sears is easy to pick on, but the truth is that Amazon is seemingly the only company that was early to understand ecommerce and how to effectively gain market share by continually innovating and creating customer-centric practices like free shipping on all orders over $25, which was unheard of before that. Just having a lot of money and knowing the internet would be big was table stakes to start an ecommerce site, but certainly not sufficient to guarantee success. If it were Amazon wouldn't be what it is today.

I think they even had no way to improve rather than (or in addition to), no reason. Their existing operations never allowed for going from 3-week delivery to 2-day delivery.

And the reason Amazon will die is because "Prime" is no longer 2 day and most "Prime" returns aren't actually free. In fact there is a whole category of "Primes".. If Target or Walmart successfully execute on local delivery + free returns they could really give Amazon a run for its money.

> I think this is especially relevant here on HN because it shows how startups are required to solve problems.

that's quite a leap. and i don't see how that follows from what you've said.

The high value of Sears real estate holdings alone distorts the valuation of the company and doesn't help in making good decisions for running the store.

The reason Amazon is successful is AWS. They can buy stickiness in retail by offering lower prices subsidized by being the biggest cloud provider.

Amazon's business model commands a continuously increasing selection and best-in-class customer experience.

Cannot succeed without both.

Where's the startup that is solving the pile of Amazon boxes in my backyard that I am too lazy to breakdown?

Lol I paid for next day before the holidays and got my stuff 7 days late. Demanded and got refunded shipping.

Name recognition

This can't be understated, and is something a lot of new companies don't understand. If people know your brand and trust your company, they will hand you money.

Anecdata: My parents were massive Sears loyalists. When they bought an appliance, my father researched the various GE models, then bought the Kenmore version. When he wanted a video game console, he researched and decided he wanted an Atari 2600. Then he went out and bought the Sears Tele-Games version.

Half of their house addition was built with Sears products. If Sears had a lumber yard, it would have been closer to 90%.

And Sears, like Walmart now, was big enough that they could go to manufacturers and get special versions of products to makeup the "Kenmore" brand. I remember looking at fridges back in the day and the Kenmore version had just minor differences that made it slightly better than the 'same' model from the actual manufacturer.

The difference between Walmart and Sears through is that Walmart pushes manufacturers to build the cheapest possible product so their versions are worse rather than better then the manufacturer's own branded products.

But also cheaper, which is what a lot of their customers are looking for.

>If Sears had a lumber yard

In a way, they did.


I own one of these. It was built in 1935 and unlike Sears, it has a good chance of surviving another century because it’s made of solid brick. It’s a Craftsman-style Bungalow that apparently was build extra wide (or at least wider than other homes in our neighborhood), so the upper bedrooms are more spacious than it might appear from the outside.

There are links at the bottom of the page to the catalogues. Looking at the 1908 catalogue - my goodness those houses are gorgeous.

I wonder if there is some sort of design trademark on them. I would love to build a house like these in Australia.

I remember them being in the single best position to do what Amazon did half a decade before Amazon was even a real thing. Even if they got their catalog online, searchable with images, and call in to finalize their orders, they'd have been ahead of the game.

They could well have done more optimizations with time... but they had no interest in the internet, and felt the web would be just another fad after Prodigy failed.

I knew it was the beginning of the end for Sears when they shutdown their catalog division and call centers. Just as the internet was ramping up and mail order was going to become huge.

But as a counterpoint, why would anyone build this business? Compare Amazon's profits [0] to Walmart's [1]. Assuming I've got the right chart, and recalling that the profits are coming from AWS (ie, unrelated to the catalog business), is it obvious that a sane management team would want to replicate Amazon?

We're talking two decade of basically no profits. Risk free rate of profit (ie, bonds) was something like 5% for a lot of that period, although there is obviously a lot more to consider. This is longer than long term from an investment standpoint - compare it to jobs who took Apple from "return the money to shareholders" to "most profitable company in the world" in a bit more than a decade.

[0] https://ycharts.com/companies/AMZN/profit_margin [1] https://ycharts.com/companies/WMT/profit_margin

The other point is Sears Catalog was empowered by the railroads, then along comes the Internet and they miss the analogy.

The internet was billed as the "Information Super-Highway" not the "Information Super-Railroad". That's why they didn't see it.

There was an enormous Sears near where I grew up. It always felt shabby and badly run. They had lost the recipe even then, when they still had the catalog business.

I get the impression from Sears and other big companies that lose their way that they become the playgrounds of big management egos that want to leave a mark and get written about in business publications, whether or not their ideas work.

Same experience. Sears was an anchor tenant at the local mall for decades. In that time they never did a significant rehab. When they finally closed a few years ago, it was still like stepping into the 1970s to shop there.

My guess is that they got their lunch eaten by Wal-Mart and Target. Wal-Mart beat them on cost and margin.

And you can't operate a mega-chain on premium customer service since the average customer shops on price or convenience.

Department stores have been dying for a long time.

The dysfunctional Randian management model imposed by their CEO had more to do with their failure than any external woes:


I should have made clear just how ancient I am. When I was a kid, it was still the heyday of department stores like Lytton, Goldblatt,and Marshall Field which had their own candy shop selling their own candies, and a department called "millinery." Some of these stores were notably stuffy and seemed to cater to my grandmother's generation. But they were still prosperous. I had never seen a Wal Mart.

One day, Amazon, Google, and Apple will also die. It's the circle of life. Sears operated for 126 years - astounding in our era.

maybe they will turn into world government, like in Wall-E.

Any organization has a lifecycle, governments included. There are thermodynamic constraints ensuring this. See Geoffrey West's "Scale" for elaboration.

In some alternate universe, we're all using Sears Web Services and no one has heard of Amazon.

> Sears had everything. Global supply chain, check. Top notch distribution operation, check. System and infrastructure to take orders and handling billing, check. Name recognition and established customer base, check.

I've never understood this line of thinking. I worked in engineering at Sears, and I left the company in 2000. So I was there when Amazon was getting big, and I quit Sears to go work for a company in Redmond Washington.

Sears just didn't have the engineering manpower. When I'd wander around the Sears headquarters in Hoffman Estates, I saw tons of people working on marketing, clothing, and advertising. There weren't a whole lot of people working on the Sears website.

From my perspective, in 1999 our engineering team was mostly concerned with whether the cash registers worked (Sears was ahead of the curve when it comes to the sophistication of their registers) and whether customer service worked (we had over five thousand customer service representatives working out of a series of Regional Credit Card Operation Centers AKA RCCOCs.)

Competing with Amazon isn't trivial; even in 1999 Amazon employed thousands of people.

More importantly, Amazon lost a ton of money to get where it is today. In 1999, Amazon lost something like thirty cents on every dollar that they sold.

As someone who actually worked at Sears, it's inconceivable to me that Sears could have stomached the idea of losing that kind of money. And I don't see any scenario where they'd make the kind of investment in people, even if they could find them.


My childhood home was purchased in a kit from Sears in the early 1900's. Such an interesting and expansive catalog operation, and a model that's starting to come back around with modular homes from Blu and other companies offering kit homes 100 years later.

Had to throw in the 99PI link for anyone interested in learning more about Sears homes.


Eddie Lampard's ego tour was the real nail in what could maybe have been a salvaged niche success story.

Those who are first will later be last for the times are changing...

Is there anything people don't buy online these days?

There's a lot of stuff I don't buy online.

Clothes -- I like to try them on first.

Tools -- I like to see if they are well made and how they feel in my hand. Photos on a website don't provide this.

Food -- I want to check produce and meat before I buy it. And it's easier to stop at shops I'm passing on my way home anyway.

Household supplies -- I don't want to deal with disposing of shipping boxes, styrofoam peanuts and air pillow packs for stuff I can just grab off the shelf at the local Target.

Big-ticket items (appliances, furniture, etc) -- I want a local business standing behind the product and the warranty.

Stuff I buy online are typically things like books (no local bookstores anymore) and odd items that are hard to find locally (like the mic/audio splitter cable my kid needed for his X-box controller).

Sure, but people can and do buy these things online as well, and some of these are well-suited for a hybrid approach. With clothes, for example, once I find my preferred SKU of trousers or shoes or whatever, I will just buy replacements online rather than return to the store where I bought my first pair, because they're a mass-produced product.

What's more is that more and more people do buy these things online. Clothes and tools especially.

Isn't warranty provided by the manufacturer and not the retailer, and hence better to buy big ticket items online (likely cheaper since there is no local retailers markup).

Even for clothes, yes offline stores do give us the ability to ability to try, but online offers more choices, colours, fabrics, sizes and brands than any one physical clothes store could possibly offer, so I do think online has an edge.

> Isn't warranty provided by the manufacturer and not the retailer

The cost is usually covered by the manufacturer, but the local retailer is usually a point of service.

Pretty much in agreement here, although I do find it more convenient to buy appliances through the big box store's website than to go in person and spend an hour guiding an associate through the options in their arcane inventory system.

Also you get to avoid most of the 99% profit-for-them "warranty" hard sell. I try not to hold it against the salesperson as I've done that kind of job and I know they don't have a choice but it's still incredibly annoying.

For our last 2 appliances (fridge, washing machine) we went to the store and found last year's model on sale at a steep discount to anything online. Also managed to haggle a little.

Clothes are probably one of the bigger things. General grocery items, especially produce. Things that are a pain to return (large appliances). Things you usually need now (hardware/auto store parts).

I will say, I try to never buy monitors online... I've just experienced too many that die prematurely and would rather have someplace I can take back to the same day. My current monitor is actually a 42" UHD TV. I had bought a monitor in that size (40") but it was DOA, and didn't want to wait the round-trip for a replacement. Not the first time I've had monitors die young either. At least they don't weigh over 70 pounds anymore.

>Is there anything people don't buy online these days?

Tons of stuff. [ADDED: e-commerce is 10% of retail in the US.] Ironically, especially in the categories that Sears was best known for selling. Major appliances, lawn equipment, home improvement generally, (to a lesser degree) clothes.

A few years ago, the ancient (circa 1998) microwave in my house failed. I merrily trundled off to the local appliance store and bought a new one, and had them install it. Seemed to work, but eventually I realized it must be drawing too much electricity. Like something out of Green Acres, I had to limit what lights and other appliances were on in the kitchen if I wanted to use the microwave.

I had an electrician come out and look at it. He opined that, due to the way the house was wired, it would be a pretty major undertaking to fix the underlying problem. So I just went along with turning lights off when I cooked.

I finally sold the house, but couldn't pass this problem off to the next owner.

The only place I could find that still sold a microwave so old and feeble that it wouldn't overload my circuit, was Sears.

Thank you Sears! Hopefully I will never need that again, but I am thankful for your help.

> I finally sold the house, but couldn't pass this problem off to the next owner.

As someone who's had his share of problems passed on to him when buying a house, I'd like to know (1) how the next owner found out about the problem and (2) how they managed to strong-arm you into fixing it.

I told my selling realtor about the problem before they house was ever shown to anyone, and agreed to fix it before moving out. It would have been wrong of me to have just left a problem like that.

I'm curious, do you remember what the difference in power draw between the old and new microwaves was?

Standard microwaves are 1100 watt, but there are also 700 watt microwaves. Those extra 3 amps must have set off his circuit breaker.

Sounds about right. Also, this was an above-stove unit, limiting possible choices. Probably could have more easily found a standalone unit that worked.

Especially if it was an odd size. The downside to built-in microwaves is that it took many years for the industry to decide on what sizes they would support, so older installs are always a crapshoot. If you have a weird one it can be hell finding an appropriate microwave. My parents had a very old microwave (1980s era) built into their house that was much bigger than almost everything on the market today, finding a replacement for it was impossible, they ended up having to buy a smaller one and making a custom shim to fit it in the old cavity.

All my major appliances were bought online. Amazon delivers home improvement services now (via partners) in some markets. These may be things that move online slower, but they to move.

I know other comments are pointing out reasons this is not true but honestly it feels that way to me too.

All of my Christmas presents this year were bought on Amazon and delivered direct to my family who live 400 miles away within a day of me ordering them.

Even some of the categories of things other people have listed as things people don't buy online are things I do buy online. Tools for example, if I'm buying something to get a job done I'll pick up something from the catalogue type stores (Screwfix / Toolstation in the UK). On the other hand if I'm buying a decent tool to last I'll pick it out online, usually after reading and watching reviews, and then looking around to find the cheapest price for the exact model.

I was buying a pair of trainers for my partners Christmas. She picked them out on a big department stores website. I went to the store and they didn't keep them in stock. I tried 3 other stores in one of the UKs largest shopping centres and they didn't have them in her size. I tried another shop in a different part of town which didn't have them and finally gave up and ordered them on Amazon. They arrived 2 days later (this only a week before Christmas).

>Global supply chain

I know you said "supply chain", but do Sears really have much presence outside the US?

I'm asking because I never heard of Sears before coming to the US. Might not be zero (I find there is Sears in Mexico at least), but definitely not strong compared to Walmart, Carrefour, etc.

> I know you said "supply chain", but do Sears really have much presence outside the US?

Depends how you count it. Sears Canada had about double the number of stores per capita as Sears USA. By the end, they were mostly a separate corporate entity from Sears USA, and shuttered all their stores over a year ago.

Guess I should say outside North American.

As far as I can think of, the number of retailers with significant worldwide operations is very small. Costco and Walmart both have about 20% of their operations outside of North America. Uniqlo is 40% Japan, 30% PRC, 30% elsewhere. No real others come to mind.

How about Carrefour (53% outside of France), Aldi (owns Trader Joe's in the US)?

edit: 7-11?

IKEA is the big one that springs to mind for me.

Fair point.

Not sure Uniqlo should count though, lots of similar brands in fashion have massive global operation (H&M etc.).

IMHO this is one of those cases where the idea is pretty simple: move our catalog online, but you can't do it because it would undercut your existing business. The idea that someone else is just going to do it instead is always lost on these big businesses. They always want to protect the old way of doing business because it is tried and true, but that is only safe if the world never changes.

That said, Sears could have stuck around for many more years with better management and not being sucked dry by wall street.

Sometimes having parts of a business already in place actually makes it harder to do something new. The same way tearing a house down and building new is often easier than trying to remodel.

This is why I’m so fascinated to see which carmakers can transition to electric. Lots of people think it’s easy the automakers just don’t feel like it. I’m curious if that’s true or if there’s an inertia thing going on.

"Sears had everything. Global supply chain, check. Top notch distribution operation, check. System and infrastructure to take orders and handling billing, check. Name recognition and established customer base, check."

At that time in the industry sure, but they failed to pivot. This supply chain by todays standards would be laughable.

Sears would never have been able to compete with Amazon on prices because Sears needed to fund operations for a large number of retail stores and Amazon did not.

The Chapters Indigo approach to this has just been pricematch Amazon online, and charge more for the same items in their retail stores.

> They owned part of Prodigy in 1984!

Widely considered one of the worst-run businesses of all time. No wonder they thought expanding into bigger box retail was a better move.

I did not know about Sears owning part of Prodigy. I bought Blades of Steel on NES through Sears on Prodigy. Back then delivery was weeks and not days.

and the people responsible for throwing it all away will never be punished. They all probably got nice packages over the years.

Sears is where I got my Pong game as a child that started me down this path.

To be specific it was a Coleco Telstar Marksman.

Not disagreeing with you, but where is Wal-Mart, a big box store that kicked Sears ass, in your calculus?

The difference is at the heart:

Amazon is really a software company.

Sears was not.

Software is eating the world.

Can't edit, but for those who didn't understand that comment, see what it was referencing: https://www.quora.com/What-did-Marc-Andreessen-mean-when-he-...

Ahh, I came to this thread far too late, but hopefully this won't be missed. In 1980 The Yankee Group (a tech consultancy) reached out to my dad to help them understand how Sears could respond to the growing tech phenomenon. For reasons too long to get into, Gates and my pops (a Canadian) knew each other and were even both covered in The Intelligent Machines Journal out of Palo Alto in the same issue during the waning days of the '70s.

So my father and these Yankees told Gates that Microsoft should meet with these clueless Sears guys, since they'd probably move a number of computers over the next couple years and it would be helpful for them to think "Computers? Microsoft." So he begrudgingly did.

In the meeting someone brought up investment and Gates said they could have 20% for $8m. You never know how all these things go. Sometimes someone you never heard of tells you something true and your relative position stops you from seeing it.

60 minutes interview with a young Jeff Bezos, 1999


"how do you view that phenomenon [laugh] that Amazon is worth more than Sears!? [condescending laugh]"

"a couple of geeks [laugh laugh], who sketched out some software, could destroy Sears Roebuck [laugh]"

same 60 minutes "expert", telling young Bezos, Amazon stock was wildly expensive


"Amazon is worth more than a major industrial company, like Texaco ... that didn't blow your mind?"

There's significantly more information in 2018 or even 2008 to indicate Amazon was worth that valuation. A companies potential has to be adjusted by risk if you want a good valuation, and in 1999 there just wan't enough evidence. This is validated by it dropping dramatically after the bubble popping.

In fact they were only saved because he had secured financing mere months before the collapse, had that not happened Amazon would be listed among the likes of Pets.com.


But, the 60-minutes reporter didn't justify his claims based on risk or on math. He was skeptical because Sears is huge, and to him it was laughable [and yes, he did literally laugh many times in that interview] that Amazon can someday be worth more than Sears. To him it was "messed up", and a sign of things wrong with the world

Only is a big caveat, for the "dotcom" that survived the bust and became the biggest company in the world.

Even if they were established they’d have a tough time getting financing in the .com crash. A bit of luck is always necessary.

In 1999, AMZN peaked ar $80.

Two years later it was trading at $10, and didn’t recover until 2007.

The interviewer was right; Amazon was over valued.

Or was it radically undervalued in 2001?

I'd say it wasn't, because AWS didn't exist to be undervalued as a business factor.

What kind of profits were they showing in 2001? I'm not going to look it up, but I'm sure they were negative. There were a lot of people back then who couldn't figure out how Amazon would ever make money when they sold everything at a loss.

You can’t proclaim it a right decision or wrong decision without comparing exits as well. It’s the delta that’s meaningful, not the value at that single point in time.

Amazon worth more than Sears? Can you imagine?

All things are clear with the power of hindsight. But if it were so simple you'd already know which company to throw your money at today and be a billionaire in a decade. Do you?

True, but why laugh at Amazon? What can you possibly gain by picking on the "little guy"?

The reporter is supposed to be an expert in this field. That's why 60 minutes hired him, instead of someone else, for the job. I am sure there was no shortage of applicants who wanted this job.

Why couldn't he be more open-minded and supportive of a startup like Amazon? Instead of constantly laughing at Amazon and Jeff Bezos (like his choice of cars)

So why be a snob? As you said, no one knows what will happen. Why laugh at the little guy? You don't know what's going to happen

Economics Nobel price winner Paul Krugman once said that the internet’s effect on the world economy would be no greater than the fax machine's. I don't expect a journalist to perform better.

Being open minded and supportive is probably a stretch when something sounds so outrageous that you simply can't believe it's anchored to reality in any way. I assume this is how it felt back then. Probably there were situations where you yourself became derisive of certain things you simply couldn't conceive could be different only to be proven wrong some time later.

My grandmother received an invite.

We are a seattle-native family. Through people we knew at the time, they asked her to invest in their company and she could have 10% of the company if she gave them money.

She discussed it with my grandfather and they both agreed: "Nobody is going to drink that much coffee." and rejected Starbuck's offer.

There was a good podcast about the founding period on NPRs how i built this. Worth checking out

Haha, that's interesting to hear.

So if Sears invested in Microsoft in 1980, Sears of today could've been like Yahoo, whose investment in Alibaba kept Yahoo afloat a few more years but ultimately continued down the downward spiral?

I gather that the few people at Sears who were aware of the investment invite from Bill Gates may not even be alive, considering it was 39 years ago.

May be it so negatively influence Microsoft it killed it. It is not a money deposit. You can run down your firm which core to your business you can run down other non-core business. Not many run mixed business work (GM in one stage but not even now).

Yahoo was different though. People would buy Yahoo stock as a proxy for Alibaba since it wasn't publicly traded.

Wait, I’m confused. This agency that’s consulting for sears sets up a meeting for bill gates to sell his computers to sears?

How is that in the interest of sears?

Because in the early 80s nobody understood computers or how individuals at home were going to use them and Sears knew they didn't know. For example, some people thought that computers should be waterproof so you could install them next to your sink in the kitchen so you could use them to help you with recipes. Sound crazy? What's an iPhone? A waterproof computer that helps hundreds of millions with recipes.

There were so many good ideas in the early 80s but Gates was such a genius that he understood how to separate which ones were coming first. He thought about things from first principles in a way that Musk does today. The Yankees knew databases and stuff, but they didn't know the future, but they knew that my dad thought in the same way. That he thought about the future. My dad was more of a telephony guy than a computer guy and he saw how much of a genius Gates was, so he roped him in to help out his Yankee friends.

> so you could install them next to your sink in the kitchen so you could use them to help you with recipes.

Yikes, you just reminded me of a TV ad I saw in the late 90s, of a housewife using a device like that. I remember a CRT-style monitor, but it's faded enough that I can't remember any other details.

In 1969, there was the Honeywell Kitchen Computer: https://www.computerhistory.org/revolution/minicomputers/11/...

Sears died because of Lampert, that's the beginning and end of the story. While they were far from perfect, post-Kmart "acquisition" both the service and stores became garbage and he used Sears as a personal slush fund.

Yeah this article does a great job of painting Lampert as heroically struggling against foes that turned out to be insurmountable, but there's a lot to suggest he was simply siphoning the wealth out of the company, with this being the final and inevitable result.

Couple of HN links with the opposite slant to this article:



So instead of investing in actually making Sears better (like Target and Walmart did), he thought it was a good idea to spent nearly all of Sears' cash reserves buying back its shares (at prices as high as $170)? Now shares are $0.33. Is he just an incompetent buffoon, or did this strategy line his pockets? For example, was he buying shares owned by ESL with Sears' money? If so, that's highly unethical. Seems par for the course with Wall Street.

I wonder if any company in a similar position has just done a total liquidation and turned over all cash as a one time super dividend. That seems like the honest and fair way of doing it. Though it's probably less lucrative than a debt-fueled stock buyback and dump strategy.

This seems like standard operating practice for vulture capitalists (Bain Capital) that swoop in and extract the value from the firm before discarding its debts and bankruptcies and moving on to the next firm.

I don't know about the rest of the country, but they had spent the last 2 years rebuilding their flagship store in Oak Brook Center west of Chicago. Last I was in the mall last fall, it was still under reconstruction.

Probably far too little, far too late...

This should be the top comment. Lampert's mismanagement has been thoroughly described, e.g. the Slate Money podcast from 20th October gives an overview.

Lampert took over in 2013, they were already going down hill by that point. Sears was taken over by bankrupt Kmart in 2004 and the combined company started losing money by 2010.

What are you talking about? Lampert was running K-Mart in 2004... his hedge fund acquired their assets when they went bankrupt. He immediately turned around and took loans against all of K-Mart's real estate to fund the acquisition of Sears.


Both Sears and K-Mart were crappy dumps 30 years ago. Not saying a competent manager couldn't have turned them around, but they've been on their way down for a long time.

> 30 years ago

I strongly disagree; 30 years ago, 1989. KMart had the popularity and store count in the SE that Walmart didn't. Sears was the top destination (and even still had its booming catalog business)

20-25 years ago seems more accurate.

>"... 'eyyy.. I'm 'nvestin' ' ere...."*

--Lampert, probably...

Lampert might have "saved" AutoZone, which AFAICT was the feather in his cap to make him "the next Warren Buffert", but if you asked me I'd be hard-pressed to tell you how the shopping experience changed. I speak from ignorance, and the laziness that prevents me from researching deeper, but I assume he did some accounting tricks, sold a few inefficient assets, etc. But as the owner of some old vehicles and a frequent shopper of auto parts stores, I couldn't tell you when Lampert took over AutoZone based on any changes to the shopping experience. So when it comes time for a new WhatsIt for the '81 VW, I'd just as soon go to the local NAPA because they'll probably actually have the damned thing.

This brings me to Sears: did he ever shop at his own stores, or was he busy pouring over the books and figuring out new ways to implement corporate versions of The Hunger Games? Because the shopping experience at Sears was never great, IMO, and it only got more depressing when Lampert took over. Tool quality went to shit, appliance quality went to shit, and the shopping experience sucks. You can juggle books all you want, but that won't get customers in the door. And if I do make it in the door, the lack of service and the dingy store will ensure that I never return.

So in summary, I argue that Lampert either got lucky with AutoZone, or what worked there did most certainly not work for Sears because at the end of the day customers ask themselves, "do I want to shop there?" And Sears in recent years gave customers very little reason to say, "Yes".

As a sidenote, WTH is he willing to throw good money after bad with his $4.4 billion bid? I'm stumped as to what rabbit he thinks he can pull out of that hat.

Rebuilding trust and brand value will take years or decades. Don't undervalue accounting tricks, reorganization, focusing on efficient assets, etc. Getting rid of dead weight is much more important than trying to reinvent the retail experience. You need to stop the bleeding first.

That's some good insight, definitely need to bail the water out first. Prime example that comes to mind is Gibson: get rid of money-losing electronics (Teac, et. al.) and go back to making instruments. Even that might not save you, but it's a shot.

I could see Lampert doing the first part, stop the bleeding, but once that was done perhaps he was stumped with the "now what?" part. OTOH, AutoZone has been going big guns for a while now, what do I know? :-)

Ah, good ole' NAPA, where you pay twice as much for half the quality (in their house brand anyway). At least, that's why I avoided them like the plague a quarter century ago when I was building muscle cars. Also, they always seemed to prioritize their garage delivery service over their walk-in customers. Although,that was a long time ago, and perhaps they've gotten better over time.

>Ah, good ole' NAPA, where you pay twice as much for half the quality

It's all about knowing who makes the part that goes in the branded box. At present their "blue boot" ball joints are the only way to get Spicer ball joints.

>Also, they always seemed to prioritize their garage delivery service over their walk-in customers.

Varies by location. It's a franchise model after all. Napa uses probably the longest leash of all the chain parts store franchises.

> where you pay twice as much for half the quality (in their house brand anyway)

Their oil filters are similar if not the same as Wix.

>I speak from ignorance, and the laziness that prevents me from researching deeper,

More "customer focus", (no more haggling on warranty, less pushy upsells, "sure ma'am, we'll install your wipers for you" ,etc, etc.) and they greatly improved the house brands and logistics. Basically they dumped a bunch of money into their product lines and stores with the idea that people would shop there more if the parts weren't shit and the service didn't suck. They also own Alldata which they probably turned into a massive cash cow around the time Lampert was there (which was when electronic service manuals started becoming a real thing).

I personally thing it worked well. They're basically the McDonalds's of auto parts. The customer service experience is pretty much the same in any store and part quality is consistent and you almost never get the really, really terrible stuff that you sometimes get when you buy the cheapest parts online.

Autozone has a similar feel to visiting a mechanic, so it is probably OK that it is dingy inside. Sears was just depressing.

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