Amazon has been doing this in parts of Germany since 2009. The results haven't been nearly as dramatic as the article predicts. As others have indicated, the limiting factor isn't so much speed of delivery as the inclination to physically inspect items before buying them. That said, Zappos, now a part of Amazon, has succeeded in doing that in one of the markets that tends the most towards such. Even so, there are still a lot of places to buy shoes.
When Zappos first came out I thought they'd tank. I purchase new basketball/running shoes every 6months, and never ever make a new purchase without trying it on. Playing basketball or running with an even slightly uncomfortable shoe can lead to blistering, back problems, ankle sprains, etc.
But my gf at the time thought it was brilliant. What I learned was that a lot of women's shoes are purchased based on anything except comfort. The quality can be shoddy, the wear can cause excruciating pain, yet some top brands sell for hundreds and even thousands a pair. Swing by the Nordstrom's women's shoe dept sometime and take a look at the quality of build. Eavesdrop a bit and take inventory of the questions the clients ask about. (Zappos is started by a bunch of ex-Nordy folks).
To this day I've only purchased 1 pair of shoes on Zappos, and that's after I had bought it previously at the dept store (New Balance 993, imo best shoes for walking/running in case you're wondering).
Yes. The build quality of women's shoes is astoundingly bad. Sometimes I look at them and they literally feel like glued on piece of leather, pretty on the outside, and nothing more.
It's interesting how two different markets have developed (men's shoes and women's shoes) that have such different parameters. Men's shoes have outstanding build quality --- to the point where a good pair of quality shoes gets resoled multiple times. Do women ever resole shoes?
I wouldn't say it was "bad". Women's shoes are designed with fashion and daintiness in mind. They seem flimsy because they are flimsy, and they are flimsy because well crafted, long lasting shoes are big and burly with lots of material and stitching. This goes counter to the point of the shoes: to look trim and to make the woman's foot look small and pretty.
This maybe a bit impractical by todays social norms but I don't think anyone has ever thought of carbon-fibre footwear combined with leather cushions. I'm reasonably sure that this will be light and strong.
We only need comfort testing, but I think the flip-side would be that womens shoes would cost upward of $200-$300 equivalent. I don't know if there's a market for that.
I would think when you are spending ++$ to look fashionable, you really don't want the shoes to last. Wearing three year old 'fashionable' shoes would sort miss the point, no?
I think you've unknowingly nailed the problem. Unlike men, womens' fashion moves at a very rapid pace. So for long term, it'd be more prudent to buy something timeless rather than the current trend.
WOW! I am so out of touch with these high end shoe prices. Suddenly, my idea doesn't seem that far-fetched after all.
Except, I know of not many women who'd like the carbon fibre look. I guess, designer labels...
This isn't just true for women's shoes, but women's clothing in general. I don't understand the reasons, but men's clothing tends to be made with less design and more durability.
A fashioner designer once told me he made the men's clothing first, then crafted the women's clothing out of its leftovers + some embellishments.
Women's fashion changes quickly, so if she keeps up she may only be wearing whatever it is for a single season. It doesn't make sense to make something durable if it's only going to be worn a handful of times.
Men's fashions change much more slowly, and within much narrower parameters. It actually makes sense to spend a few grand on a suit that you're going to wear to work every week for a couple years, and it has to be pretty well made to last that long.
The hipster doofus stuff is as shoddy as women's wear and for the same reasons.
This is so true. My SO purchases clothes that are made from terrible materials, with stitching that falls apart.
Womens shoes exclusively seem capable on only lasting 6 months of regular wear. Everything from straps, buckles, soles and innersoles seem to fall apart.
The ultimate insult in all this is that they always cost more than the equivalent male version. The only exceptions to this are where the two items are equivalent (ie mens/womens levis, mens/womens running shoes).
I don't like buying clothes unless they're made from natural fibres/materials. It's cotton, wool + leather for me. For a woman, it's virtually impossible to stick to a rule like this.
I guess it's all about the fashion and style, and they aren't expected to last due to the built-in obsolescence of womens fashion.
For an easy anecdote, just walk into any Forever 21. The clothes are extremely thin, with bad stitching, and made from materials that aren't durable at all.
Stereotypically, because men tend to care less about clothing, fashion and the like, and so want clothes they can wear for a long time, while women worry more about changing fashion trends and wear clothes for relatively shorter periods of time.
Well from my own personal experience. When I go out to buy shoes, I look at things like durability, ruggedness, comfort. The shoes must be long lasting and one must be able to wear them for long hours without feeling uncomfortable.
Most girls I know don't have that criteria. The first and foremost criteria for them is they must fashionable, good looking, must match with their dress etc. Given this use case, there is only so much you can do for things like durability and ruggedness. Because you need to make them colorful, with some deigns etc.
There are plenty of poor quality men's shoes. Go to H&M or any similar "fashionable" retailer and pick up some low cost shoes. They'll have terrible thin rubber soles and fall apart within weeks.
Similarly, there are plenty of high quality women's shoes.
I'd probably agree that more men buy high quality shoes. In my experience men on average tend to put less emphasis on style over function, and so that does inevitably lead to functional (well made) shoes.
Men usually have fewer shoes than women. Some men can get away with 2 pairs: dress shoes and daily wear. --I used to be that way, until I started working out and then was cajoled into diversifying a bit. But even today I have one pair that gets used probably 75%+ of the time, and they're definitely of higher quality than a lot of shoes I see people wearing.
I see multiple comments from men here about how women they know buy impractical clothing and shoes that are poorly made and don't last well. I'm happy to report that whatever the general pattern is, there are happy exceptions. Some women I know (for example my wife) and some girls I know (for example my daughter) seek out clothing and shoes that are well made and hold up to heavy use in outdoor exercise. Just the other day, my wife asked for advice among a Facebook private group of mutual friends about good garments to wear while bicycling that are also suitable business wear for teaching piano lessons (her occupation). She loves to bike to the homes of clients (her preferred location for delivering lessons) whenever she can, year-round. She invented her own outfit built out of clothing items she already had after receiving advice from friends to "buy [Brand X]" or "buy [Brand Y]." She takes a hacker's approach to clothing and fashion, and tests the boundaries of what is possible with the resources and constraints that she likes.
We both like taking walks or bicycle rides together. I ask her for advice about shoes for both purposes.
P.S. When I lived in Seattle in the very early 1990s, I was told that Nordstrom's was known as "Rent-a-Shoe," because the generous return policy at that department store meant that a woman could buy a pair of shoes to attend a fashionable party, wear the shoes just once, and then return them without hassle to the store. I don't know what current policies are at Nordstrom's, but it does seem that fashionable shoes for occasional use have long been a mainstay of the store's business.
It's also worth pointing out that many men make their decisions on factors other than comfort. I'm currently wearing some Cons that are falling apart only a year after I bought them, and I've probably only worn them 1/3 of the time I've had them. I get blisters if I walk too far, they're a pain to take on and off, but they look awesome and I'll probably be getting another pair.
Well, part of the reason I got them and part of the reason they're hurting my feet is that they are completely flat soled, with almost no cushioning. I'm transitioning quite well to a mid-step gait when walking, and eventually I want to be running mid-step or on the ball, rather than toe to heel.
I scanned the thread and surprised no one mentioned the reason I use Zappos so much:
Free returns.
When buying a new model of shoe, I order at least 2, sometimes up to 4 different sizes. Try them all on, then sent back the ones that didn't fit. This has a few downsides: slight hassle of printing shipping labels and dropping off at UPS, as well as the capital outlay of paying for all those shoes. But to me, this is so vastly preferable to dragging myself to a mall or a department store that it's not even a contest.
I wouldn't recommend this for higher end shoes however, anything above $150. Both because then the capital requirements start getting onerous, and because fitting (at least for men's shoes) becomes such a crucial component you may go through more pairs before you decide than a single credit card can likely afford on Zappos :>
Used to love the 993, but now I've switched to the Pearl Izumi for running, which I discovered through Zappos and their awesome return policy. Watching my wife goes through the Zappos process, and being an overall internet hermit, made me want to try it out.
I bought four pairs of shoes in what seemed like the best size and width for me (there is good information about brand size trends on their site), got them the next day and tried them on, decided on the Izumis and sent the others back with the UPS shipping tag they gave me.
I understand things are different now, but that was an excellent buying experience. I've never bought running shoes from a local store since.
I've never found Zappos to have particularly good selection of the shoes I buy (men's dress shoes, boots of various kinds, etc). They're particularly bad for boots. Their main focus seems low to mid range female shoes.
Makes a certain amount of sense; boots are heavy and thus expensive to ship. Since they offer free shipping both outbound and return, that would eat directly into their bottom line. Particularly if the average customer buys and returns multiple pairs before finally settling on one.
I wouldn't be surprised if there are certain types or models of footwear that are completely off-limits due to their business model.
A good pair of men's dress shoes or boots should last for several years. Hell, a good pair of boots should last decades for most people. Low to mid range female shoes won't last more than a few months. It definitely makes good sense to focus on selling low to mid range female shoes when your primary concern is volume.
The best running shoes are the ones that suit your gait, it is definitely worth going to a reputable store (e.g. Runner's Need here in the UK) and having gait analysis done. It's free, but because I'm a decent bloke I would never get their recommendation then buy it online, I buy it in the store.
I would buy the shoes in the store then. But if I liked the shoes, a year later I might buy an identical replacement pair off Zappos instead of returning to the store.
Then I'm definetly a exception for a man. I buy most of my clothes because they look good. And if they aren't really comfortable or break down after a year than be it. Exceptions are sports and outdoor equipment, but again if the don't look good for me, no way I will ever wear them.
I still have to try them on so in order to judge all that.
As far as Amazon's same-day delivery is concerned, i guess it is as much warehouse / picking speed and efficiency as it is to have the right transportation partner. In germany they are aoing with DHL, now a post susidiery. And the german postal service always had over-night next day delivery for letters within germany.
But if they can really pull it off, it would be amazing!
30 years ago, I used to buy running shoes by mail order. Asics had outstanding quality control--I at least once bought a pair of Excalibur GTs the night before a marathon, and ran it in them with no discomfort (attributable to the shoes, that is). So a couple of times, I sent my check off to a place in Cumberland, MD, and got back a package with running shoes. I'm not sure why I quit doing this, unless it was that Asics discontinued the model.
That's why their super easy returns policy is essential. You order shoes, you try them on, you return them. It's not quite as easy as a trip to the store, but it's pretty simple.
I suspect it's partially in American thing. In most European cities, the shops are around the corner. There's little effort involved, so Amazon doesn't sufficiently offset the advantages of instant gratification and being able to physically see stuff to make such a dramatic impact. Also, the different European attitude towards regulation has resulted in many cities actively protecting the kind of independent stores that make local shopping different from anonymous shopping malls full of the same franchises.
There are plenty of areas in which brick-and-mortar shops will take a hit from online competitors, but I suspect the impact in Europe will be considerably smaller than in the land of strip malls and Wal-Marts, where commercial efficiency has already trumped the "user experience", and Amazon is simply a better option with few disadvantages.
Can't say I agree - shopping feels like a huge waste of time to me. Living in a big city in Europe, but still a shopping trip will take at least 1h. Of course for other people it is heaven.
One hour still beats same day delivery on every front except having to put on pants and leave the house. People for whom that isn't a barrier form a considerable market (albeit that they may be underrepresented on HN...)
But also, same day delivery is logistically near impossible and quite expensive in exactly those cities for exactly the same reasons. The density doesn't make them car friendly, and certainly not delivery van friendly.
Online shopping gives you a wide selection, instant access to customer reviews, easy price comparison, no hassle from salesmen, and other conveniences besides the painless shopping experience.
Maybe, though I have to say same day delivery is not really the most important aspect to me. For example we get a box of groceries delivered once per week, which is a huge time saver. In general, any kind of thing I can get delivered I will probably prefer - within ecological bounds, but I think delivery vans might not even be that bad. Certainly more efficient than people driving to the mall by car, I presume.
Perhaps the rest of Europe is better. As a UK resident I hope they absolutely crush the high street "experience" as it is in many large UK towns - which I find suffers from the exactly the same triumph of cost cutting over customer service that you're citing as a factor in the US. I'd rather see the high streets grassed over and turned into city centre parks. Or slabbed over and turned into parking, in some places. I would buy everything online and have it delivered given the chance. I already buy most clothes, shoes, electronics, media, computer hardware, groceries, and a lot of it comes from Amazon already.
I expect to eventually see big retail outlets where there is only stock for trying things out. No buying at the store but you could complete your online order while at the store and have it same day/ next day.
Does anyone here remember catalog stores? That may not be the right name, I've only been in one once, and it has to have been over 15 years.
You'd go in the store and look at the merchandise, all of it in glass cases. You'd use a little golf pencil to mark the order sheet they gave you at the door for what you wanted.
When you were done shopping, you'd give your form to the guy at the register. They'd ring you up and someone in the back of the store would collect all the stuff you just bought from the warehouse racks and bring it out for you.
I was amazed something like that existed in the 90s. I have a hard time envisioning that we'd see something like that again. I mean that's how grocery stores worked once, but the market changed with self-service.
I'll occasionally "window shop" at stores, but I only do that if I know the prices are really different. If it's a $10 difference and I'm already in the store, why wait for someone to ship it to me, even if it arrives later that day?
IKEA is still essentially this concept to this day, only the customer picks their own goods.
In the UK there is a big chain called Argos which still does this, right down to the employees fetching the goods. This might be related to the fact that big-box retail space in the UK is much harder to come by.
>Does anyone here remember catalog stores? That may not be the right name, I've only been in one once, and it has to have been over 15 years.
Oh yes. When I lived in a small town we had a Sears catalog store. You went in and ordered your stuff there and then picked it up at the same place (this is pre-UPS). There weren't enough people living in our tiny burg for anybody to operate a full-blown department store, but the catalog store only had a couple employees and allowed us to pick up and handle a reasonable selection of the things we could then order through the catalog. I think the staff would help you measure yourself so you'd get the right size when you ordered clothing.
Same here. Perhaps, given the right conditions, they can also make a bit of profit on items that require installation, service, or repair by setting the customer up with qualified staff or local repair-people.
Service Merchandise and BEST, right? I never figured out why they both went out of business. They should have been able to offer a huge inventory with hardly any overhead.
I think Lechmere (regional electronics and homewares store in New England) was similar, at least for some products. You could play with a display model, but to buy one you'd take a ticket to the counter and pay, then go to a pickup counter to get the actual item.
It left the store shelves looking a lot less cluttered than they would have otherwise been, and I suspect also protected against shoplifting.
Always liked that store, actually. They sold all sorts of stuff.
Taking your idea to its conclusion: A catalog store, (like Service Merchandise) which stocks only 1 of every item for demo purposes. The twist--if you buy it by scanning it with your phone or an in-store device, the store gets an amazon affiliate payout. Is the payout enough I wonder?
We have this in the UK still. A major one [Index] went out of business a few years ago (8?) but Argos still run this way. Indeed Tesco now have a version of this [for consumer electronics+household goods] in some of their largest stores.
$10 yeah. It is more if the difference was hundreds or the increased range of not carrying buyable stock gave you access to many times you didn't before.
There's no reason why this would be "big retail outlets" and not smaller boutiques. When you don't have to stock 5-15 pcs each of 30 flatscreen TVs, the local high-street enthusiast who actually knows stuff and can give you advice could see a renaissance. He doesn't even have to stock one of each, as "That one, but in 32 inches" is a viable order.
Makes more sense for Amazon to set them up themselves. To an extent this is what Apple stores are, although they have a limited range and stock for standard configs.
Similar to Dell's failed entrance into Asia, Americans are uniquely content with purchasing plenty of merchandise without ever physically examining the product.
Amazon has an absolutely amazing return policy. I've only returned an item once, but it was a $400 USB video adapter that didn't work with my monitors. I just printed out a UPS label, and returned it to the closest UPS store for free, and I got an instant refund.
Watch out of Amazon Marketplace though. I bought a copy of The Wire through there that ended up being pirated (and terrible quality), and Amazon would neither refund the purchase nor shut down the vendor, even after we got a letter from HBO confirming that it was a pirated copy.
Without looking I'd be nearly certain that Amazon isn't going to take the hit for chargebacks on the marketplace. Appart from costing a heap it would just be inviting fraud.
Yeah, I have found PayPal for all their supposed fraud protections to be quiet useless with preventing chargebacks. As a merchant you are also disadvantaged in that you aren't able to access any BIN/AVS data on the card yourself.
Yeah but outside the US we don't have UPS stores much. Posting a parcel here in the UK involves queuing at a post office for quite some time. Makes returns much harder.
Why wOuld I feel the need to inspect a book before buying it? I am working under the assumption that no pages will be missing. It's worked out fine thus far. You do realize that purchasing items over the Internet has been working well for some time now, right?
Purchasing from the Internet works fine until you have problems. Here in Romania you can't inspect the contents of the package until you sign for its delivery. Then if it's broken you get to keep the pieces, unless the merchant is nice. Of course, there's also the option of arguing with them, but it doesn't guarantee anything.
I bought a couple of years ago an LCD monitors from today's Romanian Amazon wanna-be and they assured me that if the monitor has any broken pixels I can have it replaced. The next day after the delivery, I discovered I had 1 broken pixel. I called them back only to find out that they can replace it only if it has 3 or 4 broken pixels as specified by some ISO standard. After this, I regretted that I didn't buy the one that I saw in a regular store and worked fine.
That's not true (probably you didn't knew). If you buy something online, you have 10 days to return it without giving a reason (and if they don't specify that clearly when you buy it, the period extends to 30 days). That's the law, it doesn't matter if they agree or not.
This was before any laws as far as I know. Also if I'm not mistaking, even with these laws the package must be intact. Otherwise I wonder if you can buy a TV or computer, use it for N days then return it. Do the same with the other stores until the first one forgets the repeat.
In the whole EU the customer can return items purchased online up until X days since the purchase arrival where X varies by country. There are some exceptions like digital items, custom made ware, DVDs etc. Check your local laws.
You're failing to account for the fairly sizable chunk of the world that's both not the US and not the third world. Such as Germany, where people do seem to prefer physically inspecting items.
China hasn't been a 3rd world country for some time. It isn't even close. Sure there are massive pockets of poverty (with 1 billion people, there are massive pockets of everything)...but visit India or parts of Africa if you want to see what 3rd world is.
If we were going by the original definitions of first world, second world third world. China would be a second world country since it was aligned with Russia and not the US.
Yes, there was a first and second world, it used to denote then Nato and USSR block respectively, that's how the third world got its name. See http://en.wikipedia.org/wiki/Second_World
I supposed you could call China not a 3rd world, but I've been to China, Nepal, and parts of Africa, and a lot of rural China looks like the poor parts of the other two. How people in poverty live in China is still quite a bit below how the impoverished live in western countries
I like to flip a book open that I'm considering at a store to random sections. Not one of 20 pre-selected pages offered in some online shop, but just random places, so I can see if it's my speed. This has saved me from purchasing many (seemingly) awful works.
> Why wOuld I feel the need to inspect a book before buying it?
To make sure the pages will not start falling out before you're done reading it ? I had that happen to me several times with cheap paperbacks litterally falling apart before I was even through the first quarter of the book
I think, non-dramatic european response may, in-part, be due to comparatively sparse product options on Amazon's european stores compared to its US .com offerings. I have used Amazon.fr while in Paris and have been disappointed by the limited offerings. Price is an issue, too: on Amazon.fr: when shopping for a TV, for instance, the prices were cheaper at Parisian retail stores.
Amazon used to consistently have the best price compared to the local retail stores (where I live in the US), but in recent years they've been tinkering with dynamic pricing, so if you buy something popular you're often better off checking around.
I can't complain about selection, though. Particularly if you live in an area without boutique stores, Amazon US is likely to have every product you can buy locally.
Highly disagreed. I think assuming that people want an in-store experience when the extra information from online shopping is such a net gain is just an old way of thinking. Look at some of the work coming out of the best retailers, are from some of the researchers at Accenture Technology Labs into the Store of the Future.
For many things, I care more about the information - does it work, does it fit, what do the reviews say? - than I do about touching the object. Even small retailers are starting to do this - if you look at http://www.marinelayer.com/ - they offer approximations of sizing based on your height and weight.
Germany is about as different a market as one could get in the "advanced" economies. Drawing any conclusions from the effect it has or hasn't had on German retail is essentially and fundamentally flawed
> Amazon has long enjoyed an unbeatable price advantage over its physical rivals. When I buy a $1,000 laptop from Wal-Mart, the company is required to collect local sales tax from me, so I pay almost $1,100 at checkout.
This is such an over blown argument. Sure, Amazon is ~7% (where I live) cheaper than traditional stores due to sales tax. But that $1000 Wal-Mart laptop has a $900 sticker price on Amazon, and most non electronic items are 20-40% cheaper than in stores.
If laws change and I have to start paying sales tax on Amazon, it won't change a thing about my buying habits.
Edit: They also have an inventory many times larger than any brick and mortar store. Whenever I go shopping, I have to choose between the least crappy option Wal-Mart decides to stock. On Amazon, I get exactly the one I want.
Indeed, when you look at surveys that ask people why they prefer shopping online, things like "24/7 convenience", "saves time", and "better selection" usually end up ahead of "costs less money, even after shipping" and taxes are usually a small part of that.
The lack of sales tax hurts local tax entities far worse than it hurts Amazon's competitors.
on Amazon you just search, compare, read reviews and click buy.
with brick and mortar stores, you have to drive to the store, park, then roam the store to find what you are looking for, then hope that they have it in stock before you buy, then drive back home. Even a small purchase ends up costing you an hour of your time.
and for large purchases almost always you have to wait 20-30 for the store associate to bring out what you want to buy...and you have to deal with a sales pitch for an extended warranty
Maybe for electronics but for clothes I don't mind driving to the store. Trying stuff on till I find what works. Asking knowledgeable staff for suggestions/opinions.
I think I've had one positive result from buying clothes online.
Huge problem is fit. Especially pants. So many things can go wrong. Too tight in the thighs, pants run short, pants are tighter than usual in the hips, weird fit in the butt, etc. . .
Feel/quality is a big one for me personally because I have some hangups with textures. If something has a certain feel it makes my skin crawl.
As for suggestions and opinions, I'm usually looking for advice, make sure I'm not committing any faux pas with my choices. For example, when buying some leather shoes I may want something that can be worn with jeans or with slacks if needed. If the sales associate is knowledgeable I will probably go with something I initially was tentative about or didn't consider.
Send out measuring tapes for free to customers (like Square's credit card readers). The tapes will be branded with your logo/URL. You let users store their exact measurements on their profile, and your company takes care of the rest (building an online catalog of well-photographed stock, all of which your team has gathered samples of and tested for exact measurements.
I ordered some jeans online, taking measurements from another pair of jeans. In fact I aggregated together measurements of my body, measurements of my existing pairs of jeans, and sizes from the labels of my existing pairs of jeans.
The first pair that came were too short, and a bit big at the waist; the company agreed to swap them for a shorter pair (but I had to pay to ship the old pair back to them). I couldn't tell if going to a two-inch-smaller waist would mean an uncomfortably tight waist, so I didn't ask them to send me a pair with a smaller waist. The fit is now at best acceptable.
I could have been more stubborn about it and done more exchanges until I was happier with the fit, but that would have meant more inconvenience - and the expense of shipping them back again. Had I been buying at a shop I could have tried on a whole bunch of pairs of jeans, and I think I'd be happier with the overall fit.
For comparison, I have successfully brought sneakers, t-shirts and sweaters online so I'm no stranger to shopping for clothes online.
Not because Amazon would be paying local sales tax, because their new business plans with 1 day shipping might(!!) bring them into more competition with local retailers. States putting pressure on Amazon to collect sales tax may have encouraged Amazon into this plan but based on their past opposition I think it has more to do with their guesses about the market.
The problem though is that a big company like Amazon can afford to worry about paying sales taxes properly. I worry about the electronic store that delivers though, being forced out of business due to increasingly complex sales tax reporting requirements. It seems to me it gives the online retailers way too much power over local competition when a department of revenue audit could be used to sink the B&M retailers.
I live in the same county as Amazon's HQ, I pay full sales tax on everything there, it hasn't changed my shopping habits one bit, amazon is just such a better deal most of the time.
How is it a false dichotomy? Look at the retail marketplace and it's a wasteland. You have Walmart at the low end, aggressively disrupting entire manufacturing industries in their quest for low priced goods. At the "high" end you have Amazon squeezing out B&M bookstores, electronic stores, etc. Amazon has demonstrated a willingness to tolerate extremely low margins (1-2% if not negative) to achieve marketshare. How can a small business compete?
The only outlier I see in retail is Apple, generating huge amounts of revenue from their physical stores.
This deserves a much longer response than I have time for at the moment. Ultimately the core answer is this: the long tail. That's why we shouldn't fear amazon overly much as if it were just an online walmart. The book and music selection at amazon is better than at any physical store and that's true for almost all variety of goods there as well.
However, there's more. Retail isn't solely defined by low margin businesses like buying canned food and imported low-grade durable consumer goods (e.g. the walmart/target scenario). In many parts of the country there is a trend toward high-end "boutique" shops of various sorts. In my town, Seattle, there has been an explosion of neighborhood butchers offering organic, grass-fed beef et al. But the same sort of principles apply to lots of different businesses.
If your core business is about getting interchangeable mass produced goods into people's hands you are going to lose out to the big boxes and to the amazons. If your core business involves a lot of customer interaction or requires special skillsets or can be decommoditized in some way then perhaps you'll do ok, both online and off.
Trying to compete on amazon's playing field is a non-starter, so the trick is playing on a different field.
Yes, but the market for bespoke goods and organic foods is limited. The amount of disposable cash available to chase these goods is limited, especially during a recession like the current one. And even during "good times" the small boutique businesses don't have the market reach to do much more than eke out a living. And market economics will force out smaller companies that can't fit into either stratum.
I think we forget how many people are employed in retail jobs across the US. In 2010, 14 million people were involved in the retail industry. As retail efficiency improves via WalMart/Amazon/Target, this employment will drop. And as a society, we aren't very good at forecasting where jobs will migrate.
Competition/efficiency helps consumers by lowering prices, but the job loss should be troubling.
I think the big advantage of amazon's tax-exemption isn't necessarily competition from physical retailer's, but rather from the online presence of those same physical retailer's. For example, I was checking out target's website the other day. They were offering some online only prices on things, I loaded an item into the cart, but at checkout, when the tax and shipping was added, I backed off because it was too expensive. On amazon, due to the no-tax and (usually) no shipping charges, I probably would have made that impulse buy.
Exactly. I live in Oregon where there's no sales tax no matter where I buy something. I still get most non-grocery items on Amazon. More selection, cheaper, and I love the reviews. I don't think I've ever been disappointed by a highly reviewed Amazon item.
But you're picking a fairly non-representative product for this issue. I doubt any of us are going to be buy a laptop from Walmart, looking at their stock, I don't think many other people are either. They have a couple but this is not their bread and butter (which actually is their bread and butter).
In almost no category that I've sampled has Walmart ever been the absolute rock-bottom cheapest compared to several places (Big Lots, Dollar General, local grocery chains, Amazon... even Target, believe it or not). People, however, can't go to Amazon to get infant formula, a car battery, ammunition, and a jar of pickles at 1AM and have it in hand immediately.
Walmart used to be about "made in the USA", then it was "always low prices", now it's about "live better". It's Walmart's ubiquity, convenience, and momentum that keeps them dominant (and their ability to loss-leader competitors out of business).
True, there will always be a need for immediacy in shopping. However, on three of the four you listed (Not sure if I want to know why you need ammunition at 1 am...) Amazon carries them, and at a reasonable to very low price. Most of the time I know I'll need something a couple days before. Instead of "I'm out of coffee, better go to the store" it's "I'm running low on coffee, better order some and it will be here in two days". Personally, I find that to be more convenient most of the time.
> Not sure if I want to know why you need ammunition at 1 am...
Zombies. That's the real mistake we're making with shifting all our purchases to Amazon and their just-in-time delivery. There will be nothing to loot when the zombie outbreak happens.
Unless you know where the warehouses are... But surviving the zombie apocalypse in a wal-mart store or a huge mall has much more style then doing in a damp worehouse in the middle of nowhere. That is unless amazon is changing that bit about zombie outbreaks, too!
The whole point of the original article is you'll soon be able to order all of those (except the ammunition) from Amazon in the morning and have them on your doorstep when you get home from work.
This is already happening in China. Because of the nature of shipping companies here it's not unusual to buy a product (typically off of http://taobao.com) and get it later that day or the next day. Many of these businesses are based in Shanghai and if you live there delivery happens nearly instantly. One online shop, http://cheers-in.com/ delivers cold beer in Shanghai in 1 - 2 hours from an order. Stuff like this is absolutely fantastic and it would be amazing to see it come to the US.
Great for consumers like us, but terrible for all of the people who work ridiculous hours under constant stress on warehouse floors or do deliveries day in and day out. I try to buy from brick & mortar shops purely because running a shop is a job that has a shred of dignity left in it.
Yes, everyone who deals with the general public knows how unstressful and dignifying that is. That is, besides having to deal with blatant sexism[1], extreme ignorance[2], elderly genitalia[3], stealing[4], destruction of property[5], physical violence[6], bigotry[7], etc.
Right, so you have 7 links to the same site, all written from the point of view of the wronged assistance. Wow. If that is not proof of nothing, then I do not know what is.
You should know that Amazon bought Kiva Systems earlier this year, so they'll be replacing human picking with efficient robot picking over the next couple of years.
Your job becomes to stand there on a foam mat and move whichever item the laser points at from the cart to the box. This job will almost certainly be automated in the next decade as well, with something like FlexPicker.
It's not intended as a proof. If you need proof that these behaviors exist, I'm afraid you'll have to spend some time in retail spaces.
Personally, I've seen all of these - and then some - simply by visiting shops in my daily life and knowing people who've worked in those places, and I'm reasonably sure that most people have as well.
Most comments on my post are supportive, for instance this one:
"You seem to be saying that as a defense of Amazon's treatment of warehouse workers. It's not. Read the Mother Jones article linked above [...] the unseen and unregulated treatment of the hidden workers who make our amazing lives possible is a huge, unsolved problem in the world."
But I'm getting down-voted. Do people seriously think that supporting mass mistreatment of workers is o.k.? I'm sorry, but automating factory floors is not inexpensive enough to happen on a mass scale yet, which means that consumer pressure for faster shipping = inhumane working conditions for the people who pack the boxes. This is a legitimate dilemma and I meant only to point out that out.
Yes, it's better than the alternative for the people working, since they're working there after all. But that doesn't make it o.k.
Yesterday I ordered a used book from Amazon, and remembering the static shocks in that Mother Jones article (btw, wearing a metal thimble to touch the shelves with seems like it would fix those shocks), I was faced with a moral dilemma. But how was I to solve it.
Pick one of the higher priced used book options? How do I know they aren't using the same distribution warehouse and just pocketing the difference.
Without a "doesn't treat workers like crap" seal of approval, I don't see what I could have done. I'd love to subscribe to a white-list/black-list of sellers on Amazon for various ethical measures but it isn't there.
I can't help but think that both of those jobs (warehouse/delivery) will be obsoleted in the near future with the development of more advanced robotics.
Maybe, but technocratic types have been proclaiming the imminent death of human involvement in logistics, at the hands of robotics, for many, many years now.
The nature of this is actually a bit different here (here being China). Undoubtedly, some of these products are coming from distribution centers. However, many of them come from small brick and mortar shops and they use this as a means to augment their business. It's pretty common for product pages to also feature the shops where the products are being sold from.
The distribution is generally done by courier companies. It's usually a guy on a bicycle with a bunch of packages that ends up either picking up the package or delivering it on the end. I've seen just about every means of transportation imaginable used to transport packages.
Of course, there are still people losing out and there are still distribution centers in the middle. Plus, there are the people working on the factory floors that are making the products in the first place.
Ordering online is incredibly convenient and it gives access to such a wide range of products that I can't imagine it going away any time soon. I think that in any system someone is going to end up losing out, but hopefully in the future the losses can at least be minimized through robotics and other technology.
You seem to be saying that as a defense of Amazon's treatment of warehouse workers. It's not. Read the Mother Jones article linked above. When people are working in terrible conditions, and they believe those conditions are better than the alternative, that is not a good thing. It's heartrending.
I say this as someone who hates shopping in retail stores and can't wait to buy everything on Amazon. But the unseen and unregulated treatment of the hidden workers who make our amazing lives possible is a huge, unsolved problem in the world.
My point isn't that conditions are good, just that the alternative must be worse. By not shopping at Amazon you're taking the warehouse jobs away from those people and pushing them to whatever that worse alternative is. "Chemotherapy makes me sick, so I'll die of cancer instead".
This would only make sense if the sole effect of not shopping at Amazon was to end warehouse jobs. But the alternative to "shop at Amazon" isn't "set my money on fire." If I don't shop at Amazon, I'll either buy the same things somewhere else, or spend the money on something else, or invest it in something else. When you (and I) shift purchases to Amazon, we're voting to take jobs away from [whoever's involved in getting stuff to us via retail] and create jobs for [whoever's involved in getting stuff to us via the internet].
Part of what I'm responding to here is, your argument seems to boil down to: "it's OK for me to benefit from these people's suffering, because they aren't being physically forced to do it, so I must be doing them a favor." That's letting yourself off far too lightly. Our standards for which businesses we encourage should be higher than "do they have to physically compel their workers to show up" -- unless that really is the best we can ask for.
Perhaps the alternative is worse because businesses are routinely given tax breaks/benefits in the hopes that they'll create jobs? This corporate welfare rarely works, but is incredibly popular with some municipalities. You never see a mayor or City Council offering tax breaks to mom and pop businesses. The end result is megastores that have unbeatable advantages.
Amazon failed to collect/remit ~270M in sales tax in Texas and has owed millions for years. So what did the state of Texas do about it?
They struck a deal to erase the 270M owed, as long as Amazon starts collecting sales tax starting 7/1, create 2000 jobs and invest 200M in Texas. They were likely already planning more infrastructure in Texas, but threatened to reverse course and pull out of the state entirely.
The way I see it, Amazon bluffed the state of Texas to the tune of 270 million dollars and all I might get out of it is next day delivery?
Companies are only required to pay state sales tax if they have a physical presence in that state. Amazon wasn't bluffing, Texas was. We went through the same thing in California. Amazon agreed to pay the sales tax, but only after it had decided to open distribution centers in the state.
I think the distribution center was owned indirectly, through some sort of holding company; that was the linchpin of their whole argument.
Woot was probably just one of the things they were threatening to close down and move out of state if Texas didn't give them a break. And I'm sure they had an argument ready as to why Woot wasn't a tax nexus for Amazon as a whole; there's a lot of really arcane rules that go into determining nexus.
The real losers at the end of all this are going to be the tax-free states, who ended up getting a lot of Amazon (and other mail-order retail) business because putting a warehouse there wouldn't risk triggering taxation. But if the tax loopholes are closed, there's not a lot of reason to set up shop there. They are going to be the losers in the end, I think.
I do as well. And I actually look through my bank records to make a reasonable estimate of how much I've bought online to get the number as good as I can without having to actually track everything all year.
My businesses do. Since we have to keep all the records for the Feds. Here in Washington it is nice to have Amazon collecting the sales tax. It leaves less use tax paper work for us.
I recently got an email from Amazon stating the amount I owed sales tax on in my home state of Tennessee, with a link to a tn.gov site where I could pay. Amazon actually seems to ship a lot of things to Memphis, so I'm not sure why they don't collect it directly.
A general policy that "online stores pay sales tax" also benefits Amazon vs. small internet retailers.
A while ago I sold a few bumper stickers online and ended up using cafepress. I could have made a better profit by printing the stickers in bulk and mailing them to people, but I'd have to spend $100+ on paperwork just for the privilege of paying sales tax just in case I sell any to New Yorkers.
If small internet businesses had to pay taxes to the 40+ states that have sales tax plus to all the other jurisdictions (cites, counties, who knows what) in the U.S. it would be almost impossible to sell stuff and comply with the the law.
Actually a general policy that "businesses that deliver things pay sales tax per jurisdiction that they deliver thins to" (the way "online stores pay sales tax" is implemented) benefits Amazon vs small local retail stores that deliver.
Where I usually live in the US, there are at least 6-7 tax jurisdictions within 20 min. by car. For businesses in Wenatchee that may deliver within an hour's radius, there are a very large number of tax jurisdictions. Most brick-and-mortar businesses ignore the rule and figure if they don't tell the state they are delivering things, they won't get looked at too closely, but it means they are in violation of the law.
The tax argument comes up in every discussion like this. It's a nice advantage, but I seriously doubt their sales are very different in areas they charge tax and those where they don't.
I have to pay Amazon sales tax because they have a distribution center near me. I remember a few years ago I noticed that they were charging me tax when they didn't used to, but it never figured into my buying.
The truth is Amazon's prices are generally better anyway, so they still hold an advantage. Shipping was always a bigger problem for me. I would keep lists of things to get and then when I decided I wanted really wanted something I'd order enough to qualify for the $50 or $100 order free shipping.
Now I've had Amazon Prime for a few years, and it's fantastic. I don't have to pay extra for two day shipping, and overnight is just $5 or so. Two day is almost always fast enough. Since Amazon has made everything so easy (and I don't have to worry about shipping or waiting too long) I buy more than enough for Prime to pay for its self.
It'll destroy larger B&M stores but I doubt it'll fully outdo local specialty shops. What you'll see is a stratification between hyper specialty B&M that sell luxury items only a tiny subset of people want, but are willing to pay out the nose for, and places like Amazon filling the role of Target and Walmart, being the catch-all for everything else that most people need on a week-to-week or month-to-month basis. While you might be able to buy a certain brand of organic mustache wax on Amazon, I don't see a day coming where they'll be able to do that same-day.
For most people that think this is going to wipe out the B&M stores ... Have you guys been outside of Mountain View lately? I mean, this is just the most ridiculous thing; it's just nonsense. Has anyone here ever been to a Wal-mart? You think all those people are going to say "Nope, just buying next-day shipped products from Amazon now." It's just not serious.
Never been to Walmart, no plans to either, why would I want to. I plan my purchases a few days in advance, know what I want and like that amazon makes it show up at my desk a couple of days later. Haven't shopped in a regular retailer for years. Except groceries, which I buy fresh every day.
OK, so what? I don't really understand this response. You're a perfect person. The height of physical fitness, nutrtious/organic eating habits, superior mental acuity, don't have any need for "The Man" or Big Box retailers, have ever seen a television, much less ever seen a "cable program," etc.
Whatever. But billion dollar retail industries are not built on great folks like you. They are built on probably what you'd consider the "Great Un-washed." :)
B-school 101 stuff. If we understand how the world really is, we can make more successful businesses because we will understand the market how customers think. We can't let our personal perfection cloud our judgement about the world as it is. :)
There's certain classes of non-luxury stores that should survive OK. If I need to find a screw for my (insert doohickey here), I'll go to Ace hardware, where I can try out the different screws in their bins, then pick the one that works. The same logic applies to lots of other hardware store type items.
Like shoes ? and clothes ? those are starting to move online using some interesting technologies[1][2] and there's no reason to believe that we won't find a way to help with buying other physical items.
[1] using the kinect to virtually measure clothes on your TV.
[2] using a variable robot to show you how a specific garment would look on your specific measurements.
The Zappos (owned by Amazon) model is kind of interesting too. They actively encourage you to return shoes that you don't like for any arbitrary reason, thereby making it easier at least from the consumer's perspective of avoiding the situation where he/she would be stuck with a purchase that doesn't fit them or something.
You're making the assumption that you won't be able to purchase a box of assorted screws cheaper than making the trip to the hardware shop. If you could purchase an assortment of screws that essentially spanned the entire range of the hardware shop, you might change your mind.
Another part of retail is that different kinds of stores support each other. Anyone "making a shopping run" usually visits a number of stores, especially in the suburbs/exurbs where they are a distance away. The few stores people have to visit, the fewer "runs" they make and the more pressure they have to make do with stuff online. Just as much, when some of the stores in a retail complex go out of business, the complex suffers. The total number of complexes has to shrink and by the time that happens, some portion of the remainder is further disrupted.
Retail is in trouble. I'm in a major metropolitan area and it is very visible.
As an Amazon Prime subscriber who bought mustache wax from their affiliates on two occasions, I have to report very disappointing shipping times. Living in NYC and ordering in the morning, I expect delivery the next day. Alas, my mustache wax came three days later. Part of blame has to be placed on Amazon's affiliates. If the merchandise is not in an Amazon warehouse, then what can Amazon do to speed up delivery? I foresee a future where Amazon has deals with local specialty retailers to ship items that are rarely sold that wouldn't make sense to warehouse for Amazon directly.
Also, amazon is kind of skeevy; I'm very leery of buying food, cosmetics, or toiletries from them because they make it really hard to tell from whom you're buying stuff. I'm happy to buy eg usb cables from the cheapest vendor, but I don't trust any of the chinese knockoff shit if it's going to regularly touch my skin or be eaten. Particularly since china appears to have no real food safety laws and poisoned 300k of their children [1] with the same well known techniques used to fake out protein readings on milk they used to kill thousands of american pets [2] the year before. China even went so far as to hurt more children by delaying a recall to avoid embarrassment during the summer olympics! If I'm going to buy food or cosmetics on amazon, they need to be much better about communicating from whom I'm purchasing and what was done to make sure it isn't a knockoff.
And knockoffs are everywhere on amazon's site. I've wanted one of these cool suck.uk bottle opener keychains that looks like an old school key for a while [3] but their shipping charges to the US are too expensive. So I found it on amazon [4]. If you read the reviews, it's full of complaints about knockoffs or the steel snapping. And I've seen it sold for as little as $2.99 with shipping while amazon sells it for $9. Adding to the skeeviness, the cheapest vendor of that item changes all the time, and for quite a while amazon didn't sell it directly. I finally bought it from amazon proper and I'm hoping they got the actual item and not some knockoff themselves, but who knows. Shit like this makes it hard to be willing to buy food on amazon.
I buy food (dry goods: cereal, granola bars, coffee, etc.) from Amazon all the time. It's always clear who the item comes from, usually a manufacturer you've seen at the grocery store, and I've never gotten a knockoff item. Well, that I know of. Hmmm. You know, the very idea of knockoff food items from Amazon is so deeply disturbing I'm going to entirely ignore the possibility.
They show the seller, and I agree a lot of the Marketplace sellers are horrible. I pretty much stick to Amazon.com LLC (i.e. real Amazon) and trusted sellers (Adorama, J&R, ...) for most products.
I wish there were a way to set a flag in your account to ONLY show Amazon.com LLC products.
Manufacturer is OXO, but it says "In Stock.
Ships from and sold by Amazon.com. Gift-wrap available." below the price. That means it's sold directly by Amazon.
You can also go to "more buying choices" where it is even more transparent.
I think that's sort of overstating the problem a little bit, although I agree that Amazon shot its brand in the foot with the way it has implemented the "Marketplace".
The whole "Marketplace" concept might have seemed cool back when everybody was trying to be an eBay competitor, but I'd be happy if they just ditched it, or moved it over to some subsite-ghetto where I don't ever have to see it. When I go to Amazon.com, I want to purchase products from Amazon, not from some random guy in a basement somewhere, using them for payment processing.
That said, they make it pretty easy to tell who you're buying from, at least when you get to the point of checking out. Sometimes if you're moving quickly, you might not realize it until then, and I have definitely abandoned would-be sales when I've realized an item is coming from a Marketplace seller rather than Amazon itself.
I bought 2 things on Amazon this week, both with free 2 day shipping with Prime
Item 1 spent 13 hours on a UPS truck driving around my city and was delivered about 7pm in the evening 2 days after ordering.
Item 2 was delivered 14 hours after purchasing by Amazon Fresh at 9am.
For the same price of shipping, which service would you rather have?
EDIT To Add: The delivery guy for the 14 hour item works for Amazon - the whole experience was produced by Amazon without needing a third party. UPS is another company that will be in trouble if Amazon can make this scale.
UPS could also benefit greatly if they play their bargaining game right and form a good partnership. Breaking into shipping is difficult, even for a company as large as Amazon.
It depends on how well I know the item. If it's a commodity where I've bought exactly the same thing before (Charmin Extra-Strong Toilet Paper), then price rules all. If it's a new item that I'm not sure what I need about it (chef knife, bar stool, etc.), then seeing the item in person helps determine which item I need.
I'm not sure if you've used Amazon's return system before, but it's absolutely immaculate. In my opinion, this is more an issue of perception than reality - in many ways it's easier to return things to Amazon than to your local store.
Every time I've tried returning an item less than $20, they don't make me send the item back in. They just give me a refund and tell me to keep the item.
Amazon charges you for return shipping (or obliges you to use your own shipping, e.g. USPS) depending on the reason you are returning an item. If you are returning it just because you decided you didn't want it, they don't pay to take it back.
That was my experience with some housewares stuff, about three weeks ago. I decided to take the item down to the Post Office to ship it back rather than using Amazon's label, because it was cheaper that way. (If I'd used the label, they would have deducted $8 or something out of the amount they were going to refund me eventually; USPS was something like $4-5.)
If amazon decides to built its own transportation organisation, yes. But such a thing would make most sense in metropolitan areas, in rural ones I'm not sure. Maybe here it's better to use the existing specialist. But then amazon built it's own top-notch distribution and warehousing infrastrucrure, so maybe I'm wrong.
This is the trojan horse. Once Amazon has a large presence in each major centre, the next logical step for them is use some of their massive space as a showroom (think Ikea but on a much larger scale).
[Edit: To clarify, the showroom and warehouse would be in the same complex but separated. Shoppers + heavy merchandise + fast moving robots is a recipe for disaster.]
Then they can satisfy both the "I want to see it before I buy it" crowd as well as the "I know what I want - just give me the best price" crowd.
Mark my words. Amazon has the Costco's, Walmart's and Best Buy's of the world squarely in their crosshairs.
*Of course there will of course always be specialty categories that are too niche to fit in this model, thus many specialized retailers will still exist.
Interesting idea, but I seriously doubt Amazon would do this with their normal warehouses -- maybe paying sales tax and thus being able to have presence in major cities would let them set up dedicated showrooms for certain kinds of high-lifetime-margin products, like Kindles and maybe a Kindle Phone, though.
Big warehouses are highly automated (especially Amazon's), essentially unsafe for untrained people (forklifts, robots), and potentially at risk for theft. Not the kind of place you'd want customers milling around. Amazon is more likely to promote their existing easy return policy -- buy 3 pairs of shoes and send back the two you don't like -- vs. letting people into their warehouses.
Small, Apple-store style showrooms, or partnerships with someplace like Starbucks, would make a lot more sense. The lifetime value of a Kindle user far exceeds the cost of a Kindle (I probably have 200 x $10 books on mine at least), and it's the kind of product where try before you buy could be important. I'd rather have a bunch of Kindles and Kindle Fires in a cafe setting where you could check one out for a few hours, buy or get free drinks, and comfortably use the devices in an ideal environment, though. This could work for all the Amazon first-party products.
Maybe there are third-party products which would benefit from this, so Apple store sized showrooms with rotating third party stock (and fixed first party stock) could work, but they are really unlikely to be the existing warehouses.
To clarify: the warehouse and the showroom would be separate but contained in the same complex (much like Ikea). Each person has an app on their phone to record their purchases while browsing the showroom. When the shopper is done some items are retrieved robotically for them to pickup while some items (or all items - it's up to the buyer) are delivered later in the day.
I don't believe the robot technology is quite yet up to this. But in 5-10 years it should be.
This setup would feature primarily first party products but it would also be possible for third party products to be on display in the showroom (to be delivered later from a different location).
I agree that Apple-sized showrooms with mid to high-end first party items would be the logical first step.
If Amazon can deliver in one-day, why even worry about stock at these showrooms. Find something you like, order it, and it's delivered to your door the next day.
Certain huge items are obnoxious to purchase, evaluate, and then return if unsatisfied -- like 80" LCD TVs. Not sure what percentage of Amazon that is.
Also, many people feel "bad" about buying and returning. The "buy 3 pair of shoes, return 2" where you know you'll only keep 1 from the start feels dishonest in a way, although I'm more than happy to return something which isn't as described or is otherwise unpredictably unsatisfying.
I actually do a mental calculation before buying something which I might return, trying to figure out if Amazon is better off by me buying it (given my odds of returning it, and the costs/residual resale value if returned), and if the return is due to a bad description (Amazon's fault, and thus ok to return if the product turns out to match the wrong part of the description, like when it is internally inconsistent with the photo or whatever).
"Which of these two should I buy" is sometimes addressed by buying both, but buying 10 items and returning 9 is probably going to get your Amazon account flagged at some point.
More technology driven hyper-deflation on the way.
The future: high inflation in food, energy, fuel, and consumables, hyper-deflation in everything else except to the extent that it depends on or consumes the former.
The future: high inflation in food, energy, fuel, and consumables, hyper-deflation in everything else except to the extent that it depends on or consumes the former.
The reply below your reply that says "The act of predicting the future alters the future" indeed expresses a truth about economics. But as a person who once predicted the future, by writing down my predictions and putting them (with classmates' predictions) in a time capsule that was opened thirty-one years later, I'd like to explore this process of predicting the future a bit more.
What exactly do you mean by "high inflation in food, energy, fuel, and consumables." Do you mean that in the developed world it will take more units of time at typical paid work to buy a meal or light up a room in 2050 than it does in 2012? That suggests a bet, a bet on which I would be willing to take the side contrary to your side. (I think so, as soon as I figure out if that is really what you are predicting.) What is included in the category "consumables," and what is not?
What is your definition of "hyperdeflation"? Does that basically mean that you or I or anyone else in the developed world will be able to obtain more and more of that "everything else" (WHAT everything else?) for fewer and fewer units of time spent in paid work? What kinds of goods or services do you have in mind here?
Except to the extent that stuff like this cannibalizes existing resource use (e.g. all the people driving an SUV to the shopping mall who instead buy with one-click), and to the extent technology & automation end food/energy/resource scarcity as well (which is underway, but hard to tell timeframes)
What else could you expect when the explicit goal of monetary policy is to fight natural deflation? (how does any upstart win in a competitive market? doing better things cheaper). The costs of manufacturing and services are dropping the quickest, so feedback-driven monetary inflation causes the price of raw resources to skyrocket.
Isn't this just one step away from Amazon just being another brick-and-mortar? If this is the case, is not having an actual store that is accessible by customers (and coincidentally, the neccessary staff), that much of a operational advantage?
Or is this just a case of the more efficient company (Amazon) beating out less efficient companies (Best Buy, Barnes and Nobles, etc...)?
It's not just the staff, I think -- it's the real estate. Amazon doesn't have to have conveniently located distributed locations and the inventory headaches associated with them; they can just have one gigantic warehouse in Jersey that provides goods to all their customers in Manhattan.
No it isn't, because it's markedly less efficient. Amazon is, literally, taking the concept of the "store" and putting it online - yes they've done that already, but the instant gratification of receiving your item same-day; that's a true shopping experience that you, previously, could only really have with Brick and Mortar shops.
Instead of physically shopping inside of a store where you will have fewer selection, you shop online with a lot more selection, a powerful search based interface, recommendations, reviews, etc...; then have the items efficiently sent to you same-day.
Amazon is very successfully grounding the "internet" in the real world - and they are eating quite a few lunches.
I don't think Amazon would ever go the brick-and-mortar route, but having these facilities in major metropolitan areas might enable it to have a lot of 'Pick up at location' kind of shopping.
You fail to realize how tremendously expensive it is to operate a retail environment. The real estate, the overhead, the heating and cooling, the cleaning, the customer associates; It's absolutely huge compared with a warehouse.
Amazon is playing a complicated but more rewarding game with millions of moves and therefore ample opportunities to innovate, while old fashioned brick and mortar stores are stuck in a simple game with little to no room for more innovation.
"I have no idea how Amazon made any money on my order (the whole bill was less than $30) but several people on Twitter told me that they’ve experienced similarly delightful service."
Therein lies the problem. At some point there will have to be revenues to justify the company's valuation. I suppose their goal is to initially obliterate all competition in entirety and then have everyone purchase from Amazon. I'm doubtful this will work. Of late, there has been a trend towards experience stores - with manufacturers creating their own stores instead of distributing to retailers. Many luxury brands do this and even some non-luxe ones, such as Samsonite, have been getting into the game. There's some value added here, and it's something Amazon won't be able to directly compete with.
I think you might be underestimating amazon's position. They already have massive revenues, and better mindshare than most of the brands they sell. They aren't some new startup, they bring in millions of dollars a day and are historically proven to be a successful company. Your post would make sense if amazon were a year old. They aren't. They've been doing this for a long time now and are very very good at it.
Q1 2012 Amazon had $13B in revenue and basically broke even, Costco had $23B in revenue, and Walmart has $113B. Where are you getting your financials from?
While making very little profit; that's not infinitely sustainable in retail where margins approach nothing. Amazon 2012 profit was $650M, Costco $1.4B, and Walmart $16B. If Walmart decided to go zero profit they could drive out a lot of competition and get a visit from the DOJ...
Amazon has a great story to tell the DOJ:we've not reduced our prices, we're working on offering better service: prime service is expensive, and we're building costly warehouses and bought a robotics company, and investing in pack-stasions.
This is crazy - I ordered 3 things from Amazon today through Prime and started wondering if/when a day would come when you'd have same day delivery from Amazon and what it would look like. I figured it would happen someday, but thought the complexities would be too much to handle for a while. Looks like they're way ahead of me. This is why I love Amazon.
I think this will come into it's own with driverless car technology. Once we combine the current automated warehouses with automated delivery the timescale and costs will drop dramatically.
I think the implications of emerging technologies are greater than most people realize. Between driverless cars, voice-recognition systems, and the Internet, it doesn't seem far-fetched to imagine saying, "Computer: deliver one large pepperoni pizza and a Sprite", and having it appear on your doorstep within 15 minutes. All without human intervention.
And then we have 3D printing. This is one tech that IMO is going to come fast as companies continue advancing this tech. And then we can swap delivery time for print time on basic items!
The only advantage local retail stores have is immediacy. You can buy it as fast as you can drive there (and park/find it in the store/wait in line). Amazon has almost every other advantage. Ive come to find shopping local retail stores more and more frustrating. Shopping without reviews or videos, and having to flag down employees to help you locate items. It's really hard to beat online shopping with one day or two day shipping. Not impossible, but challenging. Target, Best Buy, and other generic mass retailers would be hurt the most
Yeah, but most of the time your local retailers will not have the right product in stock (unless you are very vague about your requirements).
On top of that, local stores are annoying: it takes time to go there, you need to deal with traffic, weather condition, sometimes shop employees being too intrusive and wanting to see you additional services (or recommending you bad products), waiting in line just to pay. etc... It's just not worth anymore.
Amazon delivers at my door usually 2 days after I order something. In case of defect they even come at my door to pick the malfunctioning product.
They are clearly doing what's BEST for customers. I don't even understand why local shops who have stores a few kms away from me don't even offer delivery services. They don't even think about improving anything, and they well deserve to disappear. No regrets.
No, local retail stores can be (depending on what you're shopping for) a lot more fun to shop at. You get to talk to salespeople and other customers, and you get to browse around the store.
Now most shopping isn't fun. Toilet paper? click But if I decide I want to take up drawing? I'm going to drive to a store, look around, and have fun.
But I certainly agree with your last point. As I see it, the advantage of Amazon Prime is that I never have to go to Target.
I just couldn't care less about reviews and those videos. It's just self-selection, doesn't usually tell me much. If I'm shopping for groceries, I don't need reviews, thanks. If I'm shopping for electronics, if it's a small purchase, I don't need reviews. If it's a bigger purchase, I will read specialty review sites, not what Tom the hipster or Joe Bob has to say. Ever read YouTube comments? That's basically what I think of user reviews from the general public. I don't tend to flag down employees at Target though. :)
Maybe this will put a small dent more in the profits, I don't know, but I don't think it's going to be revolution or anything.
Theoretically, being able to try the product before purchase is another advantage. Particularly for me where it seems no one complains about terrible user interfaces or noise anywhere near enough in reviews.
But in practice, outside of clothing and furniture, very few stores are set up to allow this almost at all. So screw them.
Returning stuff adds additional complexity for consumers (you have to repack it and drive to a drop-off point) and eats into profit margins, especially for non-clothing items that can no longer be sold as new.
Because the last mile is always so expensive and subject to theft, I think we'll eventually have a centralized local pickup location for all sorts of small deliveries. We'll just stop there on the way home if something has arrived.
That will even include your postal mail if the postal service ever wakes up. There's no need to physically deliver mail every day if people could see what mail they've received remotely and can pick it up or request deliver if they can't leave home.
In the old days, they had milk boxes. One house I lived in as a kid had one. There's usually a door on the outside and a locked door on the inside. Here's one:
They are offering same day delivery in some markets today, including Las Vegas. I've used it twice, with the $10 same day delivery being less expensive than other expedited shipping options. It was very cool having a courier drop a package at my door with my purchase the same day I bought it. Even with $10 delivery the final price was cheaper than buying from a retail store at retail prices.
I think with these test markets, Amazon has proven to themselves already that the idea works. I know that I'm very happy with the results so far!
They've been working on making the idea work in Seattle for years now. It has been fascinating to watch the many different iterations and experimentations. To say that they're just building warehouses isn't even close to correct, they are proving their business model, startup-style.
According to wikipedia, Amazon has been operating Amazon Fresh since 2007 (the article draws a direct comparison: "It is reviving the business model of ordering groceries online for home delivery first popularized by such companies as HomeGrocer.com and Webvan in the late '90s.") and seems to now own Webvan.
I'll leave analysis up to somebody else, but I find this interesting.
I disagree here. Amazon has clearly proven the market with their Amazon Prime membership; Amazon has massive mind share (I don't even know what Webvan is/was); Amazon will also only improve operating efficiency by building these warehouses with the automated inventory fulfillment system (which has the nice side-effect of making customers really happy) which over a long period of time will pay for itself (not discounting the happy customers buying more and more products through Amazon).
They've had same day delivery (local delivery) for quite a few product categories in the Seattle area for some time with Amazon Fresh trucks. I've bought a book recently with same day shipping for an additional 3.99 (Prime) that was on my door step when I arrived at home.
Webvan massively overbuilt/overspent in a fairly typical dot com era story of losing massive amounts of money to try to own a new category. Peapod leverages physical grocery businesses through partnerships. It's much less ambitious in a lot of ways. The fact is that grocery delivery has been available in urban cores forever. Peapod just expands on that a bit, adds online ordering, and treats it as a premium service (ie. you pay for delivery).
Is the idea then that Peapod isn't doing anything particularly novel since they're basically just a delivery service for existing stores, but Webvan and now this new Amazon stuff owns the whole supply chain, making for a qualitative difference?
Remember when home videos were going to obliterate movie cinemas? Who would go out when they can watch a movie on their couch?! For a while too things dipped. Then people realized there was a social element to going to the movies that made it a compelling experience. Add to that iMax and 3D etc. Heck, who would bother going to an Apple store when you can buy everything online!
Amazon is to shopping what McDonalds is to food. We all know what happens when you have McDonalds every day.
I rarely go to the movies because I can watch netflix on my couch (and save $20-$30). Movie attendance still grows because of economic growth, but in relative numbers it's falling (down 4% in the US/2011).
"I’d gotten next-day Saturday service for free. I have no idea how Amazon made any money on my order (the whole bill was less than $30) but several people on Twitter told me that they’ve experienced similarly delightful service."
I've got news for you- they didn't make any money on your order. Amazon is profitable but has razor-thin margins on the whole. They take losses on several markets, including Prime, gambling that the entire seamless, low-cost user experience will cause enough people to spend enough money to push them over the edge of profitability.
I for one have serious doubts about whether what the author describes (based to a large extent on pure speculation) would be a profitable business model. It's one thing to keep huge amounts of inventory in centralized locations and ship items out across the country over the course of days. It's quite another to stock all that inventory redundantly throughout every state. So if I want to buy a specific pair of shoes that I can't find at Foot Locker, is Amazon going to stock 50 pairs on the off-chance that somebody down the street is going to buy them? Probably not.
In fact, the USPS runs a similar business model. One would then logically think (if this article is any indicator) that UPS and FedEx would go belly-up. I mean after all, if I can distribute mail to somebody's house for $0.50 in a day, how could UPS and FedEx compete with that? The reality is just the opposite. UPS and FedEx enjoy such enormous margins when compared to the USPS, that they want no part of the markets in which the USPS operates and it's too late for the USPS to compete with UPS and FedEx on parcels and important packages. I don't agree with the author's prediction at all.
When Amazon lets me physically try out the feel of things while browsing them, see how well built a tool is, or how a piece of clothing fits, it might have a chance of killing local retail.
Until then, I like to see which pants fit best, which knife is most comfortable in my hand, which tablet is most responsive. Yes, if I already know what I want, I'll go to Amazon. But if I'm not entirely sure and I want to compare things, I'll go to a local store.
At long last, the dreams of the Coyote ordering from Acme and getting immediate delivery of his latest gadget to catch the Roadrunner come closer to fruition.
I don't think it will destroy local retail. All the businesses within a 10 minute walk of your home will be fine, it's still more convenient than same day shipping unless your very busy. It's the businesses slightly outside the core of the town that will suffer. If it takes you 30-60 minutes to drive to a store you might order same-day from Amazon.
The biggest challenge I see for amazon to come is, besides competition and makets and all that their ability to handle their whole supply chain. Amazon already proved that in terms of warehousing and distribution they are really ggod. but if there is one thing that comes with an ever increasing number of arehouses, especially if you want same-day delivery, is a ever increasing inventory level, in both number of items and value.
So from the outside one cornerstone of a strategy like this would be inventory management at at least regional if not even warehouse level. It's do-able, no question, but difficult. An advantage amazon has here is a huge history of point-of-sales data for most important regions they are operating in, no matter if there actualy is a amzon warehouse or not. And if they don't have (enough) point of sales data, well then it's to early to offer same-day service and all that.
All amazon has to do now is to keep operations up to the task... :-)
The other day I ordered something from Amazon, and it showed up in a small cargo van, delivered by a guy without a uniform, and in a package with no UPS or FEDEX label (or any other delivery label I could discern apart from the amazon labels).
Was this some kind of test for Amazon ran delivery from a local warehouse?
Amazon often uses smaller regional delivery companies. I assume they're cheaper for the areas they serve. In the DC area, a lot of Amazon orders are delivered with Lasership, which pretty much fits your description. They drive shoddy white cargo vans with PACKAGE DELIVERY slapped haphazardly on the side. Their deliveries often don't make it. Once they delivered my package 30 miles away for no apparent reason (completely unrelated family name, no similarities in address, etc.). Amazon's use of them seems to have declined recently, but they're still using them and it really doesn't seem like a good idea.
Amazon does a bunch of drop ship orders. If a vendor gets a local order, I can imagine they may decide to save on shipping by sending an employee to hand deliver the product. Or it could have been a local courier service (same day delivery uses couriers).
The package I had delivered today came via Amazon Fresh - the grocery delivery service they are testing in the Seattle area. It looks like they're also using it for non-Fresh items too for small, commodity items like CDs
This is Amazon owning the entire process from order until the item is in my hand.
I use Amazon fresh all the time, and it's possible to get all sorts of non-grocery things through it. I think it's whatever Amazon.com stuff they have available in the local warehouse.
Workplaces should be an easy place to get same day delivery. At a large office you probably have 100+ Amazon orders each day that conveniently get delivered by the company's staff. Amazon could have their own truck just drive straight to the office building without getting UPS involved at all.
OK so pretty soon Amazon will have same day delivery. That's going to be great!
Then, can we have evacuated tubes that connect our homes to all of the retail outlets, or homes to homes maybe also, and then they could have like 5 minute delivery, or however long it takes the picking robot to get it and then for it to travel at hypersonic speed through the tube?
Maybe we should all live within a few hundred yards of the warehouses. Then upgrade the picking robots and streamline the warehouses and tubes so they can deliver items in less than a minute.
Then we can all have robots that pull the items out of the tube, open the packaging and hand it to us on our couches/beds.
I would totally buy a giant plastic jug of cheeseballs right now if it could arrive in less than a minute and be delivered to my hands.
In the chicago area, you can order from McMaster Carr (mechanical hardware), and get same day delivery. Any company that builds anything mechanical is probably ordering something from McMaster Carr. This isn't an impossible problem.
Local retail is their own worst enemy, at least those that have websites.
If I go to the website of a brick and mortar store, chances are I want to know what they carry in-store, because I need something specific and am planning to visit a store.
Ideally I'd be able to see what they have in stock at the local stores, so I can avoid a needless trip.
Instead, many retailers have larded up their online stores with online-only products. Some don't even give you an easy way to exclude those and see only in-store items.
This is stupid, and just makes me more likely to not bother visiting the store at all, opting to just order from Amazon.
In Germany, when you order in the morning before noon, you will most likely get your stuff by the next morning without any special shipping at all. That's how efficient the German postal service is :)
There are a few fundamental, hard problems : energy and transportation. Amazon is trying to solve a subset of the latter here. However, I like to see/feel some things in person before buying. I often go through lot of items before finding "the one". Examples: food, pens, shoes. It would revolutionize the industry if Amazon could solve that. Until then, it's just a really large online store.
Also - USA isn't the world. Non-US Amazon is heavily sub-par to other online stores: worse prices, small selection. So there's that, too.
I think amazon is concentrating on the clear and really hard pieces of eCommerce: warehouses everywhere, robotics, pack stations and leaves the fuzzy and less hard pieces to start-ups.
So now for example there are many start-ups working on the clothes and shoes fitting problem. In the future when the solution will be found , amazon would buy them , or just use their eCommerce muscle to force them into good terms or just copy them if possible.
I'd have died to have that in the US or Japan for e.g., anywhere delivery of basic goods actually works and isn't painful. I feel the main barrier to this is to have the local delivery company deliver things on time and in a friendly fashion.
That's not something you could expect in any country amazon operates (french's chronopost delivery is really hostile for ex., but there should be a ton of others). It'd bear with it for things I expect in weeks anyway, it would be horrible to have it for goods that are supposed to be there today.
I already don't shop locally except on a whim and when there are items I'm not price sensitive about at all. Well, groceries are an exception but I like to pick my own produce.
To be honest, I feel this has a good outcome for environmentalism as well. Same day delivery putting physical retailers out of business means less overall driving.
First the internet revolutionized music and eliminated record stores
Then it revolutionized videos and took down video stores
It didn't stop there, and moved on to bookstores and wiped them out.
And now its taking out brick and mortar stores in general.
Honestly, I LOVE IT! The internet is so great. Anything that gets stuff in my hand faster or easier is great in my eyes.
I don't see how they can possibly achieve the same economies of scale with a lot of small local distribution centers vs. a few huge ones. Plus coordinating deliveries in all those local markets vs. just having UPS or FedEx handle that part. To a point this may be successful, but it sounds self-limiting to me.
I'm surprised Amazon just hasn't started their own logistics company. With the spread of their warehouses now, is the next logical step becoming their own USPS/UPS/FedEx? I can only imagine what would happen once Amazon takes over the part of the process that seems to always have the most problems.
Until now it would have meant becoming a business in each delivery state and thus exposing themselves to sales tax. Maybe this will change in the future, and they are their own delivery company for AmazonFresh in Seattle I think.
I remember my grandmother telling us how first the bus and then the family car let her shop where she wanted to. Stores adapted. Face it, lack of transportation will allow bad service to exist simply because the customers are trapped.
I hope this applies to international shipping as well.
I buy stuff regularly from Amazon and their prices are even cheaper than what my country's local stores are offering after shipping included. E.g. A book from Amazon cost ~30% cheaper than the shops here in Singapore.
I actually have a problem with Amazon's shipping. I live in a small town. Often FedEx shipments are dropped off at the USPS, so a two day delivery turns into three or more days. The worst was 5 days. UPS OTOH often delivers the next day.
My opinion is that this may not be the end of local retail. I would still prefer to shop at my local grocers and farmers market on the weekend. Sometimes shopping is more than just shopping, its also an outing with family.
A business is required to pay sales tax, not collect. Like some other businesses, Amazon can just include the tax in the price.
For instance, bars will include the taxes in the drink tax because if they show you how much tax is in a glass of beer you'd be very surprised, it's something like 40%.
It's an mental game though. Do you get people "through the door" with an item at $19.99 and hope they don't close the tab when they see the $1.00 tax, or do you just advertise it at $21.99 and hope that people are attracted to you because of name, etc even though joesonlineshop.com has it for $19.99?
I don't shop local any more unless it's for a premium item and the customer service is beyond average. Not when Amazon can deliver consumer items the next day.
What this is going to do is punish people in non-metro areas.
The way that happens is the same way supermarkets work. In very competitive areas, cut rate prices, coupons and promos like doubling, etc. are offered very liberally. To make up for that profit loss, they pump up the prices and cut out promotions in areas where there is little to no competition.
In areas with a walmart and target and now amazon local delivery, prices are going to be crazy good.
Everyone else will suffer as they supplement the profit-loss.
I don't know about that. In Chelan, WA (population 3000, plus tourists, whole valley population maybe 10000 + tourists) 2 supermarkets, 3 if you count the fact that one of them has another location the next town over), prices aren't any higher than they are in Seattle, and both supermarkets have amazing deals occasionally.
I once bought a whole beef tenderloin for $5.99/lb during one of the specials. One supermarket has themed specials every 2-3 weeks during the summer and reasonable prices the rest of the time. They also really focus on meeting needs of everyone around, so you can find goat meat, intestines, tripe, cow feet, and shank for sale in their meat department, and the shank is about half the price that they originally quoted me when i requested it.
The fact is that if you are in a rural area, you already end up with lower housing prices and some other benefits. So I wouldn't be surprised if that compensates for the increased shipping efforts.
I am not saying I like the supermarkets. I wont do business with the local Safeway because of ways they have treated family members. However, I wouldn't say prices are higher.
There is no reason to think that prices elsewhere will get worse. If they could get away with charging higher prices in non-metro areas now, they would do it already. It is likely, however, that non-metro areas will fail to see the price lowering that other areas do.
(Disclosure: Slate participates in Amazon Associates, an "affiliate" advertising plan that rewards websites for sending customers to the online store. This means that if you click on an Amazon link from Slate—including a link in this story—and you end up buying something, Amazon will send Slate a percentage of your final purchase price.)
Do they really think that they'll get more affiliate conversions by being the honest guys? Seriously, what is the point of this?
Slate probably thinks it's worth giving up short-term profits for long-term reader trust, which is particularly important for an online newspaper. The referral money is still money, but it's icing on the cake.
It has to do with journalistic ethics. By disclosing this now, they avoid a bad reputation when someone "discovers" that they participate in the affiliate program.
