Yglesias has an even more sinister theory: that there's no real rhyme or reason to Amazon's strategy, that it's acting on the assumption that having beaten the market into submission there will somehow, in some way, be a way for Amazon to capitalize on the resulting chaos --- but that it's equally likely that Amazon will itself crater, having destroyed everyone's profits in the process.
I like Amazon (we're Prime subscribers), but I have to bear that in mind every time I prepare myself to complain about Wal Mart (which I do not like).
In any case: it's close to impossible for a small-scale retailer to compete with Amazon once Amazon decides it's competing.
The issue Yglesias seems to have with that is that the market can profit from volatility even if, over the long term, Amazon's actions are a net negative for the larger economy, and would fail without their intervention.
I don't know how much of that I buy. I'm just pointing out the hugely privileged position Amazon has.
Its like grinding in poker, once your bankroll is much bigger then all the other players combined it is a forgone conclusion that you'll win it all if you play correctly.
This sort of thing is inevitable and why you have Walmart and Tesco for example. Mature industries settle around a few outsized players.
Royalty clubs like Amazon Prime are obviously the end game. They won't go broke, they'll become the single most important account for many millions of households.
As i see it , their strategy is simple: identify the points along e-commerce where monopolies/quasi-monopolies can be formed and control them.
So they try to control the customer, the data, the warehouses, the marketing(the digital experience), the volume and now the financing.
My guess is, due to all those, e-commerce's end-game is a winner takes most market.
If they'll have monopoly powers, destroying everybody's profits(and everybody) wouldn't matter much. At that point amazon could increase prices and profits.
Luckily for smaller businesses, they can compete with Amazon and other big box retailers on that front, but they're still learning how to use/leverage the tools the big guys have been using for years.
This is one I will definitely leave for the smart investors.
Living in the future.
What's Instacart's range/pricing like? Would you say they're closer to a higher price/smaller range inner city convenience store, or do they have a lower price/larger range like an out-of-town big box retailer?
I don't believe inventory management is that crude that they can't do deliveries in short time. Given that supermarkets were doing it in an albeit slightly longer timeframe (weekly), then I don't see why they can't refine the process to be same day. If anything, it gets the stock out of the store more quickly and they make a quicker sale.
To be frank, if a company has pg and jl's high praise, you know they're doing something right.
pg: "Incidentally, of all the startups we've funded, Instacart is one of the ones we ourselves use most. Jessica can't stop talking about how great it is. You learn how useful grocery delivery when you have small children like we do, and Instacart is by far the best option for this.
Instacart is one of those rare products that's surprisingly great. I.e. you don't realize how good such a thing could be till you try it. A lot of the best startups have this quality. I wish we could figure out a way to identify them when they apply to YC, but at the moment I admit we can't."
jl: "I just got a delivery 30 minutes ago, in fact. For years, I'd used Safeway.com's delivery services and now that I have used Instacart, I'll never go back. The UX is 100x better, delivery is much quicker (and cheaper), and I can order on my phone."
The luxury apparel market is going to be the next wave of retailers who explore this offering and, could be, successful with it. Shoppers who are spending hundreds and thousands of dollars online expect an elevated level of customer service- same day delivery (like Net-a-Porter offers) is the next step in this personalized service.
"292 of Macy's 800 stores have been doing double-duty as mini-fulfillment centers that assemble, pack and ship online orders"
"since 40 percent of bestbuy.com orders are now picked up."
So I don't support them, but if I need something, ordering for pickup a) ensures the price, b) minimizes upsell, and c) ensures stock (I'm sick, too, of times when there was a display model out but nothing in stock).
It made me swear off ever shopping at Best Buy again, but I broke that promise when they started price-matching Amazon prices...
I've yet to try them on this. I'm curious - do they actually match Amazon every time, no matter what? When they first announced this, the press releases seemed to indicate that each store could independently decide not to honor on a per-situation basis.
- For groceries, it is really awesome. Instacart prices are 10-15% above Safeway prices, but their customers don't care on average, and that's how they make money. Delivery fees are a necessary evil.
- For premium pizza, "get it now" is really great, but their business model is not sustainable: I never paid for delivery, and they only charge 5% out of which they pay 2.5% for CC processing. The fact that they want to scale now and expand to further categories without having nailed their primary suppliers (fancy restaurants that do take out but don't deliver) seems crazy to me.
- For other types of goods, one hour delivery is a bit too much, and you feel bad the first time. But then, hell it is practical, and in many ways it seems much more relevant and ecological that having an item shipped from a random warehouse in the middle of the country, boxed specifically for me, etc...Same day/next day would do in 99% of the cases though.
Prime with amazon is pretty much next day/ 2 day shipping on everything? Which is likely already very fast for most people an most purchases.