I am amazed at how amazon remains doing business with so low margins or no profits. We love amazon at my house and being Prime members, we are almost ordering everything under the sun from Amazon that we possibly can. Here is why we love it:
- The reviews are actually useful. I just bought a 70 inch TV through amazon and the critical and helpful reviews really helped me get going with settings on the TV that would have taken hours to research on google otherwise.
- Shipping is superfast. Most items are delivered within a day or two with prime.
- Btw, if you are a parent of a baby, then check out Amazon Mom. It is free with Prime membership and gives you further discounts if you subscribe to ordering baby stuff like formula, diapers etc. on amazon. Also we compared the prices and it is almost impossible to beat amazon for these things as well.
- No need to go drive to a store. Sometimes I need to buy $10 item for which I might end up spending $2 on gas.
- Easiest returns if the need arises.
- Not to mention that Amazon prime gives you access to lot of great videos, movies, shows etc as a bonus.
One drawback with prime is that not all items are Prime eligible. Specially what they call "add on items"
> Also we compared the prices and it is almost impossible to beat amazon for these things as well.
Huh? Where did you look?
For formula, diapers, wipes, etc. Amazon didn't come close to Target, even without coupons. Amazon was like $23 for diapers that were $19.99 at Target. I've been a prime member forever, and wanted to use Amazon, but it easily cost 10-20% more, even with automatic ordering. Combine Target retail or sale prices with coupons and the 5% credit card discount and it was an unbeatable combo.
I agree. Items are no longer, consistently cheaper. (ex:Horizon 8oz Milk packs, are at least 2x more than our local grocery stores.) Even their Subscribe and Save program changed to introduce a 5 item minimum. Seems like, they are finally able to charge a (small)premium for the 'Amazon Shopping Experience'.
Then stock up, and seriously? Their shelf stocking doesn't work that way. Any SKU ordered (other than food stuffs and specialty seasonals) are stocked for, at least, one month in any given location before long term stocking is decided on
I live in a pretty suburban area in Florida. A trip to Target, Walmart, Sam's Club, Home Depot, Lowes, etc. costs me about half a gallon of gas ($1.60 at the moment) and an hour of my time. Then there's the risk that they either don't carry the item I'm looking for or that it is out of stock. That usually tips the scales in Amazon's favor even if they aren't the cheapest.
In our case, Amazon is $0.38/count and Target is $0.35.
Plus, Target is a smaller package (my son grows like a weed, I want just-in-time inventory), I get another penny per diaper off with the credit card, and Target accepts stacked coupons, which typically translates to another $0.05-$0.10/count discount.
Also, the we don't use it, but the Target generic brands are very high quality and cheap. Saved us a bundle when my son was on formula and the Enfamil coupons ran out!
1. Amazon has more size choices.
2. You didn't say up front you were comparing different diaper brands. Maybe they are just as good. However, we've tried different diaper brands in the past, and went with those we knew would work.
Not that any of this changes things. I was just curious about the pricing. We use Pampers because we found them to be the best for what we needed. Now though, we get them free. =/
Anyone who thinks all diaper brands are the same has never had the experience of choosing poorly. =)
Same here. My girlfriend and I both buy basically all non food items from Amazon because we live in a small town and we are a 20 minute interstate drive away from any stores other than krogers. This has saved us a ton of money on gas and lots of time that easily makes up for the prime cost each year. The one time I have had to return a package was very easy as well. I can't imagine ever going back to spending gas money and my free time driving to a store because they might have what I want, usually at a higher price, without a rating system to see what others who bought the same thing have experienced.
Ugh, I have Amazon prime in Canada and use it constantly, but amazon.ca has an incredibly smaller selection of items than .com. Amazon seems to be slowly expanding it, but still only 25% of the inventory of it's American counterpart. So jealous.
Border/customs tariffs from American websites ruins any cost savings (like paying $20 in fees for a shipping a $40 item ). That is the root problem, given the geographic nearity.
This is particularly true for electronics. However, I've noticed that if the fulfiller is Amazon then there's a better chance of shipping an item to Australia. I can't remember what it was now, but I remember one item where storage option A was fulfilled by Amazon and would ship to AU but storage option B was fulfilled by another company who would NOT ship to AU.
There's also an option somewhere to restrict search results to only items that can be shipped to the chosen country. You'll be disappointed by the reduced selection though. In this case, I suggest Amazon UK who has reasonable shipping to Australia.
Maybe I'm the only person who has this issue but Amazon's categorization of items, broken search filters, and poor administration of 3rd party listings makes it very difficult for me to find items that I would regularly want to buy.
I can search for something like "Vacuum Filter" and receive results from 26 departments including Baby Products. So say I go to Home & Outdoor > Vacuums & Floor Care › Vacuum Accessories › Vacuum Filters › Upright Filters. Now I want to search by brand but there's nothing available for my model when I filter the search, however I can buy a Dyson filter under the "Hoover" sorting. Then half the listings are from 3rd parties who only include a lone 120x120 pixel image, an incorrect product description (or none at all), and with 0 product reviews. Then I give up on logical searching, type in the product code and the only listing was in the Automotive department after all.
Sorry to go on a rant but I find the shopping experience on Amazon to be incredibly frustrating. I usually end up using Google or another site and even when I do find the Amazon listing I'm hesitant to buy because of the sketchiness of the listing.
I have had this problem once before, I was trying to buy a jewelry box for my girlfriend and the picture was way different from the actual item. I think this is mostly because Amazon is willing to put up anything any supplier wants to produce and those suppliers don't know what they are doing. In this situation at least it was easy enough to flag the images as wrong for that item and they were replaced with correct pictures in a few days.
Picking a department is always annoying especially when there are two or more it could easily be in, but overall I like the search options. For example I have wide feed so I always need 4E shoes and Amazon can filter out all of the shoes which don't have 4Es.
And I feel sorry for those people as I made sure to live within a 7 minute drive of work. I save thousands of dollars every year this way, as well as don't get nearly as much stress and have a lot more free time.
This has actually become the most compelling thing about Amazon for me. I've been a Prime member since the start and Amazon has taken care of me without question even when it's not entirely "their" problem (stolen packages, marketplace sellers, my own mistakes).
Also, a not entirely well known benefit of Prime is the option to share the free 2-day shipping benefit with four family (They call it "household member", but no need to have the same address) members.
There are things bought on Amazon which leave me wondering how they can possibly be making money on them. I recently bought 4kg of cat litter from Amazon, which was shipped to me next day for free - I may be utterly out of touch with how much they're paying for shipping, but I can't see the purchase price even covering that side, never mind the product itself.
They most likely make up for it (the small loss or lack of profit) by selling other items, at least that's what happens at other companies applying the same strategy. It evens out and they can boast about the huge number of SKUs they're able to offer.
Can you elaborate? Google Finance shows a profit of $631M for 2011, and $1.1B for the year prior, while only a loss of $39M for 2012. Their IPO is $1.50 compared to $332 today. Did they really take on so much investment that they still haven't made it back?
The thing is, companies don't pay tax on sales, but on profits. And Amazon is a company with a very strange attitude to profit: it doesn't seem to like it. In the year 2012, it made a worldwide loss of $39m, even as it had sales totalling $61bn. That year was an aberration, with a costly acquisition weighing the company down, but previous years have been similar. 2011 saw just $631m net income on worldwide sales of $48bn, and in 2010 – the company's most profitable year to date – it scraped $1.15bn of profit on revenue of $34bn.
Those are your margins. If they are less than T+400bps you are "losing money" for investors. Unless, there are other investors looking to take the stock off your hands.
It's hard to imagine where all those investors think the extra profits will come from. Do they expect Amazon to suddenly announce one day that it has finished trying to grow, and will be raising prices immediately? Or do they think that eventually, every single one of its competitors will have given up, and folded beneath the company's relentless expansion?
Unless you have a real answer for this, you are betting on the greater fool theory. Of course, you may have a better answe than this. [Digging around a bit, it seems to (/may) be tax avoidance. Amazon is eating fulfillment costs in lock-step with its increasing gross profits on product sales].
The parent to my comment stated it was a "charity" funded by investors. I've no idea if AMZN is a good stock investment. I'd just be surprised to find out that investors buying shares from the company have kept it afloat.
People buying shares on the market doesn't give any money to Amazon and is rather meaningless in this context.
Indeed: "That's because Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers. The shareholders put up the equity, and instead of owning a claim on a steady stream of fat profits, they get a claim on a mighty engine of consumer surplus. "
I don't really have a bone in the fight, but to answer your question. In the world today, the company is governed by the extant investors (not the ones that give them money to start up or IPO). So the sentiments of those investors basically determine how the management gets compensated (how high the performance bars are, etc). In a normal world, the investors would tend to default to management provided that management is generating "returns on investment" in relation to the Capital at risk in the organization. For a compnay that is 15 years old+, its pretty odd to see a continual state of "strategic" losses. I don't think anyone is arguing that Amazon is stupid (investors or managment). The legitimate question is more like...what is everyon missing here?
This is a semantic distinction, between cost and opportunity cost. And the sentence is really just your imagination. The market is driven by quite sophisticated investors these days. You have to remember that hedge funds (as one example) are not mutual funds. They are in all kinds of illiquid complex stuff. There is plenty of depth for strategy that makes sense, and has longer term payouts. Again, the issue is more that Nobody appears to actually understand what that is. Or at least, nobody is talking about it. Wondering what that really is, again, is not short term thinking. Its more like sanity checking. That's why its worth playing devils advocate, occasionally. I'm actually sort of more curious to understand it myself after having looked at it a bit more today.
News flash: most technology companies don't really pay dividends. Probably, the main reason is because dividends are taxed at a pretty high rate. It's easier just to keep the money overseas in some tax shelter or other (Apple, Google), or plow it back into the company as investment (Amazon). Microsoft is one of the few tech companies that pays dividends.
Spending money on dividends looks like a poor choice. If your share price is sagging, you can always buy back your own shares with part of your cash hoard, like Microsoft did recently. Investors are always willing to believe that your investment will make the stock more valuable because TECHNOLOGY. And if they aren't, who is to guarantee that the stock will have any value at all next year? Cough-- Nortel Networks-- cough.
While its true that lack of profits limit dividends, return on invested capital is measured using other metrics. So the question of dividends "not a news flash", in the sense that it's not central to the topic.
The question of profits, though remains. Three possibilities:
(1) Tax losses & Tax Shields (avoidable, but cash positive)
(2) Obfuscation of earnings (avoidable, but to deter entry)
(3) Stategic operating losses (unavoidable)
(4) Incompetence (or actual lack of business leverage).
Since no one is really arguing (4) the question is more which of 1-3 is relevant? I don't think avoiding dividends would be a central consideration, but YMMV.
I'm sure they lose money or are right on the edge with some Prime customers.
* Large-volume shippers have always gotten much lower prices than you'll get walking into a UPS store. Amazon is an uber-volume shipper.
* Their warehouse network minimizes the actual distance products must travel on average.
* I naïvely assume they've worked with carriers to optimize how they interface with them (both digitally and physically; e.g. boxes stacked/arranged in certain ways for pickup).
* Amazon often does not have the lowest prices for things, especially small/cheap items. If you buy a $5 widget you could have gotten for $3 at the local hardware store, some of that is probably making up for cheap shipping.
I love Prime, but there's no way that shipping a 20-roll pack of paper towels that cost less than the store, in a giant cardboard box, in two days via an airplane to my door, is sustainable. They are taking a loss, even factoring in the membership fees, and at some point they won't be able to get away with it any longer.
 Or a big heavy television. Or anything else you can find on Amazon.
I would guess this is why amazon keeps expanding their distribution footprint so much. I would hazard a guess a rather large percentage of the US population is already in a 2-day ground shipping radius. In the past couple years, I can only think of one or two things shipped via prime that came via air mail, even overnighted stuff came ground.
> I would hazard a guess a rather large percentage of the US population is already in a 2-day ground shipping radius.
I live in a fairly low population state, and there are at least 2 major UPS distribution centers within a 3-6 hour drive. My small town also has an UPS office and ground facility where shipments through them to the surrounding communities originate. Even FedEx has distribution centers nearby (although their shipping here is notoriously slow and clumsy).
So, I'd believe it. I can't think of anything gets shipped out here via air and much of this area is rural. The only reason Amazon's "free" shipping is slow to this region is likely because they probably hold orders destined for a specific area or zip code until they can get a bulk shipping rate on all of the items and send them out via the same carrier. I've speculated about this before because Amazon will happily hold onto items for 1-2 weeks via free shipping that will arrive within 2-3 days after they've been marked as "shipped." Amazon Prime shipped items usually arrive within 2 days, and like you, I'm pretty sure those are overnight ground.
Amazon very carefully tracks the profitability of each SKU they sell. If they're selling it to you, they've figured out how to do it profitably. Consider that you'd pay a similar price for it in a retail store, where it had to be handled multiple times, stocked on a shelf, subject to theft and loss, etc. - there's enough margin to cover that, so if Amazon can drop it in a box and ship it to you for less, they can make money on it.
I came in to write exactly what you wrote above, point-for-point. I love Amazon, I with buying big-ticket items like stoves and refrigerators were easier through them. And I still have a bit of trepidation of buying TVs, etc, and would prefer going to Costco for those, since shipping back is so expensive in case something goes wrong. If they have a solution for that they will get all my business.
Amazon has "Enhanced delivery" for things like TVs. Basically they use a special carrier that will come into your house and set-up the TV and make sure it's working before you sign for delivery. More info in the link below
I used to be an Amazon fanboy, too, but I don't buy much from them anymore after (1) Target, Best Buy, and other retailers started pricematching amazon prices. Since Target gives you 5% off for using Target card, Target is now almost always cheaper than amazon. and (2) Amazon started charging sales tax. That was a HUGE reason I ordered items from them.
I still like amazon, and still have Amazon Prime, and I am still looking forward to their Black Friday / Cyber Monday deals.
They pay taxes where they're required to. In 1992, the Supreme Court ruled in Quill Corp. v. North Dakota that states cannot compel out-of-state retailers to collect taxes without the company having a physical presence in the state.
We all know it's up to the consumer to pay the sales tax on their tax filings.
They're paying it in more jurisdictions than ever and the infrastructure they're setting up to support paying taxes in every jurisdiction will be sold as a service to other merchants. This will enable the technical ability for states and municipalities to finally collect revenue on Internet sales universally.
Better tip - 99% of America would without hesitation agree with a statement like "The Democrat party is the main left-wing party in America". (Similar with 'right' and 'Republican').
Would the terms "left" and "right" have the same meaning in all parts of the world at all points in history? Of course not. But when people make a statement without context, you can assume they mean the terms as the majority of their contemporaries use them.
I'm not in America, I'm on Hacker News, which despite being composed mostly of Americans, is its own community with its own context. I don't see why we should accept the American's ignorant definition of Left any more than we accept their definition of 'hacking'.
Hacker News, if anything, is probably to the right of most Americans, due to the number of libertarians and entrepreneurs.
Also, referring to "the Left" as if it were a single thing qualifies you as the "ignorant" one. Even back when the USSR existed, there were differences of opinion. You can look up Marshall Tito and the differences of opinion between Mao and Stalin if you're curious.
I'm not referring to the Left as if it were a single thing, on the contrary. It's exactly because it combines hundreds of different schools of thought that saying that the "sufficiently left" support the state is ignorant. But they're still all part of the Left.
Where I live, we have a Communist Party (Stalinist) and a Left Bloc party (merger of Trotskyist and Marxist factions) both in Parliament. They still call themselves part of the Left, even though they effectively refuse to do any kind of coalition.
This is not to mention the smaller parties and movements, such as the Reorganizing Movement of the Proletarian Party (MRPP) and, of course, the various Anarchist groups.
Hacker News, if anything, is probably to the right of most Americans, due to the number of libertarians and entrepreneurs.
Just one more reason for them to be aware of ignorant labeling. Or do Libertarians enjoy being considered fascists?
Oh they are passing on most of the tax for now, but what
will happen when they really dominate? I saw what happened
to Home Depot. They concored the market on prices. Competition folded. They raised their prices. It's now just an expensive big store with unhappy help.
So we should punish successful companies that provide services people want through taxes because they might become too powerful? Increase the incentive for the company to influence politics? Feed the entity that has no competition by definition?
Pick any big company, certainly including all the big tech companies, any company with a brand you've heard of, and any government, and I could put together a dozen compelling "reasons" not to do business with them.
You need to decide whether a company offends your values on balance. Both as a customer of Amazon and as a supplier (author/publisher), I've found them better then average to deal with.
How are they as an employer? No personal experience, but better than WalMart and FoxConn, I'm sure.
They make it difficult to return inexpensive items. It's
happened two times when I have been a Prime Member. Once, they sent me the wrong model radio. It was only 10 dollars,
but it's the principal of the blah. When I tried to return
it was not just a click--I had to call, and the number was actually busy.
Plus--that two day shipping--works great for their items, but it's hit, or miss with resellers.
I've only returned a few items over the years, and I've spent a lot of money with them. I tried to return an $11 product last year. They just refunded me the money and told me to keep it. I had a $35 product stolen off my doorstep once (empty box left behind). They shipped me a new one, no questions asked.
The point of business is you're doing it right if you maintain $0 profits - otherwise you're paying taxes, and you're not undercutting competition - so you're not killing them off. This is why Amazon is now only upping their $25 to $35 minimum. I'm wondering how much competition got destroyed by that early on.
This. Amazon has done almost everything right for the customer (as Bezos emphasizes in all his interviews). For me, the primary weak point is the dubious quality of third part sellers sometimes. Other than that, it's an awesome place to shop.
Crazy, a company that uses its economy of scale to drive down costs, cut prices across the board (TV's, books, AWS) and reinvest those profits in new services and products, continuously. Quite different from the rent seeking companies in the hardware and telco spaces. If Apple and TWC were Amazon, you're iPhone would cost $150 without a contract and you're cable internet would be $10/mo.
I am amazed at how amazon remains doing business with so low margins or no profits.
It's called the bait and switch? That's always how it works. They will extract value from you, likely in ways you don't understand. Or cant comprehend. At times you won't expect. Anything else is a mathematical impossibility, given the fiduciary repsonsibility of management. Its not if but when.
- inventory is limited? which amazon website are you visiting?
- anecdotal, but in the several years of using amazon, never had a problem with any of the 'non-amazon' sellers. There are ratings for a reason. That's like saying you didn't get what you wanted from one ebay listing so all of ebay is bad
- reviews don't mean nothing..what's your problem with the current reviews. Like anything you read, take it with a grain of salt. Amazon also includes verified reviews, as in, people who actually purchased the product. Search google if amazon isn't enough for you
- based on the rest of your post you ordered what you thought was an arduino from a non-amazon seller off of amazon, found out it was a clone, and was pissed cause you thought the reviews would have made that more clear
- inventory is limited? which amazon website are you visiting?
The amazon.es selection is much more limited than amazon.co.uk's selection. I typically end up buying from the UK and having it shipped across as it will usually be cheaper despite the extra shipping charges.
There are a lot of reviews i read that don't make any sense at all, like they were generated by some algorithm and the review fails to say anything even remotely meaningful. I always wonder where those reviews come from and they always have like 3 out of 3 people found this review helpful instantly the minute the review is written.
I love and use Amazon all the time. but there are so many weird things about it.
Sometimes I buy something thinking it's from Amazon, but it's not, it's from another seller, and sometimes the product is not "mint." It seems like it was opened before and put back in and there are finger prints all over it or something that is "slightly" off like a tiny dent.
I feel like there's definitely room for something better.
Honestly, reviews everywhere run the risk of being fake. Amazon, Target, YouTube, App Store, Yelp, Zagat, etc. Caveat emptor.
I do read the negative Amazon reviews, though. I'm also finding myself looking at their customer-submitted photos to get a better sense of size+function, and checking on YouTube for reviews as well. I'd rather get a review of a radiator thermostat from a guy that has reviewed a few of them (and posted videos of them all) than trust a bunch of 50-word reviews anywhere else.
Looking through the last several years of my Amazon account, I've purchased over ~$170K in product from them, ranging from Cisco switches/firewalls to jeans to phones/smartphone cases and even some more.....avant garde items for my wife.
Inventory sucks? Reviews meaning nothing? Incorrect!
The "no minimum order size" statement about Prime is a bit disingenuous. Many low-cost items are now Add-On Items (http://amzn.to/1a4NFBI), meaning that Amazon will only ship them in an order of at least $25.
Prime has become a bit less useful over the past year due to the introduction of Add-On Items.
The thing that's really annoying about the whole "Add-On Items" bit is that they won't ship them AT ALL, even if I want to pay to have them shipped. Forget the free shipping thing - they won't even let me pay shipping and just send it to me.
One of the great utilities of Prime (and Amazon in general) is that it saves me a trip to Wal-Mart for smaller items. Need a pack of Sharpies? Ship it from Amazon, because a trip to Wal-Mart is an hour of my time wasted and a level of frustration that I really could do without. I'm willing to pay money for that convenience.
Well, I agree that it's somewhat less useful. There is an upside though, as shipping things has an environmental impact and people probably shouldn't be wasting a box + shipping on a missing cover for a food processor.
I don't think I've been bitten by an add-on item since they've introduced it. A food processor would definitely get you free shipping in two days via Prime, it is small items like a 6oz bottle of lotion that costs $1.99 that you can't get by itself.
You'd think the Add-On Items would ship with any Prime-eligible order. For example, I wanted to buy a staple gun for $9.50, which will ship with Prime, but the $3.59 staples are an Add-On Item, so I can't get the staples shipped with the staple gun without adding additional items to my order.
Yeah, I'd also like to see them allow you to attach Add-On items with your Subscribe & Save order. Subscribe & Save exists because it's cheaper to send it all at once, right? So why can't an Add-On item be put in that box?
Add-On items are items that are not economical enough to be in the Prime program by themselves but can be thrown in a box already on it's way to you. Without the Add-On program they would not be Prime shippable at all.
Therefore Add-On items are just an improvement to Prime.
Not true. I just placed an order with two add-on items (totaling $7) and one non-add-on item ($20). The two add-on items were shipped separately.
Also, I'm pretty sure everything that's actually sitting in an Amazon warehouse is prime-eligible. The stuff that isn't is the stuff going through 3rd party sellers that don't use fulfillment by Amazon.
The intent is for add-ons to ship in a box with the main Prime order. This doesn't always happen due to the combination of what you order and the locations of the items across Amazon's fulfillment network. When this happens Amazon is eating the cost of those extra shipments and is considered a 'miss' by the inventory folks.
Everything in the warehouse is not prime. If fact, an item can flip from prime to not prime in near real time if the most accessible inventory is used up and all that is left is the stuff in the 'reserve' areas of the warehouse. This is the area where the giant boxes of inventory stored. Grabbing inventory from there involves pulling it down, opening, pulling apart eaches, and then stowing in fast access areas.
Amazon has always had both Prime and non-Prime products in their inventory. Usually, 3rd party sellers are non-Prime, although some choose to use the Amazon Prime shipping system (and their products cost commensurately more). Also, products with thin profit margins, such as textbooks, quite often were and are not Prime.
Not exactly, there were items I buy regularly that used to be Prime eligible and were moved to add-on items. Amazon was borderline lying about that because they removed it from being Prime eligible for 1-2 days and then made it an Add On Item.
While the Add-On Item thing is annoying, I have to admit, there were a few times in the past where I've ordered small items that were shipped for free and I couldn't help but think it was pretty dumb that Amazon was doing that. Such a waste of resources.
I abuse Amazon Prime to no end. I live in the boonies and don't have a car so they're actually my lifeline. Bought a pack of 50 machine screws the other day and including the free 2-day shipping to my door it was only $1.35. Unbelievable.
But I am glad Amazon is raising prices. I don't want them to falter and hope they continue what they're doing. I'd be screwed without em.
The only side effect this will have is that it will push more people into buying Prime. Great comments in the other Amazon thread about how they're really playing the long game .
Personally, I think Prime is a serious USP for Amazon that is often overlooked. It's pretty controversial among analysts (from what I understand) with some claiming it's causing explosive growth  yet with others unconvinced it's sustainable .
Definitely a company to watch over the next 10+ years though...
When Amazon first introduced Prime I was able to get any of their products next day regardless of what warehouse they were in. I live in NY and occasionally some stuff would come next day air from say Arizona at probably a large loss for Amazon. Recently though they took the 3.99 next day option away from items that they do not have located in my warehouse (PA). Then the 2 day items do not ship directly from the other warehouses, they must have trucks going from KY to PA and then UPS takes final miles. Previously I would get 2 day items direct from other warehouses.
So I think they are transitioning to a system where they maintain stock in every warehouse, and every warehouse is within 2 days UPS ground to everyone in USA. If you ship things to Amazon for Fulfilled by Amazon they want you to ship to at least 3 warehouses. Prime is a major reason I buy everything from Amazon. Often I can find goods at lower prices from other retailers online but the free second day shipping that is always on time cannot be beat.
So this latest super saver shipping change I think is Amazon basically making shipping free due to its superior distribution system. Paying UPS for to door delivery from nearby warehouses for all these items is most likely less money than it costs stores for rent and other costs associated with brick and mortar.
"This is the first time in more than a decade that Amazon has altered the minimum order for free shipping in the US."
The BLS's Transportation Services urban CPI has increased 29% since August 2003, or 2.6% annually. Amazon would need to have offered the free-shipping-for-orders-over-twenty-five deal for the last 13.3 years, or since before June 2000, for this threshold increase to be on par with inflation.
Amazon UK used to be no limit but it's now £10 limit. However, this can be bypassed slightly by adding any media item (for example CD/book/DVD).
A lot of people had fun finding the cheapest piece of media, I think someone found a warehouse full of 10p cassette tapes at one point being sold by a company and handled by Amazon, thus giving people 10p shipping for orders under £10.
Regardless, if you have 4 friends you can split the cost of prime up to 5 ways (yourself + 4 friends) for next day. In my experience, at least, this has worked even delivering to different addresses. You have to list them as family members, 3 of my "family" are housemates and a fourth lives down the road.
I took up the free month again this year, and have decided to keep it for the year. The finial decision point was when I realised that the free faster delivery often includes Saturday delivery, which I find more convenient than having larger and/or heavier things delivered to work.
For a $2000 plasma, maybe. But you're going to drive 45 minutes to avoid paying $7 in taxes on a pair of shoes? I really doubt that. The scenario you outline would be true if people did a large amount of shopping once a month, but Amazon customers are now accustomed to making hundreds of little purchases throughout the year.
Probably you're right, and actually in the case of shoes I would patronize my local running shoe store because they're awesome people (also, most types of shoes are not taxed in Mass. so it's not the best example :).
But it might alter our shopping behavior and start being more disciplined and saving up lists of stuff to get, and then the trip starts to become worthwhile. (It doesn't hurt that I have a Prius now, 50 mpg/22kpl).
> Example: You purchase furniture for your Massachusetts business or residence from an out-of-state firm and pay no Massachusetts sales tax. You are required to pay the 6.25 percent Massachusetts use tax. The use tax applies because the furniture was not subject to a sales tax in the other state and because it is for use in the Commonwealth.
According to the use tax definition in that link, the vendor has to actually deliver the item to the resident within the state boundaries:
"Sells to Massachusetts residents or businesses and delivers, repairs or installs goods or telecommunications services within the Commonwealth."
Without that stipulation, essentially anything you buy anywhere outside the state for which you didn't pay sales tax, then carried back into the state, is subject to a "use tax". This seems both unreasonable and unenforceable.
Suppose while on a trip you buy a souvenir at a gift shop in NH, or Alaska, or Delaware, or Oregon, where there is no sales tax. Does this law actually require that you are to pay tax on it when you bring it over the border? That sounds like a tariff or customs duty, a power which the Constitution specifically assigns to only the Federal government.
Also, given that the price of the item includes baked-in compensatory taxation such as higher property taxes or income taxes, effectively you would be double-taxed. New Hampshire, for example, has much higher property taxes than does Massachusetts. They have to get their revenue somewhere.
> That sounds like a tariff or customs duty, a power which the Constitution specifically assigns to only the Federal government.
Well I'm no lawyer, but I think the difference is that tariffs apply regardless of the tax you paid overseas, whereas use tax only makes up the difference, if it was originally in your favor (if you pay 8.75% sales tax on an item in San Francisco, Massachusetts won't refund you the 2.75% difference when you bring it back, but they won't charge you extra tax either.)
I've come to dislike the boxes because I then have to discard them. When I didn't have a car I just dealt with them. Now that I have a car and I go to the grocery store every week, I don't get things like toiletries or paper towels on Amazon; they are never cheaper for these things and if I get them on Amazon that's more boxes I have to move out of my house.
I'm feeling even better about getting Prime now. It seems like we order stuff almost daily now instead of running to the store. We've more than paid back the $75 in free shipping less than halfway into the 12 month cycle.
There has been similar changes in their European operations some months back. Many items are no longer covered by complementary postage. Deliveries also seem to take longer to 'ship' (that might be my imagination though). I think it's all related to Prime, them trying to make a subscription service look more valuable by disabling the alternatives.
Yup, a few months back amazon uk went from "free shipping for everything" to "Ah, only if you spend £20" (I think? perhaps £25) which is how it used to be way back in the day with their "super saver" delivery.
I'm amazed it actually took Amazon so long after the demise of Play.com to do this. (Play.com were a serious competitor for games/music but had a tax loophole closed on them.)
Good for them. This and the other similar change they did recently ("add on items" for Prime so that you don't end up ordering $1.5 items with free 2-day shipping) makes me believe Amazon will be more profitable and survive in the long term. I find Amazon extremely useful and love their customer support.
I tried Prime, found on my first order (as a Prime user) of several small items that none qualified for free shipping so I guess they weren't in the "15 Million items" category, yet those were the ones I needed. So I canceled. If the free shipping worked out, we would go for it and probably drop NetFlix even though they have a better choice of shows and we got hooked on their House of Cards series. We probably would keep both. Until I feel that their Prime membership will support us when we need to buy something we will remain non-members of Prime.
We still spend several hundred to several thousand dollars per year, Amazon makes shopping so easy.
Is there a significant ethical difference between purchasing from a store or from a large online retailer? In one case, shipping to the store is bulk, and employees may make low wages, but they interact with other people. For a retailer Amazon's size, warehouses run on people who read orders from handheld devices and are timed for retrieval speed per box filled. Then shipping is done per parcel. How have you decided what's the right behavior to encourage with your dollars?
I suppose the same question could be asked about all those saddle makers and horse breeders when the age of the automobile arrived.
Online retailing is a great innovation; it makes sense, it's convenient, the selection is 1000x better, the service is excellent (at least at Amazon), and it saves people having to drive somewhere. The reviews and comments are useful, the related items and "what people bought" sidebars are handy.
By contrast, retailers have lost their edge. They hire low wage non-specialists, often high school students or other non-professionals who would rather be doing something else for a living.
So when you go to a store to purchase a gadget or article of clothing or book, your chief human interaction experience is distressingly often with a bored, under-motivated person who hates his job and hates you too.
I treasure the exceptions to the above rule, the dedicated doing-it-for-love guy or gal who really knows their stuff, like the extremely knowledgeable handyman guys and gals at the local hardware store--which is why I still patronize my local Ace whenever I can. Except they sometimes have a teenager who doesn't know where anything is, who doesn't scan my frequent buyer card, who can't offer me any advice whatsoever, who screws up the price. That kind of morbidly useless experience drives me (and millions of others) to redirect my money to smart, helpful businesses like Amazon.
Maybe more apt a comparison would be a choice between custom-built automobiles and those from factory lines. At the time, there was fear that working in factories was dehumanizing. The ethical question is resolved politically, by having labor unions so that workers have some control. From the undercover reporting articles on Amazon's warehouses, there aren't labor unions.
Amazon does provide a lot that stores don't, but now you're asking what is the outcome of your choice for yourself, not for others. There is a lot of that same focus in the comments here.
Counterexamples of people who work in stores and don't enjoy their jobs are perfectly valid. I would focus, though, on what my choice of where I spend money offers as an opportunity to others. The opportunity in the warehouse depresses me. The opportunity in the store seems pretty OK.
I, too, want what Amazon has to offer, and those who can pay taking what is offered them is the way of the world, but I still have to make my own choice.
For me, I wonder if that saved 90% of non-food shopping would actually be an increase in overall shopping. "Sure, I spend $90 out of $100/mo shopping at Amazon, but before I joined Prime I only spent $40 total."
It's the same reason why I don't belong to Costco, it's just an encouragement to buy things that I normally couldn't be bothered to get up off my ass for.
In a decade it amazon has raised the minimum order by $10. Given that Amazon is a pure data driven company, we can guess this is the inflation cost which turn out to be 3.4% as per US Gov data the inflation for last decade is 2.29%
Its not so much a matter of belief as the gov reported inflation rate is tied to innumerable fedgov dependents via cost of living allowance raises and so forth.
So the truth of the matter is the .gov is willing to pay its dependents 2.3% more, unfortunately inflation rate is somewhat higher, then again their cost of shipping is not necessarily numerically equal to the aggregate average inflation rate of every product for everyone purchased everywhere.
There is the obvious data gathering issue that amazon can't signal 6 sig figs of inflation accuracy, for marketing reasons it probably had to be rounded to the nearest $5, probably rounded up.
What great timing considering the other post. AMZN "buys" growth with their shipping expenses, and if they want to become profitable something has to give, and this is it. Their attempts to become more profitable will come at the expense of revenue growth.