The Trouble with Amazon(asserttrue.blogspot.com.au)
asserttrue.blogspot.com.au
The Trouble with Amazon
http://asserttrue.blogspot.com.au/2012/02/trouble-with-amazon.html
11 comments
The excess computing capacity story is a myth according to Werner Vogels, Amazon's CTO, see: http://www.quora.com/Amazon/How-and-why-did-Amazon-get-into-...
Excellent - thank you for clearing this up!
"But in patio, lawn, and garden equipment, sports equipment, kitchen and bath fixtures, and numerous other areas, they're never going to have monopoly power."
I don't get it. The author doesn't provide enough rationale for this prediction at all, other than the vague notion that Amazon's trying to do too much. (Given they've successfully move into cloud hosting services, it's hardly a stretch to suggest they can move from selling books to selling garden equipment.)
I don't get it. The author doesn't provide enough rationale for this prediction at all, other than the vague notion that Amazon's trying to do too much. (Given they've successfully move into cloud hosting services, it's hardly a stretch to suggest they can move from selling books to selling garden equipment.)
According to Amazon's 10K filing, EGM currently accounts for 60% of the business. And that's precisely where the big trouble lies.
And 40% of the business is not in EGM. Compare that with 5 years ago, when 0% was not in EGM. I call that the opposite of being stagnant. I call that lateral growth.
And 40% of the business is not in EGM. Compare that with 5 years ago, when 0% was not in EGM. I call that the opposite of being stagnant. I call that lateral growth.
Seriously he thinks they might make a loss on kindle fire. Of course they freaking do. I'm pretty sure they were open about why earnings were down.
Does he not realize how much freaking money they will make on the backend of that selling digital stuff like apps and ebooks and also more physical stuff I bet.
Doesn't mention anything about Amazon Prime. Is in Australia so possibly doesn't know much about it, but yeah Amazon is a beast. Consumers don't wanna search the web they want 1 click buy.
Amazons other meaty asset is all its reviews. Take any so called obscure category he mentioned and you will probably find more reviews in there than all other ecommerce sites combined.
Consumers want easy, fast, trust, peer reviews, cheap prices. Amazon does all that. Article a good reminder to get me some Amazon shares and short sell on traditional retailers.
Does he not realize how much freaking money they will make on the backend of that selling digital stuff like apps and ebooks and also more physical stuff I bet.
Doesn't mention anything about Amazon Prime. Is in Australia so possibly doesn't know much about it, but yeah Amazon is a beast. Consumers don't wanna search the web they want 1 click buy.
Amazons other meaty asset is all its reviews. Take any so called obscure category he mentioned and you will probably find more reviews in there than all other ecommerce sites combined.
Consumers want easy, fast, trust, peer reviews, cheap prices. Amazon does all that. Article a good reminder to get me some Amazon shares and short sell on traditional retailers.
It is true that Amazon is attempting to be a one stop shop for all merchandises physical and digital. However that goal have made Amazon's web front crowded and convoluted.
If Amazon were to extend their product models to better express the "qualities" of the products, and extend their search and recommendations for products, I believe their web storefront can easily double or triple in sales.
If Amazon were to extend their product models to better express the "qualities" of the products, and extend their search and recommendations for products, I believe their web storefront can easily double or triple in sales.
Interesting read. I hope you're wrong...
Our business wouldnt be possible without AWS, they are still innovating which is good (and often lack of innovation is another sign of a company in big trouble)
I have never found Amazon.com particularly useful, nor have i bought anything from it. My girlfriend buys books a fair bit, but also admits the library is cheaper.
Our business wouldnt be possible without AWS, they are still innovating which is good (and often lack of innovation is another sign of a company in big trouble)
I have never found Amazon.com particularly useful, nor have i bought anything from it. My girlfriend buys books a fair bit, but also admits the library is cheaper.
The author wrote, "Ideally, it also needs to acquire a payment-processing system (a PayPal)."
Why? Has he heard of payments.amazon.com? It's tiny compared to PP but also isn't hated.
Why? Has he heard of payments.amazon.com? It's tiny compared to PP but also isn't hated.
This guy has completely missed the point.
Shareholders like high margins. Amazon made some moves last year that depressed their margins, specifically releasing the kindle fire, which they're selling at a loss, and price-beating brick and mortar stores with gift cards over the holidays to lure away customers. These moves have nothing to do with a loss of efficiency in their EGM business, but they do produce the smaller profits we see.
What the author mistakenly sees as a loss of efficiency is actually amazon future-proofing their business. Knowing that the market would punish them for taking all this profit and reinvesting it in growth, they went all in and took all the punishment at once.
Amazon has bright days ahead.
Shareholders like high margins. Amazon made some moves last year that depressed their margins, specifically releasing the kindle fire, which they're selling at a loss, and price-beating brick and mortar stores with gift cards over the holidays to lure away customers. These moves have nothing to do with a loss of efficiency in their EGM business, but they do produce the smaller profits we see.
What the author mistakenly sees as a loss of efficiency is actually amazon future-proofing their business. Knowing that the market would punish them for taking all this profit and reinvesting it in growth, they went all in and took all the punishment at once.
Amazon has bright days ahead.
Thank you for posting this.
The author treats the fact that they don't have a physical storefront as just a minor quibble. As if it wasn't the fact that Amazon didn't have a physical presence, was accessible from the comfort of your own home, and had incredibly reduced labor costs, that didn't end up being the disruptive change that put Amazon on the map.
To survive in its present form, it badly needs to acquire an Airborne Express (except that AE has already been acquired by DHL), or maybe a railroad and a package delivery company. Ideally, it also needs to acquire a payment-processing system (a PayPal). Why not just admit the obvious? Amazon needs to acquire eBay.
This is ridiculous - what business reasons does Amazon have for acquiring these companies, saddling themselves with physical infrastructure and additional labor costs, which may only earn them marginally more income?
Why would Amazon rush to acquire a shipping company and more labor costs, when shipping companies like FedEX are trying to reduce their labor costs by shifting the burden of local delivery to the United States Postal Service? (http://www.fedex.com/us/smartpost/).
There are so many differences between physical retail businesses and an online retailer, that the analogy cannot account for.
There are many cases to be made for challenges that Amazon faces, but this is not one of them.