many may be too young to remember but Eddie Lampert did this with Sears in the 80s and 90s as a thinly veiled attempt to turn the company into some kind of obscure land broker. It did not end well, and serves to this day as a textbook example of ideology eclipsing principled, well researched business decisions.
in the article Bloomberg attempts to invent reasons this practice is dicey for Amazon that dont involve "you arent a real estate company" but fall short. the regulatory landscape they paint simply doesnt exist in the places (texas) they want to buy land.
the real reason is likely to prevent competitors from setting up their own warehouses, as Lampert frequently did the same thing by buying out anchors and real estate in an attempt to funnel customers back into sears during its declining era as it was being bled dry by VC style profit chicanery that doesnt involve store refreshes or new markets.
As a counter argument McDonald's does the same thing and is quite successful at it. When you open a franchise you have to build on the main corp land and pay for rent on it in perpetuity, on top of franchise fees .
McDonalds is also careful to ensure all their franchises are in locations that will make the owner a ton of money (if they run the business well) and so it is a good deal. Not all companies work this way though.
Can someone explain why McD bothers to franchise their restaurants?
Usually franchise contracts are set up in order to transfer most risk onto the franchisee. But the risk is marginal because of due diligence McD does before launching a new venue.
Is this some sort of accounting/tax trick that enhances McD financial figures on paper? Does this allow them to raise more capital for expansion somehow?
Recruiting, managing, and paying people to run those restaurants with the level of dedication that an invested franchise owner has would be challenging. There are a lot of great managers out there to hire, but probably at a higher rate than McDonald's (or any competitor) would want to pay.
There are, specially on Cloud business. They are called as Cloud Partners who resell AWS and Azure which they bundle it with their consulting solutions. Good examples are Accenture, Infosys ...
Franchise stores and restaurants like McDonalds don't compete with each other as they have a physical attribute to them insuring this. IT Franchises however would be free to compete with each other making this business model pretty much impossible. The only way I see this working is with Franchises limited to one per country/state, who are specialised in regards to language, customer preferences and local laws.
What is there to franchise? As others pointed out software is easy to sell to anyone. Maybe you can franchise onsight support, but the big customers for onsight support mostly want a national company to take care of them, so no franchises as it is all the national number. The little companies maybe, but the little companies don't need the big brand, they learn which local company provides support.
More like ”we have this development flow and tooling that just works and everyone knows it so we have a strong brand, let’s lease it to others and avoid taxes by making them pay back appropriate interest on corporate loans to the parent company”, i.e. the McDonalds model.
I think the advantage for a restaurant is the contracts with large scale suppliers. You could do the same with hardware and software perhaps, but the advantages and disadvantages would look different.
These days it's probably not necessary. Starbucks doesn't franchise and this allows them to do things that make more sense for Starbucks as a whole as it would make for any single location, for instance, the notorious Starbucks across the street from another Starbucks that Lewis Black ranted about. However, it made a lot more sense in the early days of McDonalds because of the sheer organizational complexity of employing people in every medium-sized-and-up town in the United States, and now, franchise holders are an established and vested interest that the company needs to keep happy.
The margins on starbucks are a lot higher though, and the staff needs a lot lower.
Franchising is basically Uber before Uber, when someone is an "owner/operator" they will work a lot harder/do things for free that a salaried manager never would.
Starbucks also does franchise I believe (inside places like safeway and target).
Interestingly, in the US and Canada Starbucks don’t franchise, but elsewhere in the world they do. Here in the UK the majority of Starbucks are franchised.
Same reason banks sell mortgages instead of buying homes and renting them. It’s not their business model to operate thousands of stores. Having many different people operate many different stores to their standard is.
i see franchising as a form of specialization. The corporate head specializes in branding, sourcing of suppliers and logistics and menus, etc. The franchisee specializes in operations day to day.
Largely legacy reasons related to capital access during founding, because of this McDonald's is mostly a property company that also sells burgers and burger store franchises.
State laws in some places make franchises a better worse deal. I invest in one[unnamed] company that has a few franchises, but they are regional and the state laws where they are makes running franchises not a good deal so they are no longer doing that and looking to buy bake the existing ones. They are looking to expand to new states though where the laws are different and so they may start selling franchises there.
I left McDonalds 25 years ago and I have no idea what is current. Back then about 25% of all stores were owned by the company with the other 75% franchises. The corporate owned stores were for sale if you wanted a franchise (assuming you qualify), and were in a known location so fairly low risk. The company would also buy out your franchise a good deal when you were ready to retire.
I think it would lead to some antitrust issues to be honest. McDonalds sells you the cups, the bags, the beef, etc. They are really a business-to-business business and you the franchisee are the business that is actually consumer facing. McDonalds owning the store at that point would be like movie studios owning the theaters.
Take 5 million in loans, start 3 and then you have 450k - .05*5 million = 250k free cash flow. Not a bad deal at all in an inflationary environment, but a rough deal in an environment with rising rates.
They won't allow you to franchise if you need a loan to come up with the money. You need to demonstrate "unencumbered liquid assets." They might allow a certain percentage to be borrowed, but it's likely rather low.
Like all investors / business owners income is the resukt of actively managing something. In the case of McD franchise owners, there are at least people working for you to whom tasks can be delegated
Surely any successful company, and even most any failing company, has a system for identifying and quantifying optimal locations for new builds. It’s not like Amazon is just taking whatever real estate it can get. There are at least some parameters.
Yes it is very rare. In most cases it is probably due to general economic decline of the area, but every once in a while they were just wrong about the potential of the location.
I'm sure there's a ton of resources, but if you want to be entertained as well, this came up in a Last Week Tonight episode about Subway, this last May. It may have been a web special.
> many may be too young to remember but Eddie Lampert did this with Sears in the 80s and 90s
Eddie Lampert didn't start ESL Investments until 1988 (and he was only 25 then). ESL didn't start destroying Sears / itself until 2004 (https://www.investopedia.com/news/downfall-of-sears/ "Kmart announced it would buy Sears for $11 billion in Nov. 2004..." It was via the Kmart merger that ESL came to control Sears, ESL having taken control of Kmart after Kmart's bankruptcy in 2002).
Anyway, you might be remembering a different company or different "business genius"?
Amazon is buying land piecemeal, lot by lot—probably roughly at market value, then. I don't think it's really comparable to someone buying Sears because they think Sears's land holdings are undervalued.
At worst, they're exposing themselves to the whims of the commercial real estate market as a whole. Not like Sears, where the value of their holdings depended on a pretty niche market—the value of malls.
A lot of businesses sell and lease back their real estate. That way their capital isn’t tied down in non core competencies. Also they can insulate themselves from real estate booms and busts.
Owning land isn’t something that requires a great deal of skill/competence compared to leasing land - in fact if you want to stay in a property for a long time, there is more complexity in managing a lease if you have capital tied to it once the lease period is up and you are forced to renegotiate the deal.
IMO this idea that a giant logistics operation shouldn’t own it’s own warehouses just because owning warehouses isn’t a “core competency” is questionable. In reality this decision just depends on your corporate perspective on the cost of capital (eg the WACC).
lol, most of amazon's money comes from things that weren't the core competency that they figured out how to do at scale.
The 'focus on your core competency' is for small companies on tight budgets with tight human resource capacity. When you have a few mil employees, email is a core competency, when you have a dozen, it's a pain in the ass. The same goes for AWS. def wasn't a core competency, but a huge part of the reason we can tell businesses to focus on core competencies is because amazon made SaaS, IaaS, PaaS a thing.
IDK about real estate. It probably makes sense to own your office buildings and warehouses at scale. They probably have a real estate team that's bigger than most companies that are 'focusing on core competencies' and it probably doesn't look too different than any super focused brokerage.
Once you hit scale, the money is in doing it in house. When you're paying by seat, it becomes a core competency about the time the cost to run a team of pros to do the same job is <= to paying per seat.
This may have been a misstep assuming that their pandemic growth would continue. I believe that's what they said in their last earnings call, something to the effect that they scaled quickly to address additional market capacity that was short lived.
Would assume they'll be just fine. Probably read the tea leaves wrong but I don't think this is getting off track and forgetting what they do to make money.
What they could also do, if they don't want to ride commercial property prices, is bundle the property in a fund, and have it owned/managed by selling shares, but with the caveat that Amazon is effectively on 'rent control' and gets an infinite lease, until it decides to bail out.
> That way their capital isn’t tied down in non core competencies.
That nonsense of "non core competencies" has to stop. All that mindset does is exchange marginal cost savings (by going for the lowest bidder) for resilience.
Yes, it may not be a "core competency" of a rocket company to build valves, but now they are in complete control and not reliant on the valve builder company to not fudge with test results. Yes, it may not be a "core competency" of a logistics company to build and maintain their own warehouses, but that way they don't have to keep a landlord happy to not lose their location.
"Sale and lease back" is only one thing: foolish and dangerous, particularly when the thing that was sold and leased back were the stores.
But in a place like california why would you do it? You have movie studios who have owned their lots for almost a hundred years now. Tax on those assets are probably pocket change a year thanks to proposition 13. Now when you sell those backlots back to the holding companies to lease back for your own use, they get reassessed at todays market rate, and who knows how favorable of leasing terms the holding companies will offer you when there is a demand for soundstages from every production company in socal?
Meanwhile, every grocery chain does it, Walmart does it (Successfully!), Mcdonalds does it, and more.
The later is more interesting because it's a franchise model, and if a franchisee is successful, there's usually nothing in the franchise agreement to stop corporate from setting up shop nearby. Maybe not across the street or a block down the road, but yes.
Also quite common w/ lapsing leases with walmart and such, they take out 15-25 year leases, and if it fits their margins, they will build nearby and ride the lease out.
I'm not sure how to investigate who owns lots of lands, but I think the Walmart near me did the same. They used to be in a big building, but then after some time cut down the forest literally nextdoor and built a bigger Walmart there. The original building still stands but is leased by another brand.
I use to work in a conglomerate that I did not associate with real estate. After working there for a few years and becoming friends with some people in the corporate real property division, I realized they randomly own a ton of land everywhere and that real estate is just a useful core part of any conglomerate. It's a nice place to park assets, obtain rent, and to rent for offices yourself.
I imagine a lot of conglomerates and large companies do this, because at a certain scale, it's more of a "why not?" question.
On the company’s quarterly earnings call on May 3, 2022, MicroStrategy CFO
Phong Le stated that the company would face a margin call if bitcoin’s price
fell to about $21,000.
According to Coindesk, the price for Bitcoin dropped to $20,087.90 last night:
correct! PE was more of a fever dream at sears as well. capex and opex was the most visible and agonizing part of his "vision" but certainly the 5bn in stock buyback he instituted makes harley davidson look like a food truck in comparison. under Eddie, sears made money by selling the idea and concept of sears on paper, not tangible products at the malls it occupied.
the whole thing devolved from a value trap to many people outright calling Lampert a thief who orchestrated the downfall of Sears intentionally. three years ago he even threatened to stop payment of sears and kmart pensions during bankruptcy proceedings.
I recall and interview where they spoke of returns as a profit center. I’m sure there was some sort of accounting bullshit that make 1+1=5, but in the end it’s bullshit.
What happened with Sears is very different. Somehow, Eddie Lampert got Sears to divest itself of its real assets and was then going to lease them. Some other company of Eddie Lampert's ended up owning the real estate. That company never had issues.
I don't think buying of real estate was their downfall - it was the other practices - as you point out. The real estate portion may have actually delayed the inevitable downfall.
"serves to this day as a textbook example of ideology eclipsing principled, well researched business decisions." ...sounds satirically like a lesson the Vatican is learning harshly right now.
This has always been Amazon's strategy. Amazon is not a server company, an ecommerce company, a grocer, or any of the other seemingly random things they do.
The common thread running though all of their lines of business is to create businesses with complex problems, solve those problems incredibly well, then sell those solutions to other companies. Amazon uses themselves as their first-and-best customer [1]. AWS, Prime and all of their best solutions work in this way. The whole company is organized to support this strategy.
The fact that Amazon is expanding their warehouse capabilities beyond their needs and building deeper into the stack by getting into real estate development is a natural continuation of this strategy.
I’d love to see Ben partner with a smart tax/finance guy.
His analysis is interesting, but very slanted with the tech business viewpoint. The cringy canonization of Uber back in the day is a great example. IMO, these machinations by Amazon are probably more about financial engineering than anything else.
Amazon has a good distribution network, but Shopify, Walmart and Target seem to have found and are competing successfully at Amazon’s weak points. Many people I know pivoted to Target for consumer staples vs Amazon. You can have anything they carry in about 30m. Shopify seems to be the place for sellers who want to protect their brand and avoid being ripped off within days.
Not sure why Ben cares about an Amazon truck vs UPS delivering stuff he’s probably alone in that.
> If both of these stories are true, it makes me wonder why they're acquiring so much real estate.
Most likely a low-cost option to expand at their leisure.
1. In general land will be cheaper now than in 50 years. Even if current prices are high, the fluctuations will look like a blip in a few decades.
2. They can lease the land to minimize holding costs (taxes, etc.).
3. They block out competitors from deals.
4. They can expand their capacity as needed when needed.
I know several wealthy universities I have been affiliated with have done this. Whenever real estate near the university was for sale, they were the buyer. Price really didn’t matter (a “high” price was fine). They left the buildings as they were and used them for the same uses. Then when they wanted to expand for a new facility or whatever, they just wrapped up all the leases, knocked the old stuff down, and built the new thing.
People wonder why they paid so much for the land, but it always looked like a genius move over time.
Part of King Henry VIII's fight with the Catholic Church was due to the amount of rent-seeking that was going on in England. They were such a ridiculously massive land owner by that point that they threatened the Crown.
Little different- the church doesn’t pay property taxes. Amazon does, unless they have a religious investment arm.
If I had to guess, I’d say land purchases are some sort of vehicle to filter profits for tax purposes. There’s a million rules that benefit property owners for that purpose.
Perhaps they are getting tax abatements by bamboozling the local county officials into thinking that there is going to be some huge local economic benefit from their land purchase.
OTOH when amazon wants to build a warehouse, they probably shop around for municipalities that are willing to waive collecting property taxes for X amount of years to get that development and income tax.
Is it a better buy than somewhere else is the big question though. Sure maybe you'd make your money back in 30 years but that's not what gets investors going. Otherwise everything would be powered with nuclear energy by now.
Detroit going bust is bad if all of your property is in Detroit, but if you have property in 100s or 1000s of cities then the individual booms and busts become less relevant.
They could just be leasing out space in locations where they overbought relative to short term needs, but expect to need the capacity later. E.g. project out steady 10% YoY volume growth with a 5-year real estate cycle for warehouse space, and you'd def get some medium-term regional overcapacity/shortfalls.
EX a small brewery building a 20+ barrel setup as that is the predicted need in 3-5 years then leasing or partnering use of half their facility while building their brand and distribution network. Then when ready they have the capacity to 'expand' without the costs of said expansion.
For startups/new breweries it can be a double edged sword leading to high initial debt or overhead costs but with the right leadership/strategy/product it definitely pays out over time.
Amazon thinks long-term. They have a glut of warehouse space at the moment, and it is costing them dearly, but they probably hope to grow back into it when the upcoming recession is over. If Amazon successfully launches their program to buy with Prime from other stores, they could probably fill up their extra warehouse space pretty quickly. Think of Amazon handling logistics for every small retailer and even some big ones, regardless of whether they sell on amazon.com.
They can achieve a faster last-mile experience if their facilities are closer, and this space is now in contention with Walmart already beating them to the punch on drone delivery. To compete with big-box retailers they increasingly have to act like one, which is a very deep change to their e-commerce business. There is a strong chance here that they get outcompeted.
Exactly, the tables have turned and suddenly those large Walmart and Target stores are basically customer-manned warehouses that they can also ship from. Best Buy is in on it, too - order from them and half the time the product will ship from some Best Buy store somewhere instead of from a warehouse.
I bought a device from Best Buy and it arrived on my porch within 3 hours of my purchase. It was quick enough that even if I don't always receive orders that fast, I'm more inclined to check their website now instead of just defaulting to Amazon 2-day shipping.
Even if online sales are slowing overall maybe it is still growing in some areas, requiring more capacity. As for the land purchasing, maybe it is partly an investment to get cash off the books and/or positioning for some long term strategy (this is just a guess, I don't know much about how large businesses operate).
This. Amazon no doubt has reasons to buy land that it _might_ want to use for warehouses, etc., but they are also just stuffing money into real estate because it's an inflation hedge. The very beginning of the article admits that they were in competition with hedge funds for some of their purchases.
Purchasing real-estate commercial or retail primarily for speculation should be taxed/disincentives. Basic needs with no alternatives should be shielded from speculation forces
Amazon have a colossal amount of cash sat in a variety of banks, investments and probably rainbows. It makes damn good sense to splurge, sorry liquidate, strange and probably slightly dodgy financial instruments into tangible thingies. It also makes sense to diversify your portfolio generally. Amazon also need quite a lot of strategically placed parcels of land for its warehouses, depots and what not.
If I was Amazon, I would be buying land as fast as my grubby little paws could do so, with a healthy nod to debt to value. The beauty of this is when you have shit loads of cash at hand you can grab loads of long term investments like land and win/win and you even tend to find "incentives" from grateful local govt.
In this game if you get bored of buying the usual stuff like London and Texas etc, you can also grab the bits of the Caribbean that the cruise sharks have left behind. Ideal for a party island.
The placement of the land for Amazon is very strategic. Those warehouses don't just happen anywhere. Usually they are also very close to a freeway ramp because this makes it easier to get product in and reach customers. A lot of other businesses like Costco favor these same parcels for these same reasons. You'd think there would be a lot of places like this, but to be honest these sorts of huge parcels required for these businesses are rare and valuable real estate in cities. A lot of places are pretty built out already and getting a huge lot like that zoned for this use, let alone near a highway that's near a population center, is not an easy thing. I'm betting there are only a couple dozen sites like that available on the market nationally at any given time.
The article notes that online sales growth has slowed, but honestly I don't think that matters. Amazon is building out their own logistics and that'll be useful to them even if online sales were flat. Even beyond their own deliveries, there could be an AWS-style business there.
I'm surprised that Amazon doesn't own apartment complexes. Build a multi-level basement as a fulfillment warehouse, then stack housing on top. The housing would have 10 minute delivery and be a great way to further accustom people to Amazon being the place to get everything.
That sounds awful. An apartment where you have semis pulling up at all hours delivering cargo? This is why we have zoning laws to avoid people building warehouses in residential districts.
How is this really that different from city centre multi use buildings where there are stores on the ground floor and living space on the upper floors? Especially if some of those are served by gig-economy delivery couriers.
Those stores get stocked somehow- usually not by semis.
I think you underestimate the traffic a warehouse gets versus stores in the ground.
Also recently in the Netherlands they’ve decided that the 10min delivery grocery stores are actually distribution centres and are no longer allowed to set up shop in the housing areas, because of the excessive amount of truck traffic.
It wasn’t the truck traffic only. It was also the activity at all hours. Plus the deliverers on their bikes making lots of noise. Plus these stores being boarded off or closed becoming very ugly and shady.
That should be a matter for local government regulation or workplace safety authorities - a company should not be able to not provide adequate break rooms for their staff.
It probably wouldn't be a full amazon warehouse. It would probably be no more traffic than having a Target on the ground floor of your apartment, which is increasingly a common thing.
A distribution center generates hundreds of truck trips a day. A good sized supermarket generates ~15 a week, but may vary based on the company and methodology.
Denying mixed use because it might be noisy for hypothetical residents is how we wound up with the current disaster that is American urban/suburban planning
Are mixed use buildings a problem? I thought the normal problem in America was that zoning tends to prohibit mixing uselage types.
Here [0] is a random street i picked in Paris with mixed use buildings - looks pretty nice tbh-lots of accommodation & amenities, easily walkable, some shops and restaurants.
My point was that denying mixed use is what creates the American suburbanization mess. Most cities have limits on delivery hours anyway, making the parent comments concern moot.
Which cities restrict the hours when _warehouses_ can accept or dispatch deliveries? I've never heard of that. Don't many warehouses operate around the clock?
BMW's Mini pressing plant (formerly Pressed Steel) is in my home town, Swindon, it's surrounded on three sides by housing and the fourth by a road that has houses on the opposite side.
I'm assuming you're referring to https://www.google.com/maps/@51.5715534,-1.7418073,1186a,35y... ? It looks like there is heavy use of lots of trees to mostly separate it from the housing. It also seems generally to be part of a broader industrial section that is served by freight rail and is relatively nearby to expressway to help minimize the traffic. You are right there are some homes, especially south of the plant, but I think that this example proves how work needs to be done to ensure how industry and residential can coexist in harmony.
If they build the towers tall enough, or put in only minimal windows, then only the lower floors will be inconvenienced. These floors can be reserved for the Amazon workers. /s
i think the ordering matters a lot: warehouse added to residential space: NO. apartment added to an industrial space: okay. people will put up with a lot of noise (e.g. those who live under a flight path near the airport), just so long as they knew what they were signing up for.
Smarter politicians will refuse to bend over backwards for new employers who offer low wage jobs, set up enterprises that can be easily relocated when the tax credits expire, and don’t offer anything special.
I tend to agree, although if it costs less to rent and have 10 minute Amazon delivery? I might go for it. I've lived next to train lines and highways that are louder.
Basements are by far the most expensive parts of apartment building. It's one of the reasons that reducing parking requirements for apartment buildings is a good way to make housing more cost-effective to build and therefore to increase housing supply (last I heard).
Yeah but parking above ground is probably cheaper than building out apartments. I've lived in buildings where the first 6 or 8 floors were parking. And a parking space rented for several hundred a month, on top of your apartment rent.
expensive to build, but less desirable for anyone (but parking) so there's no incentive to build much. It will definitely be more expensive than a warehouse 45 minutes away - even in the most expensive cities (where they do build basements to the extent that they can before they hit subways and whatever).
In addition to the drawbacks outlined in other responses, human living situations are too unpredictable to make that kind of arrangement desirable. Inevitably, there will be a plumbing issue because someone left a bath running, or a medical emergency causes unforeseen traffic challenges, or a fire breaks out.
The more delivery productivity you stack on top of this infrastructure, the bigger the impact from an unforeseen issue... and humans can introduce a lot of unforeseen issues.
Amazon can't build apartment complexes on top of their warehouses because many of their warehouses are already 3 or 4 floors, and the obvious zoning issues of building complexes in the middle of nowhere with a bunch of other warehouses.
So dystopian. You can imagine the vending machine kiosk on the first floor— no, the Alexa built into every unit- that’s ready to deliver anything you wish, and accept your rent payment.
I wonder what the tax treatment would be - I think company housing might not be taxed as income in this case (on prem, required to work there, etc), allowing them to pay much lower effective rates for labor by baking the cost of housing into a paycheck and pocketing the tax savings.
Correct, employer provided housing not taxed in certain cases, so you get some massive tax savings this way. Be interesting to see what argument amazon might make. Needs to be:
* The housing is provided on the property owned by the business or employer.
* The housing is provided for the convenience of the employer.
* The employee must accept housing as a condition of employment.
Intended more for folks like on-call firefighters living in a firehouse or a park ranger who is required to live in a cabin in a park or nanny's staying with their family. I could see some situations amazon might have an argument to make - they could probably do micro-units or shared housing / dorm style housing for workers and save massively on labor costs especially in high cost urban areas where folks would otherwise never be able to afford a place.
Employee benefits are routinely taxed differently. Health insurance, 401ks, some meals, etc.
Most likely, it'd be considered a "fringe benefit" and the employee would still have W2 / income taxes and withholdings on it. How municipalities would tax the property value depends entirely on how they choose to tax on-site housing (as it is technically both commercial and residential space).
Maintenance on the buildings would likely be partially deductible as operating expenses, no different than any other building operated by a landlord or business.
The illegal aspect only pertains to doing something like this and not paying relevant taxes. Companies have been providing their employees housing for hundreds of years. Trump Org was perfectly free to provide employees apartments, provided appropriate tax filings and payments were made.
I used to joke that Amazon should buy up the housing in SLU and then between Amazon sales and rent they'd get 90% of their costs of employment back as revenue.
I don't live in US, and there is no amazon specifically catering to the country I live in, but my experience with Amazon as a shop has been that it is a really bad user interface, with crappy search, filled with a bunch of questionable "spam" products.
I wonder if this is the case in US also, or maybe just my individual experience. It is very hard for me to get how a company so successful has such a crappy flagship product.
It’s really nice for my 3D printing hobby since most of the brands I’m buying are based in China or Europe (mostly China). They send over a shipping container of printers and Amazon handles fulfillment so I get the stuff in a few days instead of waiting 45 days and pay $100 shipping to get a 20 pound device delivered. They also have all the replacement parts and stuff in their warehouses.
Also, their returns process is painless. I thought I’d support local workers and had been shopping at Hobby Lobby instead of using Amazon. For my trouble, when I tried to return an airbrush that didn’t suit my needs (I used it once) they treated me like a criminal, it was a whole production.
With Amazon I just head to the Whole Foods down the street (or Kohls sometimes?), return it, and get credited almost instantly.
I do think Walmart is putting a lot of effort into their online offerings and if you can return online purchases in store that’d be a huge win. We bought my wife’s MacBook Air off Walmart’s online store and it was super convenient.
> Also, their returns process is painless. I thought I’d support local workers and had been shopping at Hobby Lobby instead of using Amazon. For my trouble, when I tried to return an airbrush that didn’t suit my needs (I used it once) they treated me like a criminal, it was a whole production.
I had the same experience. I ordered a $70 worth of cleaning supplies directly from the manufacturer, thinking I'd support the brand and cut out the middle man. My package was stolen (box opened and left right there) so we contacted the seller and told them the situation and they said they can't do anything about it, even with a police report. Amazon would have refunded it immediately. Half the time when I return something they even let me keep the item and donate it rather than dealing with the return.
I want to support smaller online retailers but not so bad that I'm okay with getting ripped off with no recourse every once in a while.
The fact that they can afford to take a loss on many returns while their smaller competitors cannot kind of implies you're getting ripped off in some other way, doesn't it?
Where does the money to pay for your stolen cleaning supplies come from? Why would you even think to contact the manufacturer about this? Why not the shipping company? Or your building's management? I've fumbled a soda and broken it on the ground right after checking out and the grocer replaced it for free, but I recognized this as a generous act of kindness and not an expected baseline of customer service. I've also lost a soda in the parking lot and I can't even imagine feeling entitled enough to go back into the store to complain about it.
Never once in my history of ordering on Amazon have I received a fake, spam, or bait-and-switch product.
I have deliberately purchased non-name brand products, and sometimes I have received defective products, as one would shopping anywhere, but even then Amazon's customer services and return process is second to none. It shocks me that everyone on HN and other popular forums has very little success buying on Amazon.
I've had a defect rate of less than 1% percent with a sample size of enough items to reduce the margin of error on that statistic to something rather negligible.
To get your configuration you need to have two items that aren't defective and five items that are.
There are seven choose five ways you could have a particular configuration where you have five defects out of seven purchases.
7 Choose 5 = 21
So therefore the probability of what happened to you happening to me would seem to be:
9.801e-11 * 21 = 2.05821e-9
This written out in numbers is: 0.00000000205821 That number as a percentage is: 00.000000205821% For comparison the probability of being struck by lighting over the course of a person's life is 1-in-15,300 which is 0.00006535947. Many people struggle with reading really small numbers like that and so we often decide to round. If we do that the probability of what happened to you happening to me is roughly 0% if we choose to round at six decimal places. Seconding the OP claim that the general experience is shocking, because it is extremely divergent. It would be more shocking to be hearing everyone on Hacker News was regularly being hit by lightning bolts than that people are getting your defect rate.
When you see a result like that it’s a good idea to check your assumptions.
That calculation assumes these probabilities are independent when they aren’t. What was ordered, when it was ordered, and where it’s being shipped to are all likely to impact the odds. On top of that are ability to detect fakes and defective items are likely to be different.
Having said that, I have been hit by lighting. Or at least it stuck the car I was in and I felt some effects. I didn’t report it anywhere that records such strikes, which suggests non serious lightning strikes may be underestimated in those statistics.
> What was ordered, when it was ordered, and where it’s being shipped to are all likely to impact the odds.
given the wildly diverging experiences people report, this is my assumption also. at least to my knowledge, I've never received a counterfeit item from amazon, but there are also certain things I avoid buying. for example, I would probably not buy lipo cells, especially not from a third-party merchant. they are trivial to rewrap and poor QC can literally start fires.
would you mind sharing what kinds of things (or just categories of things) you are buying to see such a high rate of counterfeits?
Same. The only category of products where I've personally encountered a fake was SD cards, and that's a large problem everywhere online. That's the only thing i buy now directly from manufacturer-authorized retailers. Idk if that's even common, because I've only gotten a fake once out of many times i ordered sd cards.
Everything else? I've been buying all sorts of stuff from amazon, from electronics/hardware to clothing to furniture to almost anything you can think of, and not once was it fake. Before anyone asks how I know they weren't fake, most of them came with a "register on the manufacturer's website to get extended warranty/extra stuff" unique serial number, and i was able to do so just fine. Ofc that doesn't apply to everything I bought, because not every product allows registering itself on manufacturer's website. But for those that don't, I haven't noticed a single sign of fake/counterfeit items.
Ofc this is all just anecdata and isn't an evidence of anything. But i gotta say, as others have mentioned, their extremely easy and efficient return process definitely makes my decision-making efforts much easier.
Are you sure you haven't received a fake product? How do you know? The fakes are so good much of the time that you may never know if you have received a fake.
I have received 5+ fake products and stopped ordering on Amazon a few years ago. Not worth it, too much risk. Would never, ever, order food from there, or anything you put on your body, or anything electronic, etc. Way too risky.
The (legitimate) manufacturer will be able to tell the difference and won't service or provide support for counterfeits. And warranty claims are obviously out of the question.
You are right: https://www.youtube.com/watch?v=fSE_Nm7pAw4 - this video from bigclivedotcom shows the unique failure of a usb-c power supply that also took out a MS Surface and associated monitor with it.
> Never once in my history of ordering on Amazon have I received a fake, spam, or bait-and-switch product
My wife and I both have. It's likely that there's a buying pattern you have that's been very lucky. If you want to assume that millions of people are lying, there's nothing more to talk about. I would suggest trying to buy parts for anything on amazon to see the inaccuracies + bait & switch behaviors.
It has a medium level of spam, but if you stick to name brands sold by amazon, you generally get what you pay for.
It's replaced the department store, and usually has better service / return policy than a department store (Target etc.).
Costco might be the exception but generally I don't go to costco to search for a specific product. They either have some general version of a product, and if I'm willing to buy that I will; swim goggles for example. Perhaps I want TYR swim goggles. Costco will have better pricing on Speedo goggles but won't sell the TYR mirrored version I'm looking for. Click, bought on amazon, arrives next day.
The flagship product is the logistical operation and it is pretty damn far from crappy. I can't speak for everywhere, but at least in most parts of the US, they can get you damn near anything on the same day. For products where you already know what you want in terms of brand, seller, and quantity, or regular recurring purchases of staple goods (cat litter, paper towels, dish soap, anything undifferentiated that you need to repeatedly purchase), even groceries now thanks to buying Whole Foods (provided you have the upscale price point that makes you willing to shop there to begin with), it's about as perfect an interface as you could hope for. Find and click in under a minute and you can probably have most goods in a few hours, at most next day.
If you're trying to discover new products of unknown quality and reputation, then it's not so good. For whatever reason, that seems to be the use case people focus on when criticizing Amazon on Hacker News, but I don't see how that can possibly be the dominant use case. Most of what people ever buy is not something brand new to them that they know nothing about.
I'm looking through my last several months of purchases here, and I'm seeing a bunch of automotive cleaning fluids, mostly from Adam's, polishing compounds and a respirator from 3M, a bunch of power tools from DeWalt, a Bose speaker. Known brands from reputable sellers, every item what I wanted and it got here quickly. In some cases, I either tried to or had to purchase elsewhere. For instance, Amazon had most of the DeWalt power tools I wanted, but was out of stock on rotary polishers, so I had to get it from some place called Acme Tools, and it took a week and a half. Amazon got me everything the next day. (I had a bunch of stuff stolen from my garage is why I needed all this at around the same time.) I tried to purchase the Bose speaker from Best Buy since I have one a five minute drive from me, and their website claimed it was in stock and I could pick it up the same day, but then right before the pick up window, they texted me to inform me they didn't actually have it and wouldn't for another week. So I canceled the order, went on Amazon, and they had free same day delivery.
It should be obvious that anything that goes from not existing 25 years ago to top five market cap company in the world is probably offering value somehow.
> If you're trying to discover new products of unknown quality and reputation, then it's not so good. For whatever reason, that seems to be the use case people focus on when criticizing Amazon on Hacker News, but I don't see how that can possibly be the dominant use case. Most of what people ever buy is not something brand new to them that they know nothing about.
First of all, HN is full of entrepreneurs and wannabe entrepreneurs. A storefront that can't sell anything that doesn't have a good reputation outside the storefront is bad for small businesses, because nobody is willing to try anything new. A major part of the value proposition of a storefront is that the owners will vet the products they sell for a minimum standard of quality: it's not necessarily great, because greatness is subjective, but the food shouldn't poison you[1] and the AC/DC power converters shouldn't catch fire.
The second problem is that sellers will pass off counterfeit goods as being from major manufacturers when they aren't. I know I'm falling for selection bias, since I've probably bought counterfeit goods without knowing it, but that's not even really the point. The point is that I've bought stuff on Amazon that just didn't work, sold in packaging that's identical to stuff I've bought before that did work. I knew they were counterfeit and not just duds because the actual product didn't have the branding on it that genuine ones always have.
[1]: Well, okay, it might poison you if you have a special allergy. But anything with the common allergens like gluten or lactose will have labels.
> It should be obvious that anything that goes from not existing 25 years ago to top five market cap company in the world is probably offering value somehow.
That is very true, I think probably from the outside looking in it was hard to see what value they were offering. But from the responses here I think I got a better picture of what people get out of it that makes it the best choice for them most of the time.
Amazon has stunning logistics. I’ve almost never received anything late over the last 10 years and if there’s anything wrong with the product they just refund my money. There is some spam that’s unavoidable with opening up the platform to third party sellers but I think it works very well overall.
Amazon is one of the most trusted brands in America. It is almost as trusted as USPS (the top trusted brand) and is, in general, considered by most Americans to be a reliable, safe, and high-performance source of goods.
I hate Amazon as much as the next guy but IME international Amazon and US Amazon are completely different things and aren't really comparable, they just have a similar GUI. US Amazon has nearly any consumer product you'll buy (from most food up to really expensive stuff like small boats and sheds) and almost all of it shows up in 1-2 days with minimal shipping cost.
I know people in Canada and it's nothing like that. What you can find is crazy expensive and it it takes weeks to ship.
I'm an American, but I did my graduate degree in Canada, and the difference was so extreme I (and others) would just get stuff shipped to the border and go pick it up.
I have had friends receive items like candles already used or paint brushes already used.
I've been duped into buying travel size bottles of mouthwash, toothpaste, soap, etc because the seller prices them at or around the same as full sized items.
I guess that's on me for not paying attention to the weight though...
Up until the mid-2000's Amazon was mainly a bookstore with a very good catalog and recommendation system. Then it became the pile of spam that it is today, a marketplace of sellers worse then Mos Eisley.
Or some kind of regulation limiting how much you can actually own. If we can regulate eg. radio spectrum (which is a limited resource too), why not land too?
This is very hard to do in practice. Bezos could spin up a thousand new companies within days and use them to buy property.
Plus we shouldn't restrict ownership when that ownership is put to productive use. Buy up thousands of acres for for a ranch or to build factories is fine. Buying up land just to sit on it is bad for society, and that's a problem that LVT addresses.
Well yeah, but you actually need cattle and have them graze there, or build factories, employ people and produce stuff there, so if bezos buys a plot of buildable land, he would get a 5 years (or whatever) time limit, to actually build and produce something there, or be forced to sell. If someone just buys land, and hodls it, without actually producing anything there, a 100% tax rate would solve a lot of problems.
The financial industry has hijacked and transformed capitalism. Less industrious and more rent-seeking. Adam Smith et al would be turning in their graves.
What's good for Amazon isn't necessarily good for the rest of us. Maybe that land they are going to build a warehouse on should be reserved for agriculture or reforested.
I'm old enough to remember when Amazon had an "advantage" over bricks and mortar operations because it was much less capital intensive. However, under ZIRP, having a capital intensive business (warehouses, data centers, etc) is a vast moat. Will this change as interest rates continue to increase?
They retain that advantage. B&M retail needs all of the warehousing of Amazon, but also requires low-efficiency retail space that services a pretty narrow geographic area.
It's just a wise way to store capital in a volatile investment
ecosystem. Property rarely falls in the long run. If anything it shows
that Amazon don't have much confidence in other areas.
Jeff Bezos owns a ton of land personally in and around Van Horn as well. Between him and Gates, it's staggering how much land these billionaires are buying.
Billionaires/bigcorps are probably better-able to afford taxed land than non-billionaires, and/or make profit from the land to offset the tax. Adding a tax-liability to land might effectively push more of it into the hands of corporates.
Amazon has some flexibility here. They've been pushing some of their vendors to handle their own shipments, resulting in a whole Amazon reseller industry. Amazon can pull as much of that in-house as they want.
A couple of years ago, my stance was that the growth of mega-corporations would lead to economic inefficiencies which were 'as bad' as a centrally planned communist economy. But now my belief is that it will be worse because at least, in a centrally planned communist economy, there is some degree of socially beneficial collaboration between different industries... Here we have a handful of massive megacorps with distinct financial interests which are all trying to extract as much value from society by whatever means or excuses they can get away with... Won't this just lead us to China-style 'ghost cities'?
Amazon knows how to build warehouses, so they will just build ghost warehouses so long as government money printers will subsidize it; they can keep monetizing warehouses regardless of whether or not the market needs them. The entire economy is turning into some kind of Bitcoin-like mining scheme except instead of wasting electricity, Amazon will waste mostly concrete, steel and workers' time... It's incredible that while most people can't afford houses to live in, Amazon seems to be building more and more warehouses...
Megacorps are merely following the streams of currency from the money printers instead of following real consumer needs... Unfortunately, they have a lot of control over the money printers via their relationships with governments so they can make sure that they end up pointing towards wherever is convenient for them... They can turn a profit regardless of whether or not people need what they're offering.
Just look at big weapon manufacturers; they wanted some big juicy government contracts (funded straight from the money printers) and look at what they got; another war! Governments are all too happy to hand out all that free, freshly printed money to their buddies. Plenty of profits generated from destroying net economic value.
Vaccine manufacturers... Bill governments for billions of doses and then let governments worry about how to sell it to the public. Governments are systematically monetizing waste for the benefit of their corporate overlords with 0 concern for common social interests.
Amazon company town. Born into Amazon baby diapers, raised in Amazon communal housing, worked at the Amazon warehouse, buried in an Amazon coffin. Rents extracted at every stage of the process.
Look up 'feudal serfdom in medieval Europe' or 'company towns in the American Gilded Age' for similar projects.
People need to stand up to the corruption and wealth inequality, or this isn't just some far off concern, it will happen. These big companies are quite happily enjoying the same scenario internationally where workers live at their factories. Don't for a second think they won't do it here.
If you don’t want people to pay rent then you reject the concept of a societal meta-organism. The only problem with that is that another country will lean into the meta organism concept and become much stronger than everyone who doesn’t. Which will result in the economic or military destruction of those people.
I'll go ahead and say it: Amazon is frighteningly large. Any time I visit a UPS store, the lines are out the door and most of the people are there to make amazon returns. I see amazon delivery trucks throughout my town - its incredible what Bezos has achieved but I fear its just gone too far.
I'm only 32 and I've seen so many companies shutting down; partly due to consumer shifts, but also by amazon pushing them out of the market. The pandemic also caused a few big players to get thrown under, but it seems that amazon only grew bigger.
"Bezos achieved" it's never one person that changes the world, it's the conditions being ripe for it along with some bloke having enough seed money and brutal determination to make it happen.
- Internet was just starting to be a thing in the 90's so right time to capitalize on a new easier way to sell things
- Bezos got hundreds of thousands of dollars in money from his parents to start his book empire. It's not like he was a rags to riches story, they never are.
- Amazon warehouse workers suffer nearly 2x the numbers of bodily injuries[1] and it's almost like the company expects (and wants) to burn through these workers bodies because they have a ridiculously high turnover rate[2]
If he didn't do it someone else would have and for all we know they could have broken less bodies along the way.
> "Bezos achieved" it's never one person that changes the world, it's the conditions being ripe for it along with some bloke having enough seed money and brutal determination to make it happen.
IMO Bezos's main achievement was to get through the dot com bubble by keeping enough investors in so that the company wouldn't collapse. Execution probably played a role, but I think what played a bigger role were his extremely good contacts to wall street and the money owning elite in general. Keeping people convinced that your "books.com" remains a fine investment while the "pets.com"s around you are dying like flies is an achievement IMO.
> how many startups do receive way, way more than that and fail?
There is always the assumption that people failed because they're stupid, and some people succeed because they're genius. This is nonsense. Of course Dr Evil, I mean, Bezos, has a strong work ethic, intelligence, and business drive, but this is not guarantee of anything. He was doing the right thing at the right time, period. He got billions of dollars to apply a business strategy that worked well for the market conditions, but this is not because he is so different from other business people.
Even today, when I buy online from a small business, it's normal to wait 3-5 business days for the order to be processed and a shipping label to be created, 1-2 days for the product to enter shipping system, and 3-5 more days for delivery. I routinely wait 2-3 weeks for popular stuff from decently big websites that are clearly 10000000X smaller than Amazon.
Meanwhile, Amazon hits same day and next day shipping all the time zero issue.
Amazon wasn't the right thing at the right time. It imagined a different type of delivery that no one else today gets anywhere near. Amazon is to delivery what Apple is to hardware. It's different and not repeatable no matter who tries.
I try to support smaller shops all the time, but it's definitely frustrating to wait 2-3 weeks on a delivery that know Amazon will next day to me.
Shout out to local pet foodstore hollywood feed which puts a branded car at each location and does physical deliveries. Y'all beat Amazon with a 30 minute delivery. Can't argue with results.
The example of same/next day delivery doesn't suggest anything special about Amazon though. It's really just an argument of economies of scale.
A small business usually only addresses a very specialized part of the market so they don't really ship that much stuff and thus can't hire that many people to deal with shipping without a huge overhead. However, if you stack thousands of businesses onto a marketplace, and then handle logistics for all of them, now there's much less overhead: the same shipment can combine many different specialized things.
Also fwiw Amazon is by far not a pioneer of fast delivery. Same day delivery has been around in densely poplated places (like in China) years before Amazon even started trialing the service.
Sorry mate, but I'm going to call bullshit on this. I've grown a home-based eCommerce business from nothing to 400k sales a year with 5000+ active SKUs.
Once you've hit around 5-10 sales per day, there is absolutely nothing physically stopping anyone from doing same-day delivery apart from poor inventory management or a simple unwillingness to do so (which is valid; some people can't work every day due to family commitments).
You have provided evidence for the exact same point I'm making, economies of scale. You have a large ecommerce business with a variety of things to sell so you benefit from economies of scale in shipping.
Most small individual sellers have maybe like 50 SKUs which makes it prohibitively expensive to do same day delivery.
No, I think you've missed the point. 5000+ SKUs make the logistics _harder_, not easier.
Back when we only had a couple of dozen SKUs, it was much easier to get everything out same day. Package them all in the same envelope, stick in a red post box. Done.
It doesn't make logistics easier, but it makes it worth investing resources into. Economies of scale means you get more value for the resources you do invest into logistics.
Anecdotally, almost all small online businesses I've seen the back end of do not have a dedicated logistics person. When there's only a handful of different kinds of stuff to ship, shipping becomes an extra low-skill task usually given to whoever is free. They also usually do not have a sophisticated inventory management system (because it is not worth it to purchase one), and instead use spreadsheets that are manually managed.
Secondly, sending out stuff same-day is not even close to same-day _delivery_. For that you need to control all aspects of the logistics chain, which only makes sense at Amazon scales. I've encountered many times where I've ordered things, had a label created the same day but then with no progress for a week. After contacting the seller, it turned out the courier only picks up packages from their warehouse once every 3 days, and then takes another couple of days to "ingest" it and do the origin scan.
Zappos and others have done it (Zappos did it better, even), but most were sucked up or forced out by Amazon as it had all the momentum. That's exactly being in the right place at the right time.
It's possible he's special, but you often see the pattern that someone starts a highly successful company, but then go on to start other companies that don't do well. That they can't replicate their success suggests luck or circumstance was involved.
And there is always the possibility that the CEO wasn't the one to make the company successful. A company isn't one person.
Mainly because some people loathe the idea that they aren't entitled to a share of what Bezos created so they prefer to view his success as something anyone could have done if only for xyz.
> how many startups do receive way, way more than that and fail?
This is not the right way to look at it. In a competitive market obviously only a few, or one will survive.
The point is, how many "rags to riches" startup can you think of? The ones with founders who did not have a safety net. The 600k (or 300k in 94) is immaterial, he could have also done it with zero capital. What matters is he was able to take risks because of his family's safety net. He would never be homeless if he failed.
The risks he could take were very different than one who refinanced their home to fund their startup.
So let him thank his parents. What’s the problem? Are you suggesting that everyone should average down to being poor? Children are an extension of their parents. Genetically and socially.
We don’t really know how impressive it is, a lot of founders made it huge in that golden time period even for terrible ideas that died shortly after, and network effects always crown one or two as massively disproportionate winners in each area.
If you acknowledge that timing, connections, background and network effects dominate the equation (if Bezos was 2 years late, is there any doubt there’d be a “different” one?), you realize there’s something gross about how wealth is distributed.
There’s definitely doubt about another Amazon appearing!
Sure we might get a dominating e-store that sells goods, that’s easy to imagine. But that same company also creating the largest cloud provider, being the largest distributor, going international, creating the kindle, now property acquisition, and so on. Yeah I do doubt there’d be another Amazon.
AWS wasn't Bezos, it was a whole squad of Amazon execs and employees and an idea that formed over a long time period through many people, if anything it proves the opposite point that he deserves outsize rewards. The rest of the success makes a ton of sense in context (Kindle and distribution from becoming the network-effect winning e-commerce store/bookstore).
I didn't say it wasn't impressive but it's as impressive as... watching someone win the Squid Games by backstabbing everyone else? I don't think it deserves any applause or proves anything.
> If he didn't do it someone else would have and for all we know they could have broken less bodies along the way.
That's a bold statement to make and I'm not sure I believe it. Even companies like Sears or Walmart who were better positioned to dominate the space missed the boat.
Like you said, it's never one person who changes the world. It's usually one talented person who has the right connections and gets a lot of luck at just the right time. There's no guarantee that someone else would have made the same choices and gotten the same breaks if Bezos didn't exist.
Amazon exists because of Bezos, but that doesn't mean he did it all by himself.
The conspiracy theory that one person can't rise to great wealth on their skill and talent and some luck rather than mostly luck and connections, is a conspiracy theory.
What was his vision? Destroying millions of mom and pop shops and forcing millions of people to work for poor wages and harsh conditions delivering Amazon products? I'm not sure a 2 day delivery window is worth that.
> What was his vision? Destroying millions of mom and pop shops...
Wal-Mart was already leading that charge. And it shocks me to no end how many people I still encounter complaining about Wal-Mart for destroying their diverse local retail centers and eliminating jobs, while simultaneously receiving notifications on their smartphone from the Ring doorbell alerting Amazon packages being delivered on their front step.
Amazon is basically Wal-Mart 2.0, now with even more consolidation, counterfeit goods, and fewer local jobs.
Bezos isn't coming for the mom and pop shops, he's coming for Wal-Mart. Maybe Home Depot and Lowes are next?
By mom and pop shops you mean retail. I don’t think the aspiration of humanity (or a participant) should be to have a retail business. It’s neither the good being sold nor the person utilizing it. The retail shop itself was inefficient and often expensive with little selection and almost no reviewing mechanism. It’s sad sure, but it was replaced with something far better.
That replacement also drove costs down, and unlocked tremendous amounts of time spent “doing” retail shopping and as a society it’s our job to put that time and those savings to use. It’s also our job , in a moral sense, to make sure displaced industries/people like “retail” also find a new way of being productive.
Let’s not forget the investors that have reaped tons of benefit from this. They too have allocated those funds back to the market either via spend, investment, or tax. Even if the capital is idle, the bank has it which is also giving someone a job.
It's feels like your "utopia" is a world controlled by a few giant corporations which guarantee the "effective movement of capital" around. If that's the case we have few things we'd agree on as our world views are just too different.
I'll just say that as we have fewer major players the more those players will lower wages and generally exploit workers. Most people won't enjoy living in that world.
If you zoom in time scales it’s kinda what happens? Sure in 1,10,20 years it isn’t good. I don’t agree we need few companies controlling everything but when you disrupt something as pervasive as retail what do you expect to have happen? I wonder what Ford thought when he put horses and livery out of business… I wonder what the local grocery store thought when they killed the butcher shop. It probably takes a while for the “next” thing to come along that displaces amazon. I guess my point is evolution happens. It’s our job as individuals to find ourselves on the right side of these changes. It’s not the governments job to make sure I’m treated fairly and it’s certainly not bezos or fords job to make sure they don’t disrupt the status quo. The market votes and we all casted ours votes.
I do believe in capitalism so maybe we disagree on a few things but I’d be curious how you see innovation without some value transfer proportional to that innovation. Amazon and I guess the “problem” is obvious but how do you get one without the other. Genuinely interested in your views.
Capitalism doesn't work when the market is non-free, and the market is non-free when it's monopolized. So if you believe in capitalism and want it to function as intended, you should be actively promoting antitrust enforcement against the likes of Amazon.
what would antitrust enforcement against amazon look like? amazon basics is a bit questionable, but aside from that they have credible competition in every business segment.
I think “genociding” is being a bit pedantic. The shop keeper you are romanticizing was often a local inventory of goods. You were just a sale and they made a living on the arbitrage of goods. Not even all American made goods.
They weren’t always knowledgeable staff with a smile that remembered you and your family. I wish it was the case but I’m afraid it wasn’t.
So, not all shops are gone. How do we reconcile that? Is it that the ones that could not be replaced and/or provided more value than amazon have remained?
Mom and pop shops selling everyday goods don’t belong in the future. A 2 day delivery window (same day where I am) for goods, with reviews, and accessible customer support is amazing. It’s every item you can want. A mom and pop shop never offered that.
I believe his original vision was to be the worlds largest book store offering. Something brick and mortar book stores couldn't do because of shelf space limitations.
Books weren't the end goal. He named it Amazon because he wanted something generic to expand into. I don't think third party sellers were in the initial vision but selling other items was
That was the slogan when it came out to steamroll books.com (the first mover), an outfit from Ohio that sold books on the Internet and shipped without plastic packaging in 1991.
You can have a middle class salary, save well, and become a millionaire in time for retirement. In fact, at retirement age you really need millions nowadays. Not that most people have that. And most of those retirement age millionaires wouldn't have hundreds of thousands to lend.
I'm talking about billionaires, and what I contend is most billionaires had parents or family members who were rich which helped them.
- Elon Musk's parents owned an emerald mine in S. Africa
- Bill Gates not only got seed money from his millionaire parents but one of his parents was on the board of IBM and helped him land early Microsoft deals
- Bezos got 300k seed money from his parents
- Zuckerberg, is maybe an exception? His parents were only upper middle class. Enough money for good schools and private CS tutors. Seems plausible that if he was lower middle class he wouldn't have made it to Harvard.
Only armchair socialists would take a guy coming from a broken home in one of the poorest regions of the world as a golden spoon to push their agenda lol
TL;DR: In the 80s, Elon’s father sold a plane for $80k, half in cash, and the rest for 50% of a Zambian emerald mine. He had it for six years and made some good money off it, but probably not a ludicrous amount. One can imagine there being exploitative working conditions in that mine, given the time and place, but I don’t have any real knowledge on the matter.
This is what I could find with a quick search regarding what Elon himself claims. I had a skim and it doesn’t seem to necessarily contradict the article I linked or my summary (perhaps depending on your definition of ”good money”). There probably was an emerald mine, and yeah it probably didn’t yield enough for Musk’s father to have the family set for life or anything like that.
Bezos made a company who is really good at scaling to any scale at all functions. He created a ton of process at Amazon to facilitate this. I spent a number of years there as a senior leader. I was profoundly impressed with how his influence is pervasive in how things are done, and they’re generally insightful and work well for operating a highly scaled distributed organization that can try many risky things, fail fast, and succeed fast. He didn’t do it alone, but he did create the environment for it to happen and held pretty tight control over the tenants and way things are done. There are many humanistic ways in which Amazon is a profound failure but I think it’s naive to underestimate how much direct and indirect influence bezos had on what Amazon has achieved and become. I think if Bezos had applied some energy to creating an environment that fosters the humanity of its people it would be a much better company in most respects, but it’s undeniable to my experience that one man did instigate the changes we’ve seen Amazon bring to our world.
(N.b., I don’t say these things out of some worship for Bezos or Amazon, you can respect and appreciate something without liking it)
"I'm only 32 and I've seen so many companies shutting down..."
I'm mostly in agreement with your position, but I just have to add a 54-year old's perspective, which is that WalMart was doing this before Amazon did. If Amazon hadn't popped up, WalMart would have kept doing it, except without making their website market available to small independent companies.
Again, not saying Amazon isn't worryingly large and ruthless, just that this problem started well before them, and if WalMart had become Amazon instead, things would not have been better.
We will never know the number of small businesses that had to shut down because unlike Amazon, they couldn't nor wouldn't indebt themselves to grow indefinitely (aka survive)
The amount of talent and efficiency in the economy that Amazon has crushed..
The "efficiency" that amazon has "crushed". Is this serious?
They offered at home COVID PCR tests. The normal timeline was you'd take it and drop it off at 5PM at your UPS store. By 10AM-11AM (Pacific) the next day they had results. Along the way you had full tracking. In transit, at lab etc. Registering the thing was a photo of the barcode.
We had major medical providers getting paid major money that would take a WEEK (!!) to get results back. I saw on my insurance they were charging something like $289 per test because the person that picked them up was a "medical professional". So despite millions / billions, I was getting better service from my $39 amazon test.
This test included 2 day delivery (free) to me, it included priority overnight delivery back to amazon + lab work + web tools etc. They must have (smartly) located the lab near UPS worldship.
Same with shipping and logistics. The USPS, with a guaranteed nationwide monopoly on certain services struggles to get me stuff on time. Fedex is even worse for some reason. Amazon is an absolute machine where I am. We have same day, next day and two day delivery that is HIGHLY reliable and efficient. We can drop stuff off back at Kohls etc without even packing it. We can pickup from Amazon lockers, or have them deliver inside our house if we want.
When folks talk about how inefficient amazon is I want to know what they are comparing them to. Fedex? Some walmart warehouse?
I think it’s not efficiency of getting a product to a customer that Amazon has squashed, rather the efficiency of innovation that comes with competition.
Amazon still has competition, both from brick and mortar stores that will let you actually touch the product and go home with it the same day, and from other online stores that can also ship stuff to you within a few days. What does Amazon sell that you cannot get something similar to from some other store?
they also provide an experience with far larger externalities (e.g. a massive fleet of vans wandering around and polluting all day) that the customer isn't paying for. i wonder why they're so popular
Is the fleet of polluting vans worse than every single delivery target hopping in their polluting cars and driving to the store (the model that amazon displaced?)
I don't think so. I think delivery has been demonstrated to be significantly "greener" than everyone individually driving to each store one by one.
Exactly this. One of the best things governments could do to help lower greenhouse gasses is incentivize people to get their goods delivered instead of going to the store. So much fuel is wasted moving a ~2 ton vehicle and a >100 lbs person to the store so they can pick up, often, <100 lbs of goods. That's <5% fuel efficiency.
Just from my side once we switched more to delivery we are driving a TON less.
We used to go a few cities over for some thing, whole foods for example not in our city so we'd go over to it to grab some stuff, then to target for a few things etc etc. All that driving has evaporated - we are cooking at home more too.
"i'm pretty sure you know it."
Please cite something rather than ascribing a (false) view to someone else. I don't know your "fact" because it seems like you are lying based on my direct experience.
I'm sure you can find a thousand articles/discussions online about the math behind how driving cars to stores is significantly more polluting than "salesman problem"ing a single delivery truck.
Bonus: it's far easier to electrify or improve 1 delivery truck than it is the 100 cars it's displacing.
> Same with shipping and logistics. The USPS, with a guaranteed nationwide monopoly on certain services struggles to get me stuff on time. Fedex is even worse for some reason. Amazon is an absolute machine where I am. We have same day, next day and two day delivery that is HIGHLY reliable and efficient. We can drop stuff off back at Kohls etc without even packing it. We can pickup from Amazon lockers, or have them deliver inside our house if we want.
Why does amazon still use freight companies like USPS and FedEX? At this point, I feel like amazon should open up physical locations where people can pick up/drop off packages (this includes returns). Perhaps even maintain inventory and have a showroom for people who want to walk in and purchase something.
The return flow varies. Amazon knows what type of package your item(s) were sent it. If it didn't come in a box, you'll be forced to buy one at USPS. If you are lucky enough to have Kohls as a dropoff option, then this isn't an issue. I'm not sure what determines USPS or Kohls as the return location when you print the waybill.
> Why does amazon still use freight companies like USPS
From my understanding - USPS offers fixed rate deliveries to the entire US, so amazon can use them in all cases where it would cost them more than the fixed price to deliver something (incidentally, this probably drives this cost up)
> open up physical locations where people can pick up
imo, amazon lockers are probably going to start accepting returns at some point, if the logistics for it makes sense
USPS actually works well with Amazon, because amazon sometimes uses them for last mile.
Somehow Amazon seems to basically deliver to the local post office, so stuff still shows up quickly but then the postal carrier brings it with other mail. For very small packages in particular this seems somewhat common where I am.
Again, this is is efficient. Amazon skips the part where USPS struggles (ie, Amazon can get something moving on their network at 2AM on a Sunday), but on Tuesday the local carrier still puts it in my box.
Amazon is akin to a planned economy. It works for now. But it will damage us in the long term and by then there won't be a "real" market to fall back on. The infrastructure of ordinary people running small businesses and pouring their sweat simply won't be there. There is no incentive for Amazon to remain efficient. Eventually, people will understand that there is no life outside of Amazon. This can have lasting consequences
It’s not just realizability (did the package get form a to b). But the consistency. 2 day shipping seems to always be exactly 2 days. Same goes for their one day shipping.
i think this is too pessimistic. via FBA they've also enabled thousands (hundreds of thousands?) of small businesses and a cottage industry of others that have formed around them.
Why are small businesses so good? Yes they offer a living for people but objectively there is scant choice, you’re paying for overhead and support is inconvenient or awkward.
Because they typically actually know their products and care about customer service. Give me a face to face interaction with a person that understand what I’m after over Amazon any day of the week.
For what it's worth, neither Target nor Walmart have a wholly unrelated cash cow (AWS) to subsidize ventures into new markets at huge losses until market dominance is established.
This is the big one here. Amazon has a completely unrelated market dominate business that lets them enter new markets at a loss until they crush everyone currently in that market. Amazon is honestly the first company that needs to be broken up. Split up AWS and Amazon market and this becomes a whole new ballgame.
i understand they have a strict approach of keeping teams entirely separate and with interaction between teams no different to interaction outside the org (API-always, bill-by-usage, ...)
This has made AWS a very good provider overall, but it probably also makes them very able to cope with being forcibly separated.
I wonder if that is a vulnerability or a planned strategy for this possibility?
I mean of the current tech monopolies(Amazon, Google, etc), Amazon should take priority as the first company among them that needs antitrust lawsuits filed against them and broken up.
I think they mean at this current point in time amazon is the company that needs to be broken up first, as in take priority over companies like facebook and apple not that this is the first company in history that has required intervention.
Its scarier because there is no competition for amazon. The closest company that comes to mind is Alibaba/Aliexpress, but even they haven't had an affect on the US market to the extent that amazon has.
The stores you mentioned are physical department stores, which have been competing in their own space for many, many years. Amazon originally disrupted the book market...now look at the amount of markets it dominates.
Correct. AWS is god-tier and many non-technical users have any clue how Amazon actually works. They don't make money off your stupid ass delivers Nancy. Amazon has a monopoly with AWS and that is what people should really fear. Not Amazon, but the power of AWS
That's because they're also counting all the server on a rack rental companies as cloud market share. If you look at just the cloud the way AWS does it - running code through their service in various datacenters as a service, it's above 50%.
Source: I work in Critical Incident Response/IT Remediation
AWS is absolutely a monopoly just like Microsoft has a monopoly on Corporate/Enterprise OS's tied to Domains. From a solely cloud based provider - not the Equipment renters or Volume based licensing.
AWS is a monster - Their market share is well over 33% regardless of how many articles you google to link me. I am balls deep buddy. It is well over 33% (At least in the US)
RENTAL RACK SERVICES are not purely a cloud based service in the way AWS provides. That article is not pertinent with the presentation of their 'facts'. That is not purely cloud market share.
From another User on this thread:
"If you look at just the cloud the way AWS does it - running code through their service in various datacenters as a service, it's above 50%."
That user is correct and so is my 'Anecdotal' experience. I'll enjoy my insanity. Thanks!
Target and Walmart didn't create their own (bottom of the barrel, low quality, abusive, toxic) shipping contractor network to attack the strong labor unions of USPS, UPS, and to a lesser degree FedEx. Amazon is cheaper because of the people they screw over along the way. I boycott Amazon.
Consider that some of Amazon's more recent ventures into automation (namely PrimeAir) are driven by the long-standing knowledge that they would exhaust the labor pool in many markets. They knew their growth and labor practices would hurtle us toward dystopia years ago.
I did a 2 month "don't buy from Amazon" which forced me to look around a bit, but there are lots of alternatives. Amazon is amazingly convenient, but it's coming at a price which is higher prices and 1 vendor issues. You can't really say it's a marketplace with all the SEO and buying positions going on either. I still get stuff from Amazon occasionally, but I found there are plenty of alternatives out there if you can wait an extra day or two.
Its not clear that AMZN is bad just because its big. The value they provide is tremendous. Surely a UPS van to your house and others is better for the environment than individuals going to a brick-and-mortar store.
AMZN is still only 5% of all retail sales in US.
They should be disrupted - but not for just being big.
And you haven't seen anything yet. Today I shopped at Amazon Go. That's the store where you go, pick items from the shelf, and leave, and Amazon directly charges your account. You don't need to scan anything, Amazon has some type of computer-vision-based system that figures out what you took, what you put back, and charges you appropriately.
I have no doubt that one day Amazon will roll this system to Whole Foods. The day this will happen is the day the Apocalypse starts for all brick-and-mortar retailers in the US.
Amazon has already rolled out the go tech at a few Whole Foods in d.c. funnily enough my parents don’t like to shop there, they claim to like the small talk with the cashier.
Sears and Roebuck dominated mail order for nearly 100 years. Now, they hardly exist. Large corporations come and go. Unless Amazon starts contract police or military service there is very little to worry about.
From the article: "Buying land is a major shift for Amazon, which historically relied on a handful of developers to find property, build fairly simple warehouses and rent them back to the company."
That is the news in my opinion. They were renting before, in the last 2 years they started buying a lot of land (they still rent a lot too).
That and, "The new facilities can be 100 feet tall or more, are packed with state-of-the-art automation and require lots of electricity... The new facilities can cost twice as much to build as typical warehouses, which currently run about $200 per square foot. So Amazon is courting a new class of investor to help finance the expansion"
Their development model has shifted and the warehouses are becoming more advanced and specialized.
If they buy up enough land quietly they can then spin it out as a REIT and lease it back from themselves, thus writing off capital gains and moving them under operating expenses as a major tax dodge.
If they did it loudly people would start speculating which will present reduced wealth extraction by siphoning off rent. The goal is to avoid letting other people get rich and cornering all the capital for yourself. Stealth is a pirate's best friend.
I read the article, and look what I found, not two paragraphs in:
"Amazon plans to use much of the real estate for a new generation of towering fulfillment centers that can store a wide variety of products close to customers in populous areas, according to people familiar with the strategy."
So it sounds like Amazon is buying land for warehouses, might be reading different articles, dunno.
"Buying land is a major shift for Amazon, which historically relied on a handful of developers to find property, build fairly simple warehouses and rent them back to the company."
The comment was "Who wouldn't think Amazon is buying up land for warehouses?". The answer is anyone who was familiar with what Amazon was doing until 3 years ago.
If you thought three years ago that Amazon was buying up land for warehouses, because it's so obviously obvious, you would have been wrong.
It's total clickbait. Also, the article mentions they bought 4000 acres in 2 years. The vast majority of this is rural, where farmland runs 5-20k per acre. Let's be generous and say they spent 50k per acre. That's $200mm dollars. Absolutely nothing to amazon.
And a single full-size Amazon fulfillment center plus its associated truck yards and employee parking lots can easily take up 0.5 - 1.0 square miles (320 - 640 acres / 130 - 260 hectares), so this doesn't seem like a lot of land, given that they already have more than 100 fulfillment centers in the US.
Obvious propoganda, it's a public company, it does not purchase anything quietly it's public knowledge. Just because they're not running wall to wall adverts about the fact does not mean it's hiding anything.
All these media outlets are doing everything, everything on the beck and call of those in charge and with an agenda. No article aimed at this level of society is done independent of those who wish to be in charge.
I think you have a severe problem of digging into things too deeply.
This is purely semantics and your proclaiming some odd propaganda angle. Which is a bit odd really. The article/title is 100% accurate. They are quietly buying thousands of acres of land because they're not going around and talking of their masterplan. They're just doing it without saying anything.
Just because certain information is public for those who seek it out, it doesn't mean it can't be done 'quietly' by the company. Like I say, it's semantics.
Amazon is 1.5 TB, so is Microfuck and Google and I think Facebook...why is Amazon being targeted? Microsoft has been the root of all evil since Gates was born, or a few years thereafter. Gates is buying America's farmland, Google it. Google Google doubling, trippling its commercial real estate holdings.
When Clinton decided to become chummy with Gates as Clinton's career was ending and miraculously the DOJ stopped working on breaking up Microsoft, it paved the way for Google's and Amazon's and Facebook's monopolies.
