Is Amazon Doomed?

[NorthernThrux]

Not in the U.S. Here in the states the vast majority of Amazon deliveries are made by their own carriers. Less than 20% are made by third parties and Amazon should reach 100% self-delivery in early 2022.

Here it depends. If it's coming from one of their many warehouses and going to any of the big cities and surrounding towns, it goes by Intelcom, a contract carrier that seems to work mostly for Amazon. The typical driver has about 130 packages to deliver and makes minimum wage ($15/hr in Canada). From the various tracking alerts I get, I can see that a driver takes about 5 hours to deliver those packages and presumably another hour to get loaded at the warehouse, drop off the vehicle etc. If it is coming from outside the country, it comes by post or courier.

Here's the simple math though. In the quarter ending March 31, 2021, Amazon made a profit of $33,713 per employee, selling stuff that mostly is made in China. So if you can buy the same product in China, you can cut out a lot of that profit taking. Apple makes more than $425,000 per employee, but you can't buy an iPhone directly from the Foxconn factories in China or India. Too bad you can't easily get a mortgage from China, because the most profitable US corp on a per employee basis is Fannie Mae at US$1.9M per employee.

[jaudette3]

The Container Store has to pay for web, marketing and bricks and mortar stores and warehouse costs in North America at North American rental and labour rates. Plus they have deals with Marie Kondo, Custom Closet Solutions and Netflix. Ali Express doesn't have any of that overhead. And The Container store has to make a profit based on only a billion dollars a year in sales (profit is currently 8% or so). Ali Express sells that much in a few days I suspect. In both cases, the product are made in China, but there are a lot of middlemen and women in the supply chain when you buy from The Container Store.

It's not the shipping that's the problem.

Believe me, as a small business owner myself, I'm in the same situation as The Container Store. When the internet was first launched we had a formal term for the erosion and elimination of parties in the supply chain: disintermediation. It has certainly happened in a profound way and there is no reason why it won't continue, eventually with a pin dropped in on China. There's simply no reason to have all of the other parties in the middle now that geography is dead.

Cheers,
John

[LiveFromNY]

Here it depends. If it's coming from one of their many warehouses and going to any of the big cities and surrounding towns, it goes by Intelcom, a contract carrier that seems to work mostly for Amazon. The typical driver has about 130 packages to deliver and makes minimum wage ($15/hr in Canada). From the various tracking alerts I get, I can see that a driver takes about 5 hours to deliver those packages and presumably another hour to get loaded at the warehouse, drop off the vehicle etc. If it is coming from outside the country, it comes by post or courier.

Here's the simple math though. In the quarter ending March 31, 2021, Amazon made a profit of $33,713 per employee, selling stuff that mostly is made in China. So if you can buy the same product in China, you can cut out a lot of that profit taking. Apple makes more than $425,000 per employee, but you can't buy an iPhone directly from the Foxconn factories in China or India. Too bad you can't easily get a mortgage from China, because the most profitable US corp on a per employee basis is Fannie Mae at US$1.9M per employee.

God bless capitalism!

[LiveFromNY]

Believe me, as a small business owner myself, I'm in the same situation as The Container Store. When the internet was first launched we had a formal term for the erosion and elimination of parties in the supply chain: disintermediation. It has certainly happened in a profound way and there is no reason why it won't continue, eventually with a pin dropped in on China. There's simply no reason to have all of the other parties in the middle now that geography is dead.

Cheers,
John

As a large business owner, specifically a retailer, even more specifically an online retailer, I couldn't disagree more. I work with hundreds of different vendors and virtually none of them are doing even a mediocre job of selling direct to consumers. Most aren't even trying. And the skillsets are so wildly different - not to mention the underlying business needs - that I don't see that changing anytime soon. Probably ever. Even the companies who have seen initial success in online DTC - mostly niche retailers like Allbirds, Bonobos, etc. - are rapidly turning to retailers both online and offline as they find that's by far the path of least resistance to truly significant market share. Amazon ain't growing by leaps and bounds quarter after quarter because retailing is dying.

[jaudette3]

Wow! You are dead wrong. Your reasoning is the same I saw when the internet began. Disintermediation will take a long time but it's inevitable. In a capitalistic system efficiency is ruthless and deadly. Over time generations growing up on the internet will look at the box at the Container Store for $3.49 and laugh out loud when they know they can get it from China for 35 cents. Something their parents were oblivious to. The structural change will be slow, relentless and merciless.

Certainly capable specialists populate various components of our current merchandising infrastructure and it works pretty well. There was a need caused primarily by geography, slow communications, cumbersome organization and primitive transportation and it was filled by talented people. But let's take a look at now and the future. Geography has been eliminated from the consumers perspective. Communications are at the speed of light. Organization has been simplified and made more efficient enormously by computerization. Transportation still lags but the stuff from China arrives in a week.

I think of the last mile in telecommunications. It was a very big deal for a very long time, an inefficiency that made a lot of companies a lot of money. Until it wasn't. Geosynchronous satellites have pretty well eliminated that inefficiency.

And don't even get me started on AI.

[LiveFromNY]

Wow! You are dead wrong.

Literally every smart person I know disagrees with you, John. Well, not about Porsche lighting, but still.

https://www.macrotrends.net/stocks/c...zon/market-cap

[jaudette3]

Well, understandably. They're focused on this quarter, the next quarter, maybe a bit further. If you want to make a buck you have to do what works well "now". That can create a bit of shortsightedness at times when folks try to keep forcing a round peg into a hole that is coming ever more square - until eventually it doesn't fit. That's one of the great things about generations. The kids start with an entirely new perspective of course. All this is especially important now as this is a time of change at an unprecedented rate.

You're obviously very successful, most likely will be for some time, and probably have your pile, so no worries. In fact there aren't any worries about any of this change. It's a fun intellectual exercise to speculate about it. But very difficult to monetize. And pioneers get all the arrows anyway (don't ask). It's the second wave that makes the money.

But don't forget. Bezos told his employees that Amazon would go bust someday. Most folks giggled but he was dead serious. Have you shopped at Sears lately?

Fun discussion.

[LiveFromNY]

Bezos told his employees that Amazon would go bust someday. Most folks giggled but he was dead serious. Have you shopped at Sears lately?

Fun discussion.

Very fun.

Not for popular consumption, but if we ever meet in person I'll tell you a story about that very quote that I heard from JB's own lips. You'll like it.

[jaudette3]

I started my first internet company in early 1995 so of course I watched internet developments closely. Bezos was an interesting character and it was fascinating to watch him in interviews. When an interviewer expressed doubts about his fledgling enterprise he would giggle maniacally. He was absolutely, 100% convinced that he understood the changes that were about to happen and he couldn't even bother to enlighten the dodo's. He had no need whatsoever to defend his position. Selling books on the internet? Are you crazy? Bezos is the most focused individual that I have ever seen. Almost a man possessed.

Meanwhile my company was growing fast (eight to over 100 employees in three years) which was an incredibly enjoyable ride. We were one of the first companies dedicated to internet marketing and we were literally making stuff up as we went along. Stuff like SEO (you can look it up), AdApps, email marketing. etc. We had a number of Fortune 500 clients because they really didn't have anywhere else to go. We also made a number of entrepreneurs a lot of money. The most dramatic was a company that started out named Art-U-Frame.com. At one our annual get togethers the founder told me that he had someone on the phone that would sell him Art.com for $50K. I told him do not hang up that phone until you have a deal. He founded Art.com for about $100K and sold it to Getty Images for $240M. Giddy times.

No idea why I'm telling you this. Just an old man reminiscing I guess.

[LiveFromNY]

I started my first internet company in early 1995 so of course I watched internet developments closely. Bezos was an interesting character and it was fascinating to watch him in interviews. When an interviewer expressed doubts about his fledgling enterprise he would giggle maniacally. He was absolutely, 100% convinced that he understood the changes that were about to happen and he couldn't even bother to enlighten the dodo's. He had no need whatsoever to defend his position. Selling books on the internet? Are you crazy? Bezos is the most focused individual that I have ever seen. Almost a man possessed.

Meanwhile my company was growing fast (eight to over 100 employees in three years) which was an incredibly enjoyable ride. We were one of the first companies dedicated to internet marketing and we were literally making stuff up as we went along. Stuff like SEO (you can look it up), AdApps, email marketing. etc. We had a number of Fortune 500 clients because they really didn't have anywhere else to go. We also made a number of entrepreneurs a lot of money. The most dramatic was a company that started out named Art-U-Frame.com. At one our annual get togethers the founder told me that he had someone on the phone that would sell him Art.com for $50K. I told him do not hang up that phone until you have a deal. He founded Art.com for about $100K and sold it to Getty Images for $240M. Giddy times.

No idea why I'm telling you this. Just an old man reminiscing I guess.

Fun to reminisce. My internet years started just before yours in 1994 when I met the guys from Books.com. I was in TV/Film at the time but instantly knew that I wanted to have an answer someday when my grandchildren asked me "Where were you when the world wide web started?" I immediately founded the Web's first virtual currency that we leveraged into a leading provider of incentive and reward platforms for companies like Capital One, JP Morgan Chase, Ford Motor Company, Boeing, etc. We eventually sold to private equity after I had left in 2002 to start my current company

I remember when Getty sold Art.com to Allposters.com in probably 2000. If I remember correctly, that was done by the boys at Benchmark. Seems like a million years ago. I'm glad I got started in my 20's so I can stay around long enough to see where the next 30 years takes us!