Source: WSJ
How Amazon Changed Retail
July 18, 2015 3:00pm by Barry Ritholtz
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Would have been nice to see Walmart included in the comparison.
I buy A LOT of items from Amazon and I’ve bought just about everything including some food items.
I rarely to never visit Target or B&N although I purchase my “tech” items at BB because I want to check them out before purchasing them and BB’s prices are pretty much the same as Amazon and BB does have some knowledgeable staff.
But the REAL question is how long Amazon can continue to sell at a near loss; how long until investors demand better performance.
I think the answer to your question at the end is “pretty dang long”. I believe total online commerce is still only about 7% of total retail, so I expect AMZN to continue with their land grab behavior for quite a while, and for investors to be OK with it.
World continues after Coney Island and even Golden Gate. Here in Italy Amazon has become the most important supplier of anything besides foodstuff for three families, mine and my two sons’. This is here to stay. Amazon strategy is most effective. Not even Carrefour or Lidl is so effective. Once Amazon will trade groceries also here I think will deliver a fatal blow also to Carrefour and such. Amazon (and Easyjet and tripadvisor) changed my life. Carrefour didn’t succeeded. What’s the differnce ? Amazon has a long term, effective strategy. All others just try to sell me somthing. Amazon is XXIst century. Others just sleep in XXth, so do you wonder why Amazon is winning without effort ? they proved constantly integrity and true care of customers not philosophically but towards ME. May be they are the worst crooks who ever walked over this poor Earth (and I have some suspects indeed), but the are performing flawlessly towards ME since a few years. Nobody else did. Easyjet is the same story, in their area. They both are cashing my Euro, and I’m happy. Is it enough?
When Alibaba (and other large Chinese web merchants) roll into town and play the same game against Amazon, it is going to be entertaining to see Amazon go running to the feds, complaining of unfair trade practices, and anticompetitive behavior, when faced with a competitor with deeper pockets, fueled by sales from a billion-plus Chinese, employing exactly the same business model as Amazon does.
Somehow I just cannot see B&N, Target, et al, rushing to Amazon’s defense.
Amazon prices are not what they used to be. They still have good prices, but I’ve noticed prices creeping up over the past five years. My guess is that they aren’t quite selling at a loss, though they tell their accountants to make it look that way. (It’s surprisingly easy to do stuff like this if you known accounting.)
Amazon’s real advantage is their warehousing and shipping network. It’s really kind of impressive. They even do Sunday deliveries, thanks to the post office. I knew that the PO had Sunday special delivery, but Amazon seems to have integrated this into their standard processing. The government seems to have an edge over private industry here.
I live out in the middle of nowhere, so Amazon is the old Wells-Fargo wagon. Watch the ‘Harvey Girls’ if you don’t know what this means. Back in the late 19th and early 20th century Sears and Montgomery Ward were the ones with great logistics, and the 1980s and early 1990s saw the rise of mail order catalogs. I had friends who lived in Boston who lived out of their piles of catalogs. Amazon has just modernized this and taken it one step farther.
One thing amazon has done is eliminated the need to go to a big city to get selection. I live in a county of 40k about 60 miles from a big city and don’t need to go there to shop. Of course even in the big city if going to the store is a traffic hassle then amazon would work, all be it you might need a place to have parcels delivered as being left at the front door they might just get up and walk off.