Did you see 60 Minutes tonight? Amazon has now created little remote drones that look to be about two feet long and about a foot wide, that can carry a 5lb. package automatically to your doorstep. It's not perfected yet, but it's close. They need to get FAA approval which will take at least another couple of years yet. They currently have a 10 mile delivery range that they can fly and then return to pickup another package. You can have your delivery in under half an hour.
They continue to show losses but investors love to bet on the future. They're counting on that one day in the not too distant future, Amazon is going to be wiping out most of the retailers. By the way, 86% of the packages they deliver are under 5 lbs. They are also already testing Sunday delivery in many metropolitan areas.
If you were a small mom and pop store how could you possibly compete with Amazon? They sell items below cost in many cases to gain marketshare. What does this say about the future of retailing and I'm not just talking about books? How is any other company going to compete with this type of technology when Amazon has become such a behemoth corporation?
As I've said before, I use Amazon all the time. I've bought everything from books to televisions from there. Their customer service excels. Their downloading of software is phenomenal. I don't know what the answer is but I do not believe that they should be able to sell items below cost, which gives them an unfair advantage because of their size and being able to absorb the loss for a long period of time.
What do you think?
Steve
I'm conflicted here. As much as I love Amazon's progress - seriously, how cool are these delivery drones? - I hate how this company is destroying a fair market. On the same hand, Amazon's innovative thinking should be inspiring other companies to think outside the box as well.
ReplyDeleteI think I'd just like to see, say Apple (which you know I love), come up with something that will blow Amazon out of the water. After all, Apple used to be known for innovation. At least Apple used to be when Steve Jobs was alive. Hopefully the Apple CEOs will pop their heads out of their collective butts and stop producing the same products time and again. It’s time they created something completely different, or at the very least take what Amazon is doing and make it better. They have the means but it seems they lack the conviction to trust what Jobs used to believe in...true innovation.
- Renee R.
Like Lyrical Press, I'm conflicted here. I do buy many things from Amazon, but I also still go to other stores for merchandise and things. I think that it's great that some things are cheaper, but there is also something to be said for great customer service and quality product. Yes, there are many advances with technology and the internet and maybe I'm old fashioned, but I still like the good ole days of the mom and pop business and whenever I can, I support these businesses. When I was in NH, I always went to family owned businesses first, this is just my way of doing things. I support the locals and I believe in that. I think that this drone thing is a big risk and there are definitely times to risk and pursue higher avenues, but again, that can bring about losses. I think you have to be financially educated on where to take your investments and what risks to take. You always need to look at your profit margin compared to what risks you're willing to take and what losses might be forthcoming due to that risk.
ReplyDeleteCustomers like to bet on the future too. Simplicity, availability, new gadgets and technology. :) I doubt I'll see a drone anytime soon. Maybe if USPS, UPS or FedEx had thought of it, I would. How much time, money, and fuel could they have saved? How many jobs would have been lost or new jobs created? Would a company like Amazon have tried to come up with a more efficient and affordable shipping solution if they had?
ReplyDeleteAmericans are allowed, even encouraged, to give away time, money, resources, and products. We are also allowed to be greedy and make as much as we can from our skills and products. But which practice is more likely to endear us to loyal shoppers? Amazon shouldn't shoulder all the blame for the problems its success causes others.
I'm definitely not putting down Amazon. As I said, I use them all the time, probably one of their bigger customers as well as a vendor since they sell our books. I'm sure other companies have been looking at this technology too. FedEx is a very progressive company....they pioneered rapid delivery. Amazon does have great customer service. My only problem is them selling items below cost to take away marketshare from other companies.
DeleteSorry if I came across defensive. I wasn't, and didn't think you were putting the zon down. :) I was simply what-iffing the tech. Where I live, I'll only see them if a delivery service like UPS employs them. Or even more likely, I'm too far out for anyone but the post office to reach me via drone. Can't wait to see if the drones become a viable part of the workflow, and how they affect both businesses and consumers.
DeleteI'm wondering if people have to meet them to retrieve the package from the box, or if the drone has to make another trip to get the carrier after the customer has emptied it. And what happens when the yard is full of Christmas decorations? How many people will it take to operate the control tower? Will delivery employees cease to exist?
If Amazon is criminal then so are supermarkets and chain drug stores, which also regularly sell popular items for less than cost. I think that other retailers might be better served by figuring out what they can offer that Amazon doesn't - personal service, perhaps products chosen and curated from the heart instead of by computers, a comfy chair... Whatever. McDonald's hasn't put all the local diners out of business and Amazon shouldn't be able to kill all bookstores or retailers, if those stores figure out what their customer base wants that Amazon can't deliver... even by drone.
ReplyDeleteI certainly am not saying that what Amazon is doing is criminal or illegal. While supermarkets do sell items at a loss to bring people into their store, Amazon is selling ALL of the bestsellers at a loss. That's the major difference. Amazon's automation and personalization recommendation engines are very sophisticated and are probably nearly as good at recommending a product as someone is in a store. Their customer service is great as well.
DeleteMcDonalds doesn't sell the same kind of food that diners sell nor are they selling something that is the same exact product that you can buy from anywhere else. So I don't think that's a fair comparison.
Amazon is selling the exact same item as B&N, independent bookstores and other accounts at a loss because the size of their company allows them to absorb the loss on these items because they make so much revenue in other areas of their business.
I'm sure you've seen the articles that report that when Amazon is distributing products for a third party; they are monitoring what's hot and what's moving. Then they make a deal with the manufacturer and cut out the middleman whose product they were selling before.
I wish there were more Amazons to level the playing field a little. B&N has expensive retail space as do the other bookstores; they don't simply have a warehouse in an inexpensive location where they're getting enormous tax advantages from the local government. That's the difference. When Apple started many of the publishers on the Agency model where the prices were fixed; they were trying to level the playing field. The DOJ saw it as raising the prices of books to consumers, which it did. But how long do you think any account can continue to sell items at a loss? They can't do it forever but if they're big enough, they can do it until they've wiped out most of the competition. Then they can raise their prices slightly to make profit.
Here is the excerpt from the 60 Minutes interview with Jeff Bezos where he's questioned about the power of Amazon.
ReplyDeleteCharlie Rose: A lot of small book publishers and other smaller companies worry that the power of Amazon gives them no chance.
Jeff Bezos: You got to earn your keep in this world. When you invent something new, if customers come to the party, it’s disruptive to the old way.
Rose: Yeah, but I mean, there are areas where your power’s so great, and your margin — you’re prepared to make it so thin — that you can drive people out of business. And you have that kind of strength, and people worry: Is Amazon ruthless in their pursuit of market share?
Bezos: The Internet is disrupting every media industry, Charlie. You know, people can complain about that, but complaining is not a strategy. Amazon is not happening to book selling; the future is happening to book selling.
Later in the segment, Bezos acknowledged Amazon’s own mortality, which could explain his determination to stomp out competition.
“Companies have short life spans,” he said. “And Amazon will be disrupted one day.”
“The companies that are the shiniest and most important of any era … you wait a few decades and they’re gone,” he added.
But the acknowledgement makes Bezos’ lack of compassion toward fading businesses that much more striking, since Amazon may someday find itself in the same position.
You make a number of excellent points, Steve, and if in fact Amazon can do everything as well or better than their competitors then they can indeed crush all the others. They will be the 800 pound gorilla until the next innovation finally appears.
ReplyDeleteOf course, we are all complicit in Amazon's success. All authors and publishers want to work with Amazon, because they WANT our product and get sales. Of course I want very much to support other booksellers, but they don't seem to want to support new authors or small presses. In this way I feel they are speeding their own failure.
From their point of view the big money is on the bestsellers, but they make a lot of money using the long tail theory....small quantities of sales on many many titles. The best place still to build an author is an independent bookstore where they can hand sell the book and branch out from their local area. It's obviously a very slow painful process. I'd hate to be an author and have two people show up for a signing; how humiliating. But it happens to even the bigger authors as well.
DeleteAnd you're 100% right that we're all complicit in Amazon's success. St. Martin's Press was the one company who stood up from them and told them to take their BUY buttons down, but then they reached an agreement.
Lots of food for thought here.
ReplyDeleteI'm an editor. Hypothetically, down the road, armed with an impressive resume with dozens of best sellers on my roster, I launch my own company. Writers flock to my company. Other editors lose business.
A few years down the road, I'm so busy, I have to come up with something innovative. Some new way to train my employees faster, or a piece of software that highlights the biggest weaknesses and shows my staff at a glance where to concentrate their efforts. It doubles or triples productivity. More authors flock to my service because the feedback is spot on, the turnaround time is half what others is and their book contracts and sales show it's working. Clearly, if they're paying me, other editors are losing income.
Do I worry for the other editors who are closing up shop because they can't compete? Maybe. But most likely my focus is on improving my service, gaining new clients, keeping them happy. In all honesty, I want those other editors' clients to come knocking on my door. I'm happy when they do, proud I'm able to offer them something my competition can't.
Am I going to turn them away so other eds can stay in business? No. I'm here to grow my business, to make my clients happy, and to attract as many clients as my business can serve. Maybe I can hire some of those editors, or subcontract to some of them who can meet my standards. But I'm never going to willfully give up my customers if I can keep finding ways to serve them well.
When writers tell me they want something within my power, be it new items or lower prices, am I going to hesitate to bring it to them because my competition won't be able to keep up? Would I downsize my business, purposely attract fewer customers so my competition can survive? Nah.
I understand your point Penny. But you don't have the power to put every editor at every publishing house out of business. Books are basically a commodity once they've been written. Any bookstore or retailer can sell them. So when one of them is able to sell them at a loss to hurt the other retailers, I just don't think that's fair. That's not really competing on equal ground. And if one account gets so big that it wipes out a huge piece of the remaining retail market; what do we all do then when they're able to suddenly start raising prices?
DeleteBy the way, other companies are looking at using this technology for all sorts of deliveries, it's not just Amazon. Now people are questioning if this was just a publicity stunt on Amazon's part knowing the viewership they would get on 60 Minutes.
ReplyDelete