It's like Uber, but for Wal-Mart!
April 3, 2017 11:29 AM   Subscribe

Amazon Wants Cheerios, Oreos and Other Brands to Bypass Wal-Mart Amazon.com Inc. has invited some of the world's biggest brands to its Seattle headquarters in an audacious bid to persuade them that it's time to start shipping products directly to online shoppers and bypass chains like Wal-Mart, Target and Costco.
posted by entropicamericana (118 comments total) 9 users marked this as a favorite
 
Anything that knocks the Waltons off their perch is A-OK by me.
posted by ThePinkSuperhero at 11:30 AM on April 3, 2017 [9 favorites]


On the other hand, anything that harms Costco is not OK with me.
posted by zippy at 11:34 AM on April 3, 2017 [35 favorites]


Shame to see Amazon driving out these mom and pop stores.
posted by bondcliff at 11:44 AM on April 3, 2017 [16 favorites]


Who will speak for our beloved cereal box mascots on this?
posted by JoeZydeco at 11:46 AM on April 3, 2017 [1 favorite]


If Amazon can convince cereal producers to start selling boxes that are more than 1/4" thick again, I'll buy from them. The endless trend of making the boxes taller and thinner just to keep the price down drives me nuts - I'll happily pay more per box to be able to get more than one bowl out of the damn package. The only cereal in decent sized boxes these days are generally the ones with sugar as the first 8 ingredients...
posted by caution live frogs at 11:46 AM on April 3, 2017 [4 favorites]


Geez. It's so unnerving how Amazon and Google and Facebook and other huge companies want to be in every sector and be ever-larger and ever-more-indispensible. Like, I get why that is their strategy, but it just feels creepy to me.
posted by aka burlap at 11:49 AM on April 3, 2017 [10 favorites]


Who will speak for our beloved cereal box mascots on this?

Get Hollywood on the phone! I've got a helluva pitch for Food Fight 2!
posted by Strange Interlude at 11:49 AM on April 3, 2017 [11 favorites]


Manufacturers would have to re-imagine everything from the way products are made to how they're packaged. Laundry detergent could come in sturdier, leak-proof containers. Instead of flimsy packages designed to pop on store shelves, cookies, crackers and cereal could be packed in durable, unadorned boxes. Plants could spit out products for individuals rather than trucks-full of inventory.

Unless they're also talking about ways of reusing all that upgraded packaging, this mostly sounds like a recipe for increased waste.
posted by fifthrider at 11:51 AM on April 3, 2017 [11 favorites]


The ubiquity of Amazon is actually a form of redlining.

Now, I don't use Amazon, anyway, but the truth is that people in my neighborhood really can't. There is nowhere safe to leave a delivery - anything you left out would be stolen in a minute. And many people work odd shifts anyway, plus they work at places where you can't get packages delivered. And to top that off, many low-income people don't have credit card access.

So when something isn't available in a big box store, it either must be bought in a convenience store at a jacked up price, or can't be bought at all. And any discounts available via Amazon are not accessible to most low income people.

I'm fortunate in that a friend in a different neighborhood can accept packages for me, but I don't like to lean on her goodwill too much.

Many people would say "oh, who cares if the poor can't get oreos, they can just get the store brand", but it's still kind of a drag - and it seems likely to be extended to more products if this goes through.

Frankly, the people who suffer most from the disappearance of actual stores are the people who for one reason or another can't order online.
posted by Frowner at 11:52 AM on April 3, 2017 [100 favorites]



Geez. It's so unnerving how Amazon and Google and Facebook and other huge companies want to be in every sector and be ever-larger and ever-more-indispensible. Like, I get why that is their strategy, but it just feels creepy to me.


OTOH, I am trying to console myself by imagining that after the revolution, we will have a distribution system which can readily be adapted to luxury gay space communism. We can seize the means both of production and distribution, and there will be cheerios delivered by communist drones for all.
posted by Frowner at 11:54 AM on April 3, 2017 [12 favorites]


Don't see how this can ever be more than a niche thing for products that are large, heavy, and cheap---all of which describe cereal.
posted by aerotive at 11:55 AM on April 3, 2017 [1 favorite]


The ubiquity of Amazon is actually a form of redlining.

I think they're trying to work around this a bit.
Amazon Cash
Amazon Lockers
posted by paper chromatographologist at 11:58 AM on April 3, 2017 [12 favorites]


What about Froot Loops?
posted by thelonius at 11:58 AM on April 3, 2017 [1 favorite]


Frowner, when I order from Amazon I can specify that my shipment be delivered to the nearest post-office for pickup, and I've done this a couple of times for things that were a surprise for my spouse or that I really didn't want to have to go to the UPS location in case no one was home to receive it. It doesn't cost anything extra and you can specify the post-office so you could pick one close to work, school or the Walmart/Target/Costco you were going to be going to anyway .
posted by any portmanteau in a storm at 12:00 PM on April 3, 2017 [10 favorites]


MetaFilter: Luxury Gay Space Communism
posted by sandettie light vessel automatic at 12:01 PM on April 3, 2017 [19 favorites]


OTOH, I am trying to console myself by imagining that after the revolution, we will have a distribution system which can readily be adapted to luxury gay space communism. We can seize the means both of production and distribution, and there will be cheerios delivered by communist drones for all.

Excellent point, that does put a silver lining on it!
posted by aka burlap at 12:06 PM on April 3, 2017


Aaaaaaannd....in low-income areas, post offices are fewer and farther between, with reduced hours and staff! Also, a look in my city shows that there are literally no Amazon lockers here - there are a number in the suburbs, of course.

I am not kidding - it is difficult to access these things in low income areas, especially the core low income areas, partly because even the work-arounds are created on the assumption that you live near other services and/or have a car and/or work a normal schedule. I live in one of the largest neighborhoods in the city, and one of the poorest - we were mashed together into one neighborhood to give us less clout, basically.
posted by Frowner at 12:08 PM on April 3, 2017 [56 favorites]


zippy: On the other hand, anything that harms Costco is not OK with me.

I live in Seattle (proper, where we have but a single Costco inside the city limits) and maybe this is off topic, but...I just don't see the appeal of Costco. Maybe I'm doing it wrong but I vastly prefer Amazon Fresh and its kin. Either way, I'm paying a membership fee. Either way, I get "cash back" on purchases (via Amazon Store Card). Either way, I can have a massive stack of toilet paper on offer.

But, at least with Amazon Fresh or Pantry, I don't have to buy 75 ramen bowls at a single sitting. Or lug it out to my car. Or, and this is my least favorite of all, dive head-first into a Costco that is always packed to the gills. (I mean, seriously? I've tried going mid-day mid-week, packed. Early morning, weekend? Packed. Late evening, any day? Packed. Where are all of these people coming from???)

At least Costco has much better labor practices going for it, which is nice, but I can't hardly get into the darn things to patronize them, and I have an 800sqft house so I've nowhere to put the stuff (but that's secondary because I'm sure I could make it fit).
posted by fireoyster at 12:12 PM on April 3, 2017 [5 favorites]


Frowner: "I am not kidding - it is difficult to access these things in low income areas, especially the core low income areas, partly because even the work-arounds are created on the assumption that you live near other services and/or have a car and/or work a normal schedule. I live in one of the largest neighborhoods in the city, and one of the poorest - we were mashed together into one neighborhood to give us less clout, basically."

In that case, while yes, Amazon's services are discriminatory in fact, it's hardly fair to accuse them of redlining when they've made in-roads to traditionally underserved communities by setting up Amazon Locker or working with UPS or the USPS. I'm hardly the biggest fan of Amazon, but I think they've done well here.
posted by TypographicalError at 12:18 PM on April 3, 2017 [15 favorites]


Yeah I'm someone else who really can't get shit delivered unless I absolutely have to because there's a 50/50 chance the delivery person will figure out how to complete the delivery. If it's the post office, if the package doesn't fit in my tiny mailbox I'm probably not getting the package. If I'm not home when FedEx comes by I'm not getting the package. There is an amazon locker station at the nearby grocery store but that kind of defeats the purpose????
posted by bleep at 12:22 PM on April 3, 2017 [1 favorite]


Aaaaaaannd....in low-income areas, post offices are fewer and farther between, with reduced hours and staff! Also, a look in my city shows that there are literally no Amazon lockers here - there are a number in the suburbs, of course.

That may be why paper chromatologist said "I think they're trying to work around this a bit." rather than "Nah, Amazon's totally solved that problem."
posted by Etrigan at 12:23 PM on April 3, 2017 [1 favorite]


I live in Seattle (proper, where we have but a single Costco inside the city limits) and maybe this is off topic, but...I just don't see the appeal of Costco.

Costco treats its warehouse workers well, Amazon treats its like shit.
posted by zippy at 12:26 PM on April 3, 2017 [34 favorites]


Geez. It's so unnerving how Amazon and Google and Facebook and other huge companies want to be in every sector and be ever-larger and ever-more-indispensible. Like, I get why that is their strategy, but it just feels creepy to me.

This recalls one of my all-time favorite things from The Onion, March 14, 2001: Starbucks to Begin Sinister "Stage Two" of Operation.
posted by something something at 12:26 PM on April 3, 2017 [10 favorites]


One of the areas in which I consider myself almost absurdly fortunate is my access to retail. Costco is my closest Big Box (with a pharmacy that has a discount deal with my insurance), with Target just a little farther away. Two major supermarket chains and two locally-owned stores within reach I can compare fresh food prices from. And my almost-rural location (most of my neighbors are in trailer homes; I'm not) with a large front porch, reliable before-noon delivery from UPS and FedEx and a usual mailcarrier I know personally. I have short lists of things I buy from each source (including Costco, which is why my freezer and pantry are always full).

But I do wish somebody would find a way to successfully compete directly with Amazon because I have a very rational fear of monopolies. I'm keeping an eye on jet.com even though it's apparently part of WallyMart.
posted by oneswellfoop at 12:27 PM on April 3, 2017 [2 favorites]


So, when the power goes out, or there's a storm in the forecast and it's a good idea to stock up for the few days of inclement weather, we're supposed to order online how, exactly?

Amazon needs to learn how to stay in its lane. There's a need for being able to go to a store and getting something immediately. Trying to convince major brands to go online-only is like trying to convince the Mayo Clinic to dole out medical advice strictly through WebMD. If they want to compete with retailers that have stores, then they should do what everyone else does and open stores.
posted by Autumnheart at 12:33 PM on April 3, 2017 [8 favorites]


If they want to compete with retailers that have stores, then they should do what everyone else does and open stores.

They've run into a little snag: Amazon's checkout-free physical shop 'can't cope with more than 20 people'
Specifically, the new shop can’t handle tracking more than about 20 people at the same time, and freaks out “if an item has been moved from its specific spot on the shelf” the paper writes, citing un-named sources.
[...]
“For now, the technology functions flawlessly only if there are a small number of customers present, or when their movements are slow,” the Journal reports.
posted by cynical pinnacle at 12:39 PM on April 3, 2017 [2 favorites]


As an employee of the company that was accused of being "Amazon's Showroom" for a few consecutive years, all I can say is....payback's a bitch.

Retail is really a fascinating industry, especially from a logistics point of view in bridging multiple channels. Amazon has created an incomprehensibly huge advantage for itself in being *the* online retailer by a huge margin. It should stick with that, and learn how to maximize it. Own your niche. Branching into brick-retailing is a known industry, and pretty much every other retailer has a 50-odd year head start, particularly where property is concerned.

So, if I were working for Amazon, and thankfully I am not (I read that NYT article! Yikes), I would not be recommending this whole "store that isn't a store" kind of thing. If existing retailers are struggling with finding the sweet spot between selection and square footage, Amazon isn't going to magically reinvent that wheel.

If I really wanted to talk crazy, I'd tell Amazon to buy the USPS. Voila. You've got a location in every wide spot in the road in America.
posted by Autumnheart at 12:45 PM on April 3, 2017 [2 favorites]


I may be a little bit old fashioned - but I think it's not a particularly great idea that people get more and more isolated from one another. I really notice that people no longer seem to know how to interact in public spaces anymore. Simple 'hello's', 'pardon me's', and 'excuse me's' are rapidly evaporating from how we deal with strangers. It's not a matter of people not being rude - but simply not knowing what to do - we are increasingly ignorant of how to interact.

When I was a kid - grocery shopping was a bit of adventure, because you could see what other people ate (someone needs to recreate Woodward's World of Food Floor in Vancouver) - and that made other people, less "other". I love that I can go to my local everyday grocery store and see North American, Persian, Chinese, and Latin American products in one place. I have asked - and been asked - how to use a particular product that was not part of an everyday shopping list.

Amazon does a lot of interesting and good things - but creating communities is not one of them.
posted by helmutdog at 12:47 PM on April 3, 2017 [11 favorites]


aerotive: "Don't see how this can ever be more than a niche thing for products that are large, heavy, and cheap---all of which describe cereal."

I would not describe cereal as cheap, particularly.
posted by Chrysostom at 12:50 PM on April 3, 2017 [2 favorites]


Aaaaaaannd....in low-income areas, post offices are fewer and farther between, with reduced hours and staff! Also, a look in my city shows that there are literally no Amazon lockers here - there are a number in the suburbs, of course.

But is the Walmart closer to you than the post office? That's the comparison.
posted by danny the boy at 1:00 PM on April 3, 2017 [3 favorites]


It's like Uber, but for Wal-Mart! posted by entropicamericana

eponyaccurate.

zippy: Costco treats its warehouse workers well, Amazon treats its like shit.

Amazon's "disruption" of brick-n-mortar chains comes at the cost of the store worker, and a study suggests the knock-on effects of delivery trucks may worsen traffic congestion and transport-related carbon emissions, so that time-saving from shopping online instead of locally in stores isn't a net benefit. Add in the mountains of packaging to deliver a few goods quickly, and personal convenience is coming at a greater public cost (writes the guy who ordered a CD via Amazon and received it on Sunday, in an oversized bubble padded package, from a USPS delivery person).
posted by filthy light thief at 1:02 PM on April 3, 2017 [7 favorites]


I can't see Wal-Mart being super-friendly to Amazon lockers for much longer if they're stealing business
posted by scruss at 1:04 PM on April 3, 2017


I'm not looking forward to comparison shopping amazon to find fiber and sugar content in the different brands of oat-o's and crunchy flakes on their complicated product pages. I just checked a few items I eat regularly and the standard nutrition label is there, but it's not text, it's not always in the same place, and I had to zoom in to read it at all. It takes me a minute tops in stores to look at multiple options and make a decision.

That said, I will definitely try AmazonBasics foods when they start that nonsense. It can't be much worse and their HDMI cables are good.
posted by mattamatic at 1:04 PM on April 3, 2017 [1 favorite]


Like, I'm not in love with Amazon, but online delivery + the US Postal system (which has a mandate to serve everyone) should be a lifeline to people who can't get the things they need locally? If your neighborhood is the "wrong" demographic to get Kashi (or non-wildly overpriced convenience store basics) I'm not sure how providing an alternative that isn't driven by local economic conditions would be bad...
posted by danny the boy at 1:06 PM on April 3, 2017 [3 favorites]


For one thing, the article mentions re-imagining packaging to be sturdier so that it can withstand the rigors of shipping more easily. Well, okay, that's a tremendously expensive process that apparently the manufacturers would assume. Amazon can give these companies some interesting ideas, but where exactly do they make more money by selling through Amazon instead of traditional retail?

He notes that Amazon has 300 million shoppers and can make its own products if brands aren’t willing to sell on its marketplace.

Ha. Okay. I don't think brands are indestructible by any stretch, but sure, go ahead and come up with an Amazon competitor for Oreos and see if anybody fucking buys it.

Amazon's built its entire website strategy around showing up in search whenever you search for anything. It's a lousy website to browse, but it's a great website if you already know what you want. No matter what that is, you're probably going to get a banner or a top search result that points right to that item on Amazon's website. How, then, are they going to market new, unknown products on a website that depends on name recognition? Especially ones that compete directly with well-established, beloved brands? How will that differ from any other store brand? And why would anybody go to Amazon to order faux-reos that they won't even get for 2 days, when they can run down to the corner and buy the real thing in 10 minutes?

Maybe there's a roadmap somewhere in Amazon's corporate depths on how this would feasibly be accomplished, but from my chair it sounds like a lot of hot air, right up there with delivery drones.
posted by Autumnheart at 1:09 PM on April 3, 2017 [4 favorites]


Frowner: " people in my neighborhood really can't. There is nowhere safe to leave a delivery - anything you left out would be stolen in a minute."

Secure parcel receiving is a solved problem. There are lots of parcel drop boxes to choose from.

fireoyster: ".I just don't see the appeal of Costco."

If we have to have big box retailers it's nice that there is at least one that treats it's people well.

Autumnheart: "So, when the power goes out, or there's a storm in the forecast and it's a good idea to stock up for the few days of inclement weather, we're supposed to order online how, exactly?"

I realize this isn't possible for everyone but people really should be prepared for disaster 24x7 not just when forecasted.
posted by Mitheral at 1:09 PM on April 3, 2017 [1 favorite]


Amazon is just Walmart for the middle class. Addictively cheap and convenient but in the long run not good for anybody but itself.

Compare the two:
-- Crazy rich owner? Bezos is richer than the Waltons -- in fact he's the second-richest person on earth.
-- Willing to leverage their corporate weight to hurt suppliers? They've done it again and again.
-- Bad for workers? Walmart and Amazon actually sometimes use the same contractors in the same warehouses. And of course Amazon is actively seeking to replace people with machines.
posted by mrmurbles at 1:09 PM on April 3, 2017 [10 favorites]


Aaaaaaannd....in low-income areas, post offices are fewer and farther between, with reduced hours and staff! Also, a look in my city shows that there are literally no Amazon lockers here - there are a number in the suburbs, of course.

I just did a quick check for post offices and Amazon lockers in Oakland, CA. There's -2- lockers in Oakland. One in Claremont, and one in Jack London Square. Not a single one in or around any non-gentrified areas.

As for post offices, the distribution of them in lower income areas is shocking. FFS, in Alameda alone, we have 3 locker locations, and 4 post offices. The longer I live here, the more I'm ashamed and disgusted by my privilege.
posted by Cat Pie Hurts at 1:12 PM on April 3, 2017 [7 favorites]


I like going grocery shopping. Picking out different things, seeing what is new, bumping into neighbours and friends. groceries usually involves several different stores - green grocer, bakery, deli, Fishmonger, a regular grocery store for basics. I don't even mind hauling my kids along with me. What is the fun of just checking a list of stuff online? I hate hate hate going to Costco though.
posted by fimbulvetr at 1:14 PM on April 3, 2017 [2 favorites]


I realize this isn't possible for everyone but people really should be prepared for disaster 24x7 not just when forecasted.

I agree, but if you live in a small apartment or whatever, it makes more sense to stock up once you are fully informed about how long you might be stuck inside, and that information usually isn't available until immediately before the disaster. Otherwise, it's not really feasible to keep a stash of food and water on hand that you aren't gonna use up right away.

I'm a single person with one fridge, and I find Costco to be very beneficial for produce and deli items, vitamins, towels and bedding, frozen foods, paper products, things like furnace filters and toothbrush heads, and small appliances. Even cut flowers. And gas! Of course Costco is good for buying bulk items if you need them, but even if you're just shopping for yourself, the quality of Kirkland stuff is typically quite good for the price, and you really do save a lot of money on things you might only buy once a year or so.

I try to go to Costco on a weeknight (preferably a Tuesday, the quietest day of the week in retail) and avoid the zoo. If you have a local sports franchise, go when they're playing. The place will be deader than Elvis.
posted by Autumnheart at 1:20 PM on April 3, 2017 [7 favorites]


Secure parcel receiving is a solved problem. There are lots of parcel drop boxes to choose from.

Worry not, 90 year old scraping by on Social Security and unable to access most banking systems, you only have to spend $300-500 on a safe to keep on your porch and then separately convince all the various delivery services to use.

Problem. Solved.

The underlying problems that Frowner raised are serious and not easy to solve, and I wish we were doing much more, not because I want to see Amazon succeed (because fuck them generally), but because most of them are inherently good things like access to the Internet, banking systems, and secure delivery of mail that many people take completely for granted and assume are available to everyone with no struggle, when they plainly aren't.
posted by Copronymus at 1:25 PM on April 3, 2017 [28 favorites]


lol at someone using cars as a metaphor for progress ityol 2017
posted by entropicamericana at 1:29 PM on April 3, 2017 [1 favorite]


Frowner: " people in my neighborhood really can't. There is nowhere safe to leave a delivery - anything you left out would be stolen in a minute."

Secure parcel receiving is a solved problem. There are lots of parcel drop boxes to choose from.


If you live in a neighborhood where random boxes get stolen off your front steps, you probably don't have 500 bucks to spend on making sure that they don't get stolen.
posted by dinty_moore at 1:30 PM on April 3, 2017 [10 favorites]


This is why these issues need to start with a conversation that goes like:

1. Who's our audience?
2. Do we care about people who are not our audience? Yes/no
3. Who's our competition?
4. What can we offer that they don't?

A basic SWOT analysis will put most of that on paper. (Strengths, Weaknesses, Opportunities, Threats)

If they want to capture the grocery market by reinventing how people shop for groceries, that's going to require a hell of a lot more innovating and technology than is currently available to, say, half the country. They'd do a lot better by finding an unserved or under-served niche and building on that. For example, getting Amazon packages to rural areas. (Which is where my crazy idea to buy the USPS comes in.) Secured package drops, sufficient staffing, storage for perishables. Walmart built its empire on becoming the single source for rural areas (I'm not claiming that was in the best interest of the citizenry, but it made for a profitable business) and there's still plenty of room to innovate for companies that have the resources to do it, and Amazon does. If they managed to figure that out, they might very well succeed in seeding new communities because now living in the sticks isn't a barrier to convenience. But putting Amazon lockers next to Walmart and Target isn't a winning idea (* except for people who are already customers of Amazon and those other retailers). People don't want to have to go to umpteen places to pick up their stuff, that's why online shopping AND big-box retail are both things.
posted by Autumnheart at 1:39 PM on April 3, 2017 [1 favorite]


Prime Pantry is garbage. A ton of things I used to be able to buy individually with free shipping can now only be bought as part of a Pantry box, to which I need to add an indeterminate number of items to not pay $5.99 in shipping costs. I get that the free shipping may have been a loss-maker for them, but Prime was initially marketed as free shipping on all Prime-eligible items, only now to have a bunch of that stuff become unavailable unless you buy them as part of a Pantry box, for which you have to pay shipping unless you manage to hit the mystery number of items to get the free shipping (they say five items, but I've tried several times with up to eight or nine items and still not hit the threshold for free shipping so gave up). Plus, only the premium name brands are available, so tough luck for people who would rather source at least some of their household items from cheap or generic brands.

Luckily I'm in a position where I can easily access Target, Walgreens or Costco for my basic household items. If it weren't for the movies and music (which I still use somewhat infrequently, so not really sure if it's worth it), I'd have gotten rid of Prime as soon as I realized that one of the main benefits that I signed up for was effectively gone.
posted by triggerfinger at 1:43 PM on April 3, 2017 [6 favorites]


I'm guessing there's a money threshold that you have to hit before it kicks in ($35, $50?) and/or that there needs to be a minimum of qualified items. But they should publish that so people know. And they should take care to curate their qualified items so that non-eligible ones don't accidentally make the list. Suckering people in with a promise of free shipping, and then forcing them to play tag with the fulfillment conditions so they don't actually get the deal, is a great way to kill brand loyalty.

Whoever's on their business team over there is being penny-wise and pound-foolish. I'm sure their AOV (average order value) numbers look great, but they'd be a lot better off if they just included fewer things in Prime and Pantry, if they're spending too much money shipping items that don't make up the profit margin. It's a lot better for brand perception if customers are given a consistent price, than to say they get a discount and then tell them "just kidding" at checkout. That's how you get people abandoning their carts and going to the competition.
posted by Autumnheart at 1:56 PM on April 3, 2017 [1 favorite]


There is definitely underservice/bad logistics for poor neighborhoods, that's a thing and it's one that should be worked on. There are people who like going to the grocery store and have the physical ability, transportation, childcare, situational safety, mental health resources, and inclination to do it, and that's incentive for brick-and-mortar stores to compete. That doesn't necessarily mean Amazon shouldn't sell its services to the people who want to and are able to use them.

Maybe grocery stores should work harder on accessibility and opening up more than three checkstands at 5:30pm on a weekday. Maybe they should offer neighborhood shuttle services and delivery (that isn't based on a nightmare website or literally having to drive around back to the creepy loading dock to pick up your order, Ralphs in Granada Hills) in order to better compete. I mean, if Walmart or Safeway(etc) leaned in a little, they could be running a (profitable, or at the very least an excellent loss-leader) smalltown/neighborhood public transportation system hubbed at their stores. (This, tangentially, is something that most US transit orgs seem to not understand compared to European and Asian counterparts. Every hub should have commercial retail space built into it.)

And why would anybody go to Amazon to order faux-reos that they won't even get for 2 days, when they can run down to the corner and buy the real thing in 10 minutes?

Generally my need for cookies is not so urgent that I can't wait two days, since buying the real thing in the LA suburbs involves a) a car and a drive on congested surface streets because I live near a giant university campus so it's never not some kind of rush hour b) 25-30 minutes minimum to do that and wait in line at the one checkstand c) just for cookies? For actual groceries I tend to load up my Amazon Fresh cart over 3-5 days (so I reach the $40 free delivery threshold) to have dropped on my doorstep (often before 7am the next morning, often by USPS), and I just plan my cookie purchases and consumption to flow pretty seamlessly from one order to the next. Almost all our staple household items are now Subscribe & Save deliveries that come on the 7th of the month. I do go to a physical store 2-3 times a month for a few very specific items I can't get brought to me, but at this point since I work from home I rarely even use my car most of the week now.

(Pantry is seriously bullshit. It's such a pain in the ass.)

Amazon makes their free delivery thresholds about as clear as is possible, marked on every item as you shop so you can tell what qualifies and what doesn't, there's not a ton of mystery around it; they've been fine-tuning it with Prime users for years.

I have the advantage of some of Amazon's best service because of where I live, but it wouldn't take much to compete with that in less-populated areas, or even in poorer areas. I wonder how much of that is unwillingness to cooperate (much less incentivize) on the parts of local governments.
posted by Lyn Never at 2:07 PM on April 3, 2017 [5 favorites]


We are witnessing a Tipping Point in America where The Massive Retailer That's Way Too Powerful And Needs Disrupting Badly is changing from Walmart to Amazon.
posted by oneswellfoop at 2:15 PM on April 3, 2017 [8 favorites]


Secure parcel receiving is a solved problem. There are lots of parcel drop boxes to choose from.

When someone tells you something is a problem for a huge swath of society, jumping in to say "no it isn't, this problem has been solved" is incredibly myopic. Especially since at least one of your links does not appear to exist in this person's country, let alone their underserved neighborhood.

I also live in a city neighborhood where getting packages is still a problem, because of access to buildings (deliverymen don't have badges to get where they need to go), because of things on front porches being tempting for random passersby, because there literally are not any local big box stores that offer this service, because the nearest post office has restrictive open hours, because a lot of people who live there don't have cars in order to transport packages back from a drop off location which kind of sucks if the package is heavy or bulky, because some delivery people will drop things off and some won't and you have no way of knowing who is working on what day, because anything that requires the installation of something on a front porch doesn't work when you live in an apartment building, because many of my neighbors have zero access to credit cards/the internet, because because because. When people tell you a paradigm has problems, the answer is not "lol no it doesn't". Sometimes you can trust people to tell you the truth about their lived experiences, I promise.

I find the already happening Amazon-ization of stores to be incredibly frustrating-- items that used to be staples in retail stores are now sometimes really hard to find. Sometimes I want to be able to look at an object and feel it in my hands before I buy it, especially since product reliability on Amazon seems to be getting more dicey. In a physical store, I don't have to think "hm, I wonder if this item will reek of gasoline fumes?" before I buy it. I can just smell it and find out.
posted by a fiendish thingy at 2:28 PM on April 3, 2017 [34 favorites]


go ahead and come up with an Amazon competitor for Oreos and see if anybody fucking buys it.


Trader Joe's did it, for Oreos and Cheerios.

Keep in mind during this discussion of delivery methods and access that within ten years Amazon will have a drone army delivering its shit.
posted by bq at 2:29 PM on April 3, 2017 [1 favorite]


Oh my god, if Amazon can top the Joe Joe (and then offer a year-round version of the Holiday Joe Joes) I'll just have my direct deposit sent straight to them.

I won't live long, but I will die happy.
posted by Lyn Never at 2:33 PM on April 3, 2017 [5 favorites]


On the other hand, I would enthusiastically nominate Trader Joe's as one of the candidates to "disrupt" Amazon. (And they do need desperately to re-purpose their Fearless Flyer as a Wiki) I've been a customer since they were a half-dozen stores around L.A. (and have often told the story of how I used their radio commercials to benefit my short-lived radio career).
posted by oneswellfoop at 2:42 PM on April 3, 2017 [2 favorites]


Heh, my experience with Trader Joe's is that they've spent more time trying to take on local co-ops than larger grocery chains. I'd welcome them trying to take on Amazon, but generally they've punched down, not up.
posted by dinty_moore at 2:46 PM on April 3, 2017 [4 favorites]


I live in Seattle (proper, where we have but a single Costco inside the city limits) and maybe this is off topic, but...I just don't see the appeal of Costco.
I also live in Seattle. I didn't get it until we had kids and moved to the northern part of town. Good worker policy, cheaper things that we normally buy anyway and $1.50 hot dogs with free drinks.

What I do not understand (yet) is buying food online. We've tried Amazon Fresh before. In my head, it's so simple... just click on what you want and you're done. In practice, every time I've used it I've spent wayyy too much time trying to determine if product X is actually what I want, or is a good substitute for product Y (which I really want but isn't available), or just how many peppers I want to buy, or if "3 stars" of produce quality is acceptable, or.....

And I don't get any damn samples.

Presumably with direct to consumer we'd still be ordering Oreos via some kind of online storefront like Amazon Fresh. Blech. Or perhaps we'd have Dash buttons all over the house? Awful. Or maybe each box of Oreos would have a single-use dash button attached to it? Terrifying.

Oh oh I know! You put sensors underneath each cookie and give each box a 4G connection! Then the box can send a message to Nabisco when the number of cookies left in the package gets below the number of people who live in the house! INFINITE AUTO-COOKIES!
posted by rouftop at 2:57 PM on April 3, 2017 [4 favorites]


I've checked other articles, too, and I'm still not clear on what Amazon's proposing to manufacturers. Is it that they want them to use packaging that can flow through the Amazon warehouse and distribution system more efficiently? Or does "time to start shipping products directly to online shoppers " mean that they really want Mondelez, General Mills, and the rest to start drop-shipping directly from their own factory or warehouse directly to the customer?

If it's the former, well, ho-hum: Amazon being Amazon. If it's the later it seems like a gutsy step, and maybe one step too far? If I make cereal, and Big AZ wants me to set myself to take orders through them and ship to their customers, why wouldn't I arrange to do the same thing for every other possible web store at the same time, including my own?

Amazon can still compete on being big and convenient to shoppers, but If I can buy from several places online and the prices are similar, I'll buy from nearly anyone before Amazon.

I don't see why the prices wouldn't be very similar. Most of Amazon's ability to out-price online competitors comes from the ruthless efficiency (and just plain damned ruthlessness) of its logistics operation. If every cookie maker is doing the packing and shipping for them, bypassing their distribution chain, all of that disappears. And it's hard to see how the cookie manufacturer's costs are going to be much different if they're shipping 10000 packages to 10000 amazon customers, or 99980 packages to Amazon customers and 20 to customers of momnpopgroceryonline.com. Amazon can still try to keep lower margins by running the web store more efficiently than everyone else, but surely those costs can't be more than a tiny percentage of what the end-customer pays.

AZ surely knows their own business way better than I do, and I'm sure they have other plans to keep customers and manufactures locked into doing business through them. But I, from my ignorant outside vantage, can't see any that look as powerful as their current ability to package and ship for a fraction of the cost of anyone else.

Maybe, just maybe, the big dirty river could finally make the misstep that could reverse the centralization of online shopping? It's probably as foolish as hoping for personal homepages to take back content form Facebook and LinkedIn, but still, maybe... just maybe...
posted by CHoldredge at 3:17 PM on April 3, 2017 [1 favorite]


There is nowhere safe to leave a delivery - anything you left out would be stolen in a minute.

I want to tell you about China. I haven't spent any significant time in the West for quite a while so its hard to say if I am living in the future, or just an alternate timeline, but man this place does it differently.

So first off, there is Taobao. I guess it is sort of like Amazon? But it is (almost?) completely made up of independent small vendors, Taobao is just the online platform.

Everything is available on Taobao. Stuff you think is unavailable in China is actually just unavailable out in the public shops. Somebody has a bedroom or warehouse full of Russian kolbassa, another guy has size 45 shoes. Real Hellman's Mayonnaise and mustard. Makeup, toilet paper, tampons.

The distribution system is incredibly organic. Guys on little tuk-tuk style trike / pickup trucks ferry these little boxes around. Right up to your door, or to the "hives", banks of automated lockers that are rapidly being installed near anywhere that concentrations of people live. When your thing arrives at the hive your phone gets a QR code, which you take to the hive, and you feed it in and the door where your stuff is pops open.

The distribution points are everywhere. Corner shops, stretches of sidewalk, a random road underpass. Packages all piled out on the street, in rows and lines, for the right tuktuk guy to take along to the next point.

How is it possible? You could just steal this stuff! Well at every point there is a guy in charge, or many guys. And all the stuff is packed in little nondescript cardboard boxes, how would you know what is a laptop and what is 5kg of lard and what is bulk glitter? No percentage in that! And hey, this is China - it isn't that there is no crime here, but for sure the retail level crime is way lower.

It could never work in the West... the safety regulations, insurance, liability, but here they just get it done. All the people at every step of the way, shepherding this stuff would I guess cost a fortune even at minimum wage rates.

It all happens on your smartphone. If you see something that you like in a real shop, or wherever, you can take a photo of it and Taobao image recognition / matching will find someone online who will sell it to you.

I guess retail shopping will be done pretty soon. We do about 50% of even our grocery shopping through Taobao now. All our clothes.

They have malls here, but they are filled with luxury branded shops or strange novelty impulse buy type shit... shopping in them seems more an aspirational pass time rather than a practical activity.
posted by Meatbomb at 3:37 PM on April 3, 2017 [30 favorites]


Trader Joe's did it, for Oreos and Cheerios.

Trader Joe's has stores.

It's a hell of a lot easier to sell somebody on a new item when they're already physically at your location, than it is to convince them to buy it sight unseen.
posted by Autumnheart at 3:56 PM on April 3, 2017


How many customers to you have to have in an area before you have enough to manage delivering to them whenever they want a bunch of stuff? Sainsburys seen happy to deliver my weekly shopping for as little as 2 quid, at a time to suit me, and i live in a pretty small town. I can order stuff that isn't usually stocked in their local store so i assume a lot of it comes from elsewhere. Are Amazon taking about lots of individual deliveries or whole weekly deliveries?
posted by biffa at 3:59 PM on April 3, 2017


But I, from my ignorant outside vantage, can't see any that look as powerful as their current ability to package and ship for a fraction of the cost of anyone else.

No, they pay the same amount for packaging and shipping as everyone else. What they *don't* pay is the overhead involved in maintaining retail locations, that's their big advantage. Because of that, they could set their prices to a lower profit margin than traditional retailers. Until recently they had a second significant advantage in that customers didn't have to pay sales tax to buy online, but they did when buying in a store. However, state laws have evolved over time to start requiring Amazon to pay sales tax, and retailers have come back with price-matching policies, and better distribution that enabled faster shipping. So now Amazon's biggest advantages are being chipped away. They must rely on selection and exclusivity, to be able to say you can get something on Amazon that you can't get somewhere else. That's what the article is all about, courting big brands to only sell on Amazon.

But there's nothing really in it for those brands. Why should Cheerios slash the reach of their market and assume all the expense of re-designing their packaging, just to reach 300 million customers? They already reach 300 million customers by changing nothing.

To be clear, the overall point in my posts isn't that it's a bad idea to make it easier for people to shop, but that this direction doesn't seem like a good business idea for them. It smacks of Target Canada kind of thinking.
posted by Autumnheart at 4:14 PM on April 3, 2017 [1 favorite]


I'll be worried when they start using CRISPR to engineer chickens that lay unbreakable eggs.
posted by GuyZero at 4:47 PM on April 3, 2017


So is the idea that these companies would stop selling to big-box stores everywhere, or just in places where Amazon has decent infrastructure in place? Because UPS wouldn't deliver to my old apartment building unless someone was physically there to sign for it, because apparently they thought it was a high-risk area. There are no Amazon lockers anywhere near here. (When you search on my zipcode, you get a "sorry!" message.) And the local post office is open 9-5 M to F and 9-noon on Saturday. I don't really want a three-hour weekly window to pick up my groceries. So yeah, fuck that. Not everyone lives in Oakland.
I'll be worried when they start using CRISPR to engineer chickens that lay unbreakable eggs.
I am thinking that idea contains a basic design flaw!
posted by ArbitraryAndCapricious at 4:49 PM on April 3, 2017 [4 favorites]


They'd sell you some sort of $12.99 tool that opens the egg for you.
posted by GuyZero at 4:50 PM on April 3, 2017 [4 favorites]


First you have to scan the egg's NFC tag with the tool which will validate that you are using the account that purchased the egg, though.
posted by thefoxgod at 4:52 PM on April 3, 2017 [6 favorites]


I am thinking that idea contains a basic design flaw!

I was just thinking that myself! Not gonna make very many omelets with those chickens.

They'd sell you some sort of $12.99 tool that opens the egg for you.

That'd be more up Apple's alley. The iEgg won't break in transit, but you need this special dongle to make it actually work. Although really, if it were Apple, the iEgg would break despite costing $129, and it'd be a status symbol to carry a broken egg around with you.
posted by Autumnheart at 4:53 PM on April 3, 2017 [3 favorites]


Why should Cheerios slash the reach of their market and assume all the expense of re-designing their packaging, just to reach 300 million customers? They already reach 300 million customers by changing nothing.

a) the new packaging is cheaper. They could just take existing bagged cereal and put it in new mostly-blank boxes, possibly 2-4 bags per box.

b) General Mills and their counterparts pay grocery stores big $ to keep their products stocked front and center. Working with Amazon is a major lever in those price negotiations.

c) they can go after less price-point-sensitive customers. Suburban families may like getting the best price per ounce on Cheerios but not blink at buying a $20 box. Which General Mills would LOVE.
posted by GuyZero at 4:53 PM on April 3, 2017 [1 favorite]


On the other hand, I would enthusiastically nominate Trader Joe's as one of the candidates to "disrupt" Amazon.

TJ's is owned by Aldi and the owners are more about having a reliable cash flow rather than innovating in supply chain management.

TJs is now a funky off-shoot of a German grocery mega-conglomerate. It stopped being a fun socal local thing a number of years ago.
posted by GuyZero at 4:57 PM on April 3, 2017 [1 favorite]


If I make cereal, and Big AZ wants me to set myself to take orders through them and ship to their customers, why wouldn't I arrange to do the same thing for every other possible web store at the same time, including my own?

Ah, I know this one from the back end: because Amazon and that level of retail (but especially Amazon) has basically seamless EDI-to-store integration, and you play by their rules that keep their system running perfectly. If you're a little guy, with a homegrown Shopify or Magento site, they don't offer that kind of integration to the manufacturer.

The Fulfillment By Amazon (FBA) system is sleek and powered by search and purchase data that General Mills or whoever just doesn't have access to because Walmart and grocery stores can't read people's minds or shopping lists (yet). Amazon's warehouse system takes the storage and logistics off GM's plate. But for everyone involved to make a profit, the packaging has to change to be more shippable (laundry detergent pods are another great example of shelf-friendly packaging that's a space-waster in shipping boxes), which is what Amazon's trying to convince them to do. (Just like, as the article says, Costco convinced a lot of companies to either package their own bulk-sized offerings when they didn't before, or make them under the cover of the Kirkland brand.)

I'm not sure that actually equals "bypass Walmart" as the article says, in the sense of "don't sell product at Walmart" but instead selling an extremely accessible product delivered in a way Walmart can't, packaged to maximize transportability, and probably in the end undercutting Walmart's pricing. I don't think Cheerios are going to become an online-only product anytime soon, but it does mean that fewer people are going to go into Walmart and buy 15 other things because they're about to run out of Cheerios.
posted by Lyn Never at 4:57 PM on April 3, 2017 [1 favorite]


The new packaging is only cheaper after paying someone to design it, then reconfiguring all their packaging manufacturers to the new design. That is quite an expensive process.

Using Amazon as a price lever only matters if you can demonstrate that they would actually sell enough of your cereal to make up the difference. There's no guarantee people are going to start buying groceries on Amazon en masse, and in fact Amazon has a huge amount of ground to make up on that front if they want to compete effectively.

It is kind of a chicken and (unbreakable) egg problem, in that Amazon has to demonstrate competitive sales before brands will jump, and yet they have to have the brands before customers jump.
posted by Autumnheart at 4:58 PM on April 3, 2017


Also, Target and Walmart absolutely *can* read people's shopping lists (if not minds), because both of those companies also collect and maintain an enormous amount of customer data, and no doubt use it to drive business decisions just like everyone else in retail. And what they don't have, they can buy....especially as of this week.
posted by Autumnheart at 5:00 PM on April 3, 2017 [2 favorites]


The new packaging is only cheaper after paying someone to design it, then reconfiguring all their packaging manufacturers to the new design. That is quite an expensive process.

Existing products that offer frustration-free packaging sell way smaller quantities than cereal manufacturers. Redesigning a box is a drop in the bucket if there's real opportunity to sell via Amazon. And they don't have to change the bagging system - it's the same way Costco offers bigger boxes of cereal than your local supermarket, with two interior bags. Amazon could use those right away or go to THREE BAGS.
posted by GuyZero at 5:02 PM on April 3, 2017 [1 favorite]


...if there's real opportunity to sell via Amazon.

Right now there isn't. Not in a way that competes with existing retailers. They are competing for the SAME customers. This isn't a new, untapped market we're talking about, after all. And tens of millions of dollars is a lot to spend on fixing something that ain't broke. So where's the win for them?
posted by Autumnheart at 5:05 PM on April 3, 2017


Weird to see Amazon as the bad guys in grocery when grocery deserts are a thing and have been a thing for a long, long time

Not saying Amazon is perfect, but weird to see Amazon positioned as a clearly worse option for poor neighborhoods given that so many of them already suffer from serious issues with food availability.
posted by Rock 'em Sock 'em at 5:09 PM on April 3, 2017 [1 favorite]


I mean it's just very werid to see people getting real opinionated about getting groceries to the poor while completely ignoring the current state of things (bad, it is a bad state)
posted by Rock 'em Sock 'em at 5:10 PM on April 3, 2017 [1 favorite]


As far as it being a costly swing and likely miss goes, Amazon does seem to have a predilection for ventures in the "If it ain't broke..." category, for some reason. Amazon Prime as a delivery service and streaming video service certainly doesn't make intuitive sense to me, and you hear a lot about how immediately turning a profit is rarely their primary goal.
posted by sagc at 5:11 PM on April 3, 2017 [1 favorite]


You can't ignore the logistics and the business strategy involved in achieving something like this. Government goes through the same shit. You might want to build it, and if you did, they might come, or they might decide not to bother and then you're holding the bag. You need to have a plan for that, and a lot of solid analysis on how to grow it in a way that people will actually use.
posted by Autumnheart at 5:13 PM on April 3, 2017


Amazon Prime is a loyalty program. It's basically a cross between a membership fee, like Costco, and a points program, like airline miles or credit card points. The execution of it is unique to what Amazon has to offer, but the idea of it isn't new.

That sounded sort of mansplainy. I just wanted to tie the overarching concept to the seemingly unrelated things you actually get as a Prime member.
posted by Autumnheart at 5:24 PM on April 3, 2017 [1 favorite]


I mean it's just very werid to see people getting real opinionated about getting groceries to the poor while completely ignoring the current state of things (bad, it is a bad state)

It is quite bad, but I'm not sure that a system that requires an Internet connection, a credit/debit card, and a way to get packages that's secure is going to make much progress. It would be awesome if poor people had consistent access to those things, but until they do, I suspect this is going to be much more of a way for middle-class people in the suburbs to stock up on bulk goods than for people who live in food deserts to secure daily provisions. That's not an inherently bad thing, but it's occasionally a little frustrating to see a breathless writeup on the audacity of a tech company breaking all the rules when the existing supply chain is brutally inadequate for so many people.
posted by Copronymus at 5:57 PM on April 3, 2017 [9 favorites]


All you need is a smartphone and today Amazon announced that you can deposit cash into your Amazon account at a number of local retailers nationwide like CVS.

Secure delivery remains a challenge but the ordering part is not hard at all even for fairly poor people.
posted by GuyZero at 6:04 PM on April 3, 2017


Gee, just a smartphone and a data plan, that's it? /s

Or they could walk into CVS and buy a gallon of milk from CVS.
posted by Autumnheart at 6:07 PM on April 3, 2017 [1 favorite]


I work in consumer goods not grocery but there are some things that are outright wrong in this thread I need to clear up.

No, they pay the same amount for packaging and shipping as everyone else

100% not true. Shipping rates are always negotiated and volume makes a huge difference. Packaging costs are also volume dependent. Considering how much Amazon ships I doubt the there are any other companies that can touch them on either one of those.

The new packaging is only cheaper after paying someone to design it, then reconfiguring all their packaging manufacturers to the new design. That is quite an expensive process.

Is there a cost to redesigning packaging? Of course there is, but it is pretty insignificant compared to the potential sales. The company I work for is insignificantly tiny compared to the companies in the article and the cost of creating new packaging isn't worth thinking about except for small promotional runs of a under a couple of thousand.

Furthermore, a big cereal company probably gets their box vendor to eat the cost of a new printing die.

So why is Amazon doing this? One of their big pushes over the past couple of years is a program called SIOC (ships in own container). Instead of having to pack a box in a shipping box, the item is already in a box suitable for shipping. That means that Amazon saves on the labor of packing the shipping carton as well as some of the packaging costs. This is due to the fact that a color box is much more expensive than a brown corrugate box.
posted by nolnacs at 6:12 PM on April 3, 2017 [5 favorites]


The real question is, how is Amazon going to give me my free cheese samples?
posted by kevinbelt at 6:13 PM on April 3, 2017 [2 favorites]


That's what the drones are for.
posted by Etrigan at 6:18 PM on April 3, 2017 [3 favorites]


100% not true. Shipping rates are always negotiated and volume makes a huge difference. Packaging costs are also volume dependent. Considering how much Amazon ships I doubt the there are any other companies that can touch them on either one of those.

Shipping rates are negotiated per vendor for each batch of inventory. Each of those contracts dictates whether Amazon assumes the cost to ship those items, or the vendor does. Amazon might ship a ton of packages total, but they certainly aren't selling, say, more IPads or Apple Watches than Apple. They are not paying less for shipping those sales than Apple is, or any other retailer for that matter. Secondly, Amazon must ship everything, so even if they're getting a "deal", they're still spending an exorbitant amount on shipping, especially for every customer that buys some physically small, light item and has it arrive in a box far bigger than the product. Is that cost less than what another retailer spends on housing products in a store? Dunno! I imagine there certainly is a point of diminishing return, or they wouldn't be trying to branch out into Amazon Lockers and similar concepts. They would just keep shipping everything.
posted by Autumnheart at 6:25 PM on April 3, 2017


For those of you who hate Amazon, you're in luck. Amazon is in pretty serious trouble just beneath the surface. The reason they can move and ship goods so cheaply is that they get a massive amount of venture capital; they get a massive amount of venture capital because they are growing rapidly, and have a variety of side businesses that aren't really part of their core retail business that do make money. But this can't possibly continue forever. At some point there's going to be a reckoning and investors will want some kind of profit, Amazon will raise its prices back to sustainable levels, and it will all come crashing down.
posted by miyabo at 6:26 PM on April 3, 2017


I personally don't hate Amazon (despite working for the competition). But if the lessons learned by my employer came to any conclusion, it's that it is a hell of a lot more sustainable to choose your niche and build on your strengths, than it is to try to be all things to all people.

The grocery business in particular is struggling, and that's another reason why I think this particular idea sucks. Amazon does not have infrastructure in place to capture market share. It would take years for them to build it, and for what? To bring back the metaphorical milkman? There's nothing about this idea that improves anything. Hell, even changing the packaging carries a risk, because everyone's house for the last several decades has been built to accommodate packaged foods of a particular size and shape. As I said earlier, maybe AMZN has a roadmap detailing their plans about this, but as of now...it's pie in the sky. (Pie drones.)

Now, a few people hit on infrastructure issues that are critical to making something like this work, like secured package drops, rural delivery, a solution for the infirm to get their stuff, etc. etc. So maybe, instead of groceries, Amazon should consider distribution and infrastructure itself.

Which still circles back to my original crazy idea of buying the USPS. *heh*
posted by Autumnheart at 6:37 PM on April 3, 2017 [2 favorites]


Shipping rates are negotiated per vendor for each batch of inventory. Each of those contracts dictates whether Amazon assumes the cost to ship those items, or the vendor does. Amazon might ship a ton of packages total, but they certainly aren't selling, say, more IPads or Apple Watches than Apple.

Yes, it is true that the vendor contract dictates whether Amazon pays for the shipping from the vendor to their distribution centers or whether the vendor does but that was not my point. I am talking about Amazon negotiating with UPS, USPS and the like. Their massive volume of packages - over a million a day - gives them negotiating power the other retailers cannot compete with.
posted by nolnacs at 6:47 PM on April 3, 2017 [1 favorite]


...in terms of paying shipping costs. But other retailers have an advantage in that they don't have to ship everything they sell. In terms of profit margin, Amazon's negotiating power with shipping companies is only part of the equation, just like any other overhead. So it would probably be more accurate for me to say, "Amazon negotiates shipping like everyone else."
posted by Autumnheart at 6:54 PM on April 3, 2017


For those of you who hate Amazon, you're in luck. Amazon is in pretty serious trouble just beneath the surface. The reason they can move and ship goods so cheaply is that they get a massive amount of venture capital;

I know this was true in the early days, but I thought these days Amazon turns whatever profit they would make into an investment into growth. Since the mid-90s they've taken over or created category after category of commerce and services, with what is either the world's luckiest pattern of expansion or a Warren Buffett genius level of resource allocation.

They couldn't have done it without essentially free money in the early days, but they survived the dot com bust, paying state sales tax, and challenges from: Google, Wal-Mart, Microsoft, Target, Borders, Barnes and Noble, and god knows how many others.
posted by zippy at 6:56 PM on April 3, 2017 [4 favorites]


They survived those things because Wall Street always said nice things about them, no matter how shitty their business decisions were. I'm being serious. Public perception plays a hyuuuuuuge amount in whether a stock is successful or not. How many times have you heard about Amazon losing a billion dollars because of bad product decisions? Most companies' stock price would tank like Tiananmen Square if they lost a billion dollars on an oops. Not Amazon.

(Yes, I am fucking bitter, since I've been on the opposite side of that, where Wall Street thinks you're an asshole no matter how well you do, and the stock reflects it.)
posted by Autumnheart at 6:59 PM on April 3, 2017 [2 favorites]


"If I really wanted to talk crazy, I'd tell Amazon to buy the USPS. Voila. You've got a location in every wide spot in the road in America."

I mean it's relatively crazy since USPS is one of the very small handful of things actually mandated by the Constitution.

"Gee, just a smartphone and a data plan, that's it? /s"

In impoverished areas, people are most likely to have internet services via smartphone and data plan. If you're looking to serve poor areas, you want to make sure your website and services are phone-friendly, since most of your users will be accessing your website via mobile. There are definitely people with no internet access at all, but the bigger digital divide is that people in poor areas have no desktop access and use the internet solely on mobile.
posted by Eyebrows McGee at 7:00 PM on April 3, 2017 [10 favorites]


Walmart has a serious leg-up in this race. They have an extensive warehouse and distribution chain all over the nation. It's how they supply their stores. For the past year Walmart has been implementing Grocery Pickup. Logon to the site and over several days put together an order, just you or with others. My wife and I build our order together on different computers. What you see on the screen is the current, up to date inventory of your local Walmart. Set a time, show up, give them a call on your cell and the whole order is loaded into your trunk. Over $30 and the service is free. This will be hard to beat by the remote control guys...
posted by jim in austin at 7:01 PM on April 3, 2017 [3 favorites]


I mean it's relatively crazy since USPS is one of the very small handful of things actually mandated by the Constitution.

But it is a corporation now, as opposed to a government institution. And so's the military (mandated by the Constitution), but that didn't stop Boeing and Lockheed Martin.

In my imagination, I picture this as Amazon buying the USPS but not rebranding it--the value would be in the property and the customer data, of course. Once they owned those things, they could expand existing service to offer things like Amazon Lockers and secured drops and whatever they wanted. They'd be contracted like a defense contractor. Again, just looking at this from a business perspective, not from an altruistic progressive kind of perspective. (It'd be nice if those were the same goals, but hey, this is America.)
posted by Autumnheart at 7:05 PM on April 3, 2017


In impoverished areas, people are most likely to have internet services via smartphone and data plan.

Yes, but forcing them to pay for communication to feed themselves is not, in my opinion, an advancement.

Walmart has a serious leg-up in this race. They have an extensive warehouse and distribution chain all over the nation.

They sure as hell do. Walmart has the best logistics on the planet (along with UPS, arguably). For that matter, Best Buy made huge strides by implementing "ship to store" and "ship from store", where, when you order something online, they ship it from the nearest location, be it a distribution center or a store. So people might very well get it within 1-2 days even without paying for next-day shipping. Or they can just go pick it up. Obviously, that's what Amazon Lockers are striving to compete against, but like you said...there's a lot of ground to make up.
posted by Autumnheart at 7:06 PM on April 3, 2017 [1 favorite]


Trader Joe's did it, for Oreos and Cheerios.

If I could order Trader Joes via Amazon Fresh, I would be a happy person.

This will be hard to beat by the remote control guys...

Amazon Fresh and competing grocery delivery services beat that, since you don't have to drive somewhere, make a call, and carry the bags home. It's a long way from great, and I'm not going to give up my Costco card anytime soon, but it works well for a certain set of staples.
posted by Dip Flash at 7:25 PM on April 3, 2017 [1 favorite]


they get a massive amount of venture capital because they are growing rapidly

Amazon had its IPO nearly 20 years ago to the day, May 15, 1997. They haven't received venture capital probably since 1995 at the latest.

and have a variety of side businesses that aren't really part of their core retail business that do make money.

Running low margins is not the same as cross-subsidizing lines of business.

But this can't possibly continue forever.

It can continue indefinitely as long as they're content not turning a profit on their retail sales business, which may very well be a long time.
posted by GuyZero at 7:37 PM on April 3, 2017 [2 favorites]


It really can't, because shareholders don't like it when you insist on running operations that drain money from profitable revenue streams. Amazon hasn't been a private company in a very long time. They've been allowed to operate like one, far longer than most companies have been given that leeway, but it's not just their money that they lose. Their investors are finally starting to demand accountability, and if Amazon can't get in the habit of being accountable, then that will spell trouble for their future.
posted by Autumnheart at 7:44 PM on April 3, 2017 [1 favorite]


It really can't

Sure it can. It can until it can't.

This is a 20 year-old company which is basically unprofitable in their main line of business whose total one-year return on their stock is 48%. Their total return over a decade is 36%. There are amazingly profitable companies that are much less popular with investors. Until Amazon has some real competition they're likely to run near breakeven and the stock market will reward them for it.

I guess investors could all change their mind tomorrow and liquidate their holdings and the stock would collapse. 20 years of data says that's unlikely to happen. But yeah, past performance is not a predictor of future results.

Also, note that the lack of profitability isn't a bad thing - they're taking some hidden amount of profit and reinvesting it in their business. This is part of why investors love them - they take their growth and use it to fuel more growth. The likely end of Amazon's growth is when they own the majority of the US retail sector.
posted by GuyZero at 7:55 PM on April 3, 2017 [2 favorites]


Investors are giving them money to invest in AWS (which makes a massive profit and has potential to replace companies like IBM and HPE that are worth hundreds of billions of dollars). Amazon turns around and uses that money to subsidize shipping toilet paper UPS to Omaha. Eventually the investors are going to notice that there's this stupidly inefficient retail business attached to their IT juggernaut, and get rid of it.
posted by miyabo at 8:03 PM on April 3, 2017 [2 favorites]


Have you even read Amazon's financial statements?

Investors are giving them money to invest in AWS

Investors don't give Amazon any money, not since the IPO. When Amazon stock is traded it's handed between two inventors, Amazon doesn't get any of that money. To quote their 10K:

We believe that cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, as well as borrowing available under our credit agreements, will be sufficient to meet our anticipated operating cash needs for at least the next 12 months.

They don't sell equities. I don't know if they've done any followon offerings after their 1997 IPO but for the most part they get their cash from operations.

As for AWS subsidizing their retail business, their North American retail sales in 2015 were $63.7B and their total sales from AWS were $7.8B. AWS is 7% of their business, retail worldwide is 93%.

I agree that AWS is a source of huge growth and is likely much more profitable than retail sales, but retail is big. Really, really big.
posted by GuyZero at 8:14 PM on April 3, 2017 [3 favorites]


Also:

Eventually the investors are going to notice that there's this stupidly inefficient retail business attached to their IT juggernaut, and get rid of it.

I don't think investors want Amazon to dump a $99B business for a $8B business.

They do run a low margins in retail, but it's still a huge top-line business.

2015 operating income for retail was $2.66B and the profile for AWS was $1.8B so clearly AWS is better but it'll be a long time before AWS is doing 13x its current level of sales. Well, maybe not that long, at the current 70% y/y growth that amazon reports for AWS that's like 14 years which is a lifetime in technology so it remains to be seen whether that level of growth is sustainable. And retail is currently growing at 25% and I'm too lazy to figure out when those growth curves cross over but it's not like their retail segment isn't growing.
posted by GuyZero at 8:22 PM on April 3, 2017 [1 favorite]


And a finally also: Amazon's 1997 IPO generated something like $55M which was a lot of money then but is a pretty laughable amount of money by modern IPO standards. Even adjusted for inflation it's like $86M. The billions they have in the bank come from operational cash flow.
posted by GuyZero at 8:27 PM on April 3, 2017 [3 favorites]


"But it is a corporation now, as opposed to a government institution."

I feel like you're confused. It's an independent federal agency. It's still a government institution. And, either way, it's still in the Constitution.
posted by Eyebrows McGee at 8:52 PM on April 3, 2017 [1 favorite]


Mod note: Friendly reminder, please don't use the edit function to add or change content. Just make a second comment instead.
posted by LobsterMitten (staff) at 8:59 PM on April 3, 2017


People above have already talked about amazon's shit labor practices and why their style of grocery delivery isn't viable in many poor neighborhoods. That said, food deserts are a real thing, lugging tons of groceries without a car is a pain for small things and impossible for larger ones. As a carless city person I get the impulse to be defensive here, and I confess to buying the occasional amazon thing.

I don't have to get groceries off amazon though, because the local store that opened near me a few months ago did something I've never seen before. They started offering a free shuttle for part of the day to everyone who buys over fifty dollars worth of groceries and lives within a two mile radius of the store. This is life changing for me in so many ways. I can get as much food as I need without wondering how to haul it home. The driver lives in my neighborhood, remembers my address, and helps me get the bags into my front door. I waste so much less mental bandwidth on the logistics of shopping. It's worth noting that I live in the more gentrified area of the driver's radius. The store itself is in a more marginalized neighborhood, and is the only big grocery retailer for a few miles around; I bet the shuttle's even more valuable for people who live closer by.

You could make the case that the shuttle's limited hours aren't the most useful for people with erratic work schedules. You could argue that fifty dollars is prohibitively expensive for some shoppers. All valid complaints, but that would be letting the perfect be the enemy of the really-helpful-for-many. I'm sure that my store isn't the only neighborhood grocery place with an innovative approach to getting groceries to people who might otherwise have trouble getting them. If amazon tries to get exclusive access to some goods, I worry that local places like mine that have put a lot of thought into how to best serve their local marginalized communities will get shut out.
posted by ActionPopulated at 10:27 PM on April 3, 2017 [14 favorites]


No thanks. I hate bill clutter and much prefer localizing my purchases to as few retailers as possible. Speaking of Walmart, they recently lowered their free shipping barrier from 50 to 35 dollars.
posted by Beholder at 12:44 AM on April 4, 2017


helmutdog: I may be a little bit old fashioned - but I think it's not a particularly great idea that people get more and more isolated from one another.

We're living in an age marked by the decline of casual, incidental social interaction. I don't know that I'd call going to the supermarket especially social, but it does feel nice to be out among people, even for a deep introvert like me.

But this presents a great opportunity, too. The age of robots will bring us unprecedented leisure time; we need to learn how to fill the social voids with deliberate, in-person social interaction. I think that's going to start happening more, when more people start to realize that sitting alone in a home office with the lights out and Facebook open is not sufficient for a fulfilling existence. It makes me think of endeavors like Sunday Assembly.

(looks around at dark home office, Facebook)
posted by qxntpqbbbqxl at 12:51 AM on April 4, 2017 [5 favorites]


But this presents a great opportunity, too. The age of robots will bring us unprecedented leisure time; we need to learn how to fill the social voids with deliberate, in-person social interaction. I think that's going to start happening more, when more people start to realize that sitting alone in a home office with the lights out and Facebook open is not sufficient for a fulfilling existence. It makes me think of endeavors like Sunday Assembly.

I'd never heard of Sunday Assembly before, but it sounds great.

Of course, what Sunday Assembly is trying to do is mimic the church experience for non-churchgoers . . . so a lot of Americans already do have that experience. The fact that the church is the main source of neighborly social interaction for a lot of Americans has some far-reaching effects on American society.
posted by dinty_moore at 6:51 AM on April 4, 2017 [3 favorites]


So, I need to buy a boot dryer, and my local Fred Meyer was out. No worries, I'll just buy it on Amazon, right? Well...even with Amazon Prime, shipping to Alaska sucks. Used to be, you could get things from Amazon with free prime shipping, but it might take 5-7 days. Ok, fine. But the last several purchases I've made, I guess they're just waiting for a boat to fill, because it's taken more like 2 weeks. And the boot dryer? Well, the one with free prime shipping was predicted to come...mid-may, by which point it won't be so useful. And all the other shippers wanted to charge $14.99 in shipping. So, I guess I'll hope Freddy's gets it back in stock soon.

And Amazon's just randomly decided not to ship stuff to Alaska. The vise I could understand, it's heavy, but pens? A skillet? It makes shopping on Amazon super-frustrating, because it seems like there's even odds they won't ship whatever it is to me.

On the other hand, they were willing to ship a 40lb bag of kitty litter to me, for like $13 including shipping, which is kind of astonishing.
posted by leahwrenn at 9:22 AM on April 4, 2017


I don't live in Seattle, but I live near Seattle. I have seen Amazon Lockers in Seattle but never in (less affluent, less urban, vastly less public-transit-accessible) Pierce County.
posted by trunk muffins at 12:00 PM on April 4, 2017


Investors don't give Amazon any money, not since the IPO.

Amazon has consistently been issuing $5 billion or so in stock for the past few years. That's not a lot compared to their massive retail revenue, but it's more than they've ever earned in profit.

Amazon is trading at a P/E of 185. Compare to other large tech companies that are in the 20-40 range.

Amazon has 1/4th the revenue of Walmart, and less than 2% of the profit, but is worth almost twice as much as Walmart.

The problem is that Amazon is a split empire -- a massive but low-margin retail behemoth that is pretty comparable to Target, Walmart, Best Buy etc., and an IT services business that is profitable and rapidly growing. The stock market is evaluating Amazon as if its retail business will someday make something like the profit its services business makes. This is impossible. It will all come crashing down.
posted by miyabo at 9:10 PM on April 4, 2017


Amazon has consistently been issuing $5 billion or so in stock for the past few years.

Do you have a citation for this? I can't find anything that agrees with you.
posted by Etrigan at 3:14 AM on April 5, 2017 [1 favorite]


Reading Amazon's 10K statements I see no sales of stock in 2012, 2013, 2014, 2015 or 2016.

It kind of blows my mind that people keep making statements about Amazon's financials that are easily disproved by 5 minutes of reading their financial statements.
posted by GuyZero at 8:39 AM on April 5, 2017 [2 favorites]


And in almost every year since 2008 Amazon has repurchased stock.

From their 2008 10K:

We repurchased 2.2 million shares of common stock for $100 million in 2008 under the $1 billion repurchase program authorized by our Board of Directors in February 2008. We repurchased 6.3 million shares of common stock for $248 million in 2007, and 8.2 million shares of common stock for $252 million in 2006, under the $500 million repurchase program authorized by our Board of Directors in August 2006. R

From their 2014 10K:

We repurchased 5.3 million shares of common stock for $960 million in 2012 under the $2.0 billion repurchase program authorized by our Board of Directors in January 2010.

This is also what keeps their stock propped up - fairly large stock buybacks.
posted by GuyZero at 8:42 AM on April 5, 2017 [2 favorites]


Maybe there's some confusion with Amazon bond offerings - I'm too lazy to go look it up right now but they do currently have about $7.7B of long-term debt on their balance sheet and long-term debt went from $3.1B to $8.2B in 2014 so I guess in 2014 they had a big bond offering. And googling 'amazon bonds 2014' says yes, they sold bonds in 2014.

Debt is not the same as selling stock and while I did great in the one corporate finance class I took I don't really understand why companies with cash in the bank raise money via debt, but they do it all the time so it's not particularly unusual. A lot of companies raised money via debt around that time as interest rates were really low. Google also sold $1B of bonds in 2014 when they also had $64B of cash in the bank, so yeah, corporate debt, what's up with that?
posted by GuyZero at 9:47 AM on April 5, 2017 [2 favorites]


Amazon has 1/4th the revenue of Walmart, and less than 2% of the profit, but is worth almost twice as much as Walmart.

One of these companies has shown extraordinary growth over its history including now, the other is a more mature and slower growth company.

Investors can buy mature and easy to model companies, or they can take a leap and possibly get greater growth.

Amazon has shown strength in multiple areas, from logistics (same day delivery) to data storage to web hosting to ebook readers/manufacturing. Wal-Mart outside of logistics has not to my knowledge shown the same degree of adaptation and innovation.

That doesn't mean Amazon's current P/E is sane, but it does mean that while both Amazon and Walmart do retail, Amazon does a lot more and has more opportunities for growth, increases in productivity, and new lines of business.
posted by zippy at 11:01 AM on April 5, 2017 [2 favorites]


I wonder if accepting packages would be a practical side business for homebound people who live where Amazon doesn't locker. It would be historically totally normal (Meatbomb's post describes some of the things that could be done and some of the things the US would expect, all of which we are capable of doing).
posted by clew at 6:16 PM on April 6, 2017 [1 favorite]


> dive head-first into a Costco that is always packed to the gills

Come to the one in Shoreline on a week day. It officially opens at 10:00 am but really opens more like 9:45. Plenty of room.
posted by The corpse in the library at 6:36 PM on April 6, 2017


> I have seen Amazon Lockers in Seattle but never in (less affluent, less urban, vastly less public-transit-accessible) Pierce County

There are a bunch, seemingly mostly at Safeways.
posted by The corpse in the library at 6:49 PM on April 6, 2017 [2 favorites]


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