Amazon Wants To Be Everything

September 28, 2018 6:55 AM

“His vision is for Amazon to become the underlying infrastructure that commerce runs on. Already, Amazon’s website is the dominant platform for online retail sales, attracting half of all online US shopping traffic and hosting thousands of third-party sellers. Its Amazon Web Services division provides 34 percent of the world’s cloud-computing capacity, handling the data of a long list of entities, from Netflix to Nordstrom, Comcast to Condé Nast to the CIA.” Amazon Doesn’t Just Want to Dominate the Market—It Wants to Become the Market (The Nation) - Amazon’s Next Frontier: Your City’s Purchasing (ILSR)- A new analysis by the Economic Policy Institute looking at employment in counties that managed to land a fulfillment center in the last 15 years found no evidence that overall employment increased, and in some instances employment even fell relative to comparison counties. (Huffington Post) - Amazon is doling out raises of as little as 25 cents an hour in what employees call ‘damage control’ (Washington Post) Amazon’s aggressive anti-union tactics revealed in leaked 45 minute video (Gizmodo)
posted by The Whelk (67 comments total)

Relevant tweet is super-relevant, via: @krangtnelson

“AMAZON, 1998: hello we sell books but online

AMAZON, 2023: please return to your Primehouse for your nightly Primemeal, valued Primecitizen”

posted by Fizz at 6:58 AM on September 28, 2018 [49 favorites]

You forgot the "butitssoconvenient" tag.
posted by gusottertrout at 7:00 AM on September 28, 2018 [11 favorites]

That's funny, to me it looks like Amazon wants to be something I avoid using as much as I possibly can.
posted by Mr.Encyclopedia at 7:00 AM on September 28, 2018 [9 favorites]

> That's funny, to me it looks like Amazon wants to be something I avoid using as much as I possibly can.

Sadly, these things turn out not to be in tension :(
posted by merlynkline at 7:04 AM on September 28, 2018

It’s basicslly impossible to avoid supporting Amazon since your taxes (or Amazon’s lack of paying taxes) keeps it in existence despite it never making something as primitive as profit.

It cannot be attacked by consumerism, it must be attacked as citizens.
posted by The Whelk at 7:05 AM on September 28, 2018 [16 favorites]

Well, yes, but at the same time there's no sense feeding the beast if you can avoid it. "No ethical consumption under capitalism" shouldn't mean "spend your money the worst way possible, whatevs".
posted by Frowner at 7:08 AM on September 28, 2018 [15 favorites]

The e-commerce side of Amazon is a juggernaut. Even more so is the underlying cloud service platform. www.amazon.com is just a layer on this infrastructure. Even if/when the original site becomes unsustainable, Amazon will be rolling out new services based on this platform.
posted by carter at 7:10 AM on September 28, 2018 [2 favorites]

half of all online US shopping traffic

They don't specify the metric or cite anything, but I'm guessing it's true. That's a staggering amount of market power. It's basically an order of magnitude bigger than Wal-Mart, which is just wild.
posted by Reasonably Everything Happens at 7:16 AM on September 28, 2018 [1 favorite]

Amazon is the highlander of commerce, THERE CAN BE ONLY ONE. Lol free markets.
posted by Damienmce at 7:29 AM on September 28, 2018 [2 favorites]

Having half of all online US shopping traffic just means people look up an item on Amazon and then go buy it wherever they’re going to buy it. It definitely doesn’t mean they’re buying it on Amazon.
posted by Autumnheart at 7:30 AM on September 28, 2018 [1 favorite]

When the local retailer wants $80 for the same thing Amazon can deliver to the door for $20; or I am in the middle of nowhere and I want some chips and salsa; .... .

Could be worse. I.e. I am not going to pay to read a Bloomberg article that is critical of what and how another company is choosing to make profit.
posted by Afghan Stan at 7:31 AM on September 28, 2018 [4 favorites]

The LinkedIn CEO is the same way, wanting all interactions in life to depend on his platform, although, thank God, he is not as close to realizing this sinister vision as is Bezos. These guys are insane - it's not enough for them to have a wildly succesful company, it has to be the only way that any activity or relationship can be mediated, so that there is no alternative.
posted by thelonius at 7:35 AM on September 28, 2018 [5 favorites]

All the major retailers are price-matching Amazon.com (specifically, not third-party seller) prices and have been for a few years now. That’s why Amazon went to the trouble to buy a physical retail chain whole-cloth. The most powerful point in the customer buying process is foot traffic.
posted by Autumnheart at 7:37 AM on September 28, 2018 [4 favorites]

When the local retailer wants $80 for the same thing Amazon can deliver to the door for $20

I've been finding that local retailers are now approaching or matching the Prime price for a lot of items. And I don't have to schedule my day around making sure a package isn't stolen off my porch, or heading to the nearest Amazon locker that had room for my shipment.

I'm seeing more retailers omnichanneling more effectively lately, which is good.
posted by pernoctalian at 7:44 AM on September 28, 2018 [1 favorite]

Frankly, in my opinion if anything’s going to put a monkey wrench into Bezos’ plans to dominate commerce, it’ll be what we laughingly refer to as our government, their contempt for infrastructure, and their willingness to back insane economic policy that makes it tons more expensive or inefficient for Amazon (or anyone) to move goods. All the online traffic metrics in the world won’t matter if the goods become prohibitively expensive to import and/or the investor class just openly decides to put most of the country’s population in poverty.
posted by Autumnheart at 7:45 AM on September 28, 2018 [8 favorites]

Even if/when the original site becomes unsustainable, Amazon will be rolling out new services based on this platform.

Indeed, they're planning on releasing an MMORPG very soon and based on their cloud/server infrastructure it makes a lot of sense. It also freaks me out because it gives me a lot of Tad Williams' Otherworld vibes. Like this massive corporate world game that everyone will play/consume.
posted by Fizz at 7:45 AM on September 28, 2018

I thought that was more Ready Player One’s premise.

We already have MMPORGs that tons of people consume and I don’t see any evidence that we’re entering a World of Warcraft society.
posted by Autumnheart at 7:48 AM on September 28, 2018 [2 favorites]

I was deeply dismayed to find out yesterday that Amazon is using one of my all-time favorite feel-good hippie songs in a new commercial.
posted by JanetLand at 7:49 AM on September 28, 2018 [1 favorite]

I think it's worth noting that Amazon has a 43.0% bubble score, a 0.5% value score, and a 69.5% growth score on Didier Sornette's financial crisis observatory report this month (https://www.ethz.ch/content/dam/ethz/special-interest/mtec/chair-of-entrepreneurial-risks-dam/documents/FCO/FCO-Cockpit-September_2018.pdf#page=27). High growth should keep it going for a while longer, but there is definite evidence of faster-than-logarithmic growth, which typically indicates bubble buying activity. I have heard some say that Amazon is not in the retail business, it is in the business of disrupting industries. This is evident in one original concept of its name, relentless.com. I believe the main reason it has done well is that Bezos is very, very smart. He has made very good decisions for the company at every turn, but not necessarily the workers.
posted by metasunday at 7:52 AM on September 28, 2018 [2 favorites]

In terms of perspective, I think it also bears remembering that at its peak, AOL had 35 million subscribers, was worth $224B in today’s dollars, and dominated the consumer internet market.
posted by Autumnheart at 7:57 AM on September 28, 2018 [6 favorites]

The LinkedIn CEO is the same way

You mean Microsoft... They bought LinkedIn... massive purchase, one of their smarter moves to stay in the game against Facebook and Google/Alphabet. (Not so smart move... Yammer)
posted by jkaczor at 8:00 AM on September 28, 2018 [2 favorites]

jkaczor, that is news to me.....I was referencing an interview with the top guy that I read years ago
posted by thelonius at 8:07 AM on September 28, 2018 [1 favorite]

Reading the MMPORG article linked above:

"The day/night cycle is pretty important. What you didn't experience is actually being in the wild when night falls, and what happens when some supernatural beings come out."

So they made Minecraft.
posted by davejay at 8:26 AM on September 28, 2018 [7 favorites]

Well, yes, but at the same time there's no sense feeding the beast if you can avoid it.

I've been considering trying this with American goods/services for a while now and it's pretty daunting, but yeah, you're right, even if I can't cut it all out completely, it doesn't mean it's not worth trying.
posted by ODiV at 8:28 AM on September 28, 2018 [4 favorites]

So the other day I went to an independent bookstore and my wife bought a book and I was kind of impressed by the sensory experience of all the beautiful looking and feeling books

Too bad I can't afford them or the space to store them though.

Library it is for me.
posted by srboisvert at 8:29 AM on September 28, 2018 [10 favorites]

So the other day I went to an independent bookstore and


When the local retailer wants $80 for the same thing Amazon can deliver to the door for $20;

my fave indie bookstore has proven a cheaper option than Amazon if you want to order something. Certainly in most cases. Simply, I guess, because they ship in bulk from various suppliers (maybe including Amazon, I haven't inquired). You place your order. You pay up front. They call you when it's arrived, usually within the week. This gets you stuff like brand new (or certainly MINT) trade paperbacks for less than ten bucks (Canadian) total.
posted by philip-random at 8:43 AM on September 28, 2018 [5 favorites]

→ Frankly, in my opinion if anything’s going to put a monkey wrench into Bezos’ plans to dominate commerce, it’ll be what we laughingly refer to as our government, their contempt for infrastructure …

Yep, you can only leach off using existing public roads and sweetheart deals with public delivery services for so long. After a while, if you want to grow, they have to grow. The way you fund that is to pay some fucking taxes.
posted by scruss at 8:44 AM on September 28, 2018 [16 favorites]

Prime Video still sucks, though. Just terrible.
posted by JamesBay at 8:50 AM on September 28, 2018 [2 favorites]

Yeah, I love me some books but where the hell can I put them when I'm not reading them? I know, I'll put them [back] in the Library. I want to read e.g. Tanya Tagaq's new book Spirit Tooth real bad but I do not need to have the extra space in my tiny condo taken up with a book. So I put a hold on it at the library. Hopefully the hundreds of holds on the damn thing will result in them buying lots more copies than they already would.
posted by seanmpuckett at 8:55 AM on September 28, 2018

Prime Video still sucks, though. Just terrible.

Except The Marvelous Mrs. Maisel. Dammit.
posted by mosst at 9:05 AM on September 28, 2018 [5 favorites]

Yeah, except for a couple shows prime video is a complete wasteland of crap. And Amazon has become such a swamp of scammy and suspect listings lately that it is almost as annoying to use as eBay.

I've switched to the public library for most books lately. A massive selection of free books, and they only temporarily take up space in my house. And when I borrow ebooks, they don't even do that.
posted by fimbulvetr at 9:07 AM on September 28, 2018 [3 favorites]

So, yeah, Libraries, free books, movies, music, maker spaces (though you do have to pay for the raw materials), cafes, and lots of other stuff.
Usually, if you can't find what you're looking for they will order it for from the local alliance or ILL, at little to no extra cost.
Support your local library.
Fuck Jeff Bezos, fuck Betsy DeVoss , Fuck Trump, in fact, fuck capitalism.
posted by evilDoug at 9:14 AM on September 28, 2018 [9 favorites]

An Amazon MMO sounds more like T'Rain in Reamde.
posted by snuffleupagus at 9:28 AM on September 28, 2018 [3 favorites]

I dunno, the last time I needed something major (small storage shed), Amazon had it for the exact same price as everyone else but they could get it to me in two days, whereas Home Depot wanted a $50 delivery charge and 7-10 days, Lowes wanted me to bring a truck to the store, Costco wanted to sell me a different vastly more expensive thing, OSH was going out of business, and the only other local supplier I could find would have it for me in a month plus (again) I'd need a truck.

...so, if anyone out there in internetland wants to provide free trucking services for me on demand, I'll drop Amazon. How much are your ethics worth to you? I mean, really, 2-3 hours a week of driving around on my behalf isn't that much if you genuinely care. I'll even cover gas, but you gotta bring the truck. I'll also accept free donations of items/services equivalent to what I was going to buy as long as you bring it to my doorstep.
posted by aramaic at 9:53 AM on September 28, 2018 [2 favorites]

> It’s basicslly impossible to avoid supporting Amazon since your taxes (or Amazon’s lack of paying taxes) keeps it in existence despite it never making something as primitive as profit.

> Well, yes, but at the same time there's no sense feeding the beast if you can avoid it.

It's facile to say Amazon has never been profitable even though it's true, because unlike most high-value dotcoms Amazon generates an immense amount of revenue every quarter, so they have cash flow that their peers of the dotcom era never could manage.

Expenses have always tracked revenue very closely because Amazon have been investing everything they can afford into R&D and expansion, funding as much of it as they can to ensure they own the entirety of what they use and sell. This high cash flow allows Bezos to keep his investors happy but also ensures that, if Amazon really had to, they could chop off a limb, pay off creditors, and not really suffer all that much.

Amazon's played the long game and pulled it off. They've been profitable for most of the past few years and will probably continue to be. Profits will probably look threadbare for some time to come as Amazon continues investing in itself and its ventures, at least up until they have a clear controlling monopoly in some business sector; at which time they won't feel constrained to operate competitively and things will really start to suck for the rest of us.

At this point, avoiding Amazon is about as easy as avoiding factory farmed foods and China-made goods; doing it requires constant vigilance and ends up decoupling you from the consensus experiences of everybody around you. It's impossible to be online in North America, Europe, or Japan without putting some jingle in Bezos' jeans every day, because AWS and S3 provide the hosting and/or data storage for innumerable websites, online services, phone apps, and so on. AWS fees are partially determined by data transfer, so your daily visit to icanhazfunnycatsonline.com makes Amazon another fragment of a cent with each page load. Even Amazon's direct competitors in data storage services use S3 either for offsite redundancy or because corporate contracts these days frequently specify Amazon services as technical requirements.

That's not to point at people and shout "NO! YOU'RE WRONG" because I'm trying to illustrate how you're both right, but that what you said doesn't mean Amazon has been failing upwards, but that what you think Bezos was doing wrong was actually what he was intending to do the whole time. I'm really not one to attribute the essence of individual brilliance to somebody's success -- Zuckerberg is mostly a lucky fucker and Steve Jobs would not have achieved much of anything without the right people around him -- but I really do think Bezos managed to pull off the dream of the evil genius.
posted by at by at 10:07 AM on September 28, 2018 [12 favorites]

I haven't read the articles, but Amazon Web Services is a juggernaut. Almost no one knows about it either. Most of the websites you go to are probably hosted by Amazon. Lil more scary to know Bezos can Thanos snap a bunch of websites offline, isn't it? Sure, they'd find new hosting... but it's just one more thing they are trying to completely take over.
posted by OnTheLastCastle at 10:18 AM on September 28, 2018 [2 favorites]

Nationalizing Amazon could address so many issues in America.
posted by lownote at 10:21 AM on September 28, 2018 [14 favorites]

Nationalizing America could address so many issues.
posted by a halcyon day at 10:35 AM on September 28, 2018 [16 favorites]

Split AWS into competing companies and merge the amazon retail platform and infrastructure with thd USPS and give audible to the library of congress
posted by The Whelk at 10:50 AM on September 28, 2018 [1 favorite]

AWS is truly a juggernaut in the private cloud business - so much more so that Microsoft (Azure anyone? Bueller?) or Google (although they may catch up). So yeah, it's hard to see(as a consumer) where you may be using AWS via YourFavoriteOnlineService.com, since they provide so much in the way of infrastructure services and ways of scaling that no one else has managed (yet).
posted by dbmcd at 10:57 AM on September 28, 2018

Oh, said it before cuz Bezos wants controlling shares of Facebook. Ya know, be the medium you sell upon.

Next, acquisition of spacecraft.
posted by clavdivs at 11:02 AM on September 28, 2018

Amazon is actually the infrastructure we need for fully automated gay space communism, we just need to seize it.
posted by i_am_joe's_spleen at 11:11 AM on September 28, 2018 [15 favorites]

I'd like to see AWS become a public utility, and who gives a shit what happens to the retail parts. It isn't possible for anyone right now to use the internet and not be a consumer of Amazon's services.

Until then, all I can do is minimize my exposure to Amazon by choosing other retailers. Since I work in a science/technology field I often find myself having to buy electronic components which are almost exclusively manufactured in China. I've found that I can buy through resellers, but the markups can be more than 10x. I have to ask myself, is it better to pay this than to buy from the manufacturer through Ebay, Amazon or AliExpress? Does this really constitute consumer choice? As a small buyer, I can't see that I have any ethical option except to quit.
posted by klanawa at 11:13 AM on September 28, 2018 [3 favorites]

"At this point, avoiding Amazon is about as easy as avoiding factory farmed foods and China-made goods; doing it requires constant vigilance and ends up decoupling you from the consensus experiences of everybody around you."

I would like some clarification on what you mean by "consensus experience", but I also want to say that even if you can't completely excise Buy and Large from every facet of a person's life, I think there's some value in the name becoming poison with a certain subset of consumers and some revenue being lost when certain people become casually aware that they're purchasing from the company.
posted by Selena777 at 11:14 AM on September 28, 2018

Metafilter: fully automated gay space communism.
posted by klanawa at 11:15 AM on September 28, 2018 [1 favorite]

Amazon is actually the infrastructure we need for fully automated gay space communism, we just need to seize it.

i'm pretty sure that's why amazon optioned Consider Phlebas -- just as an overt fuck-you to lovers of FAGSC. "sure yes we have the technology and you COULD have this thing you want, but lol no imma devour it like the capitalistic bastard kronos that i am, just to control the universe and make you sad"
posted by halation at 11:16 AM on September 28, 2018 [4 favorites]

No individual part of Amazon is significantly better than the competitors in each area, but no competitor has the sheer variety of businesses that Amazon does.
posted by blue_beetle at 11:17 AM on September 28, 2018

Prime Video still sucks, though. Just terrible.

... Technically it has a larger catalog of studio movies than Netflix ...

... However - they are impossible to find using the Roku app - same crap always showing-up ... Search is essentially broken... I want to like it, but have only watched two Amazon-produced TV series on it (The Tick was one...), and no movies since I loaded the app nearly 2 years ago...
posted by jkaczor at 11:26 AM on September 28, 2018

"The day/night cycle is pretty important. What you didn't experience is actually being in the wild when night falls, and what happens when some supernatural beings come out."

WHAT A HORRIBLE NIGHT TO HAVE A CURSE
posted by Servo5678 at 11:31 AM on September 28, 2018

I enjoyed their previous MMO, Lambda Kinesis Autoscale: A DevOps Odyssey
posted by sfenders at 11:49 AM on September 28, 2018 [4 favorites]

Next, acquisition of spacecraft.

Bezos' Blue Origin wins key rocket engine contract
posted by snuffleupagus at 12:19 PM on September 28, 2018

After the "BE-4" engine, comes an entire spacecraft:

Jeff Bezos unveils details of new Blue Origin rocket

Jeff Bezos, whose company Blue Origin is quietly developing a wide range of commercial launch vehicles, unveiled details of a new heavy-lift rocket Monday, a towering booster named after astronaut John Glenn that the Amazon founder says will be able to deliver crews and cargoes to low-Earth orbit and beyond.

A two-stage version of the New Glenn booster will stand 270 feet tall, have a diameter of 23 feet and will generate 3.85 million pounds of thrust at liftoff using seven company-developed BE-4 engines burning liquefied natural gas and liquid oxygen. The second stage will be powered by a single BE-4 optimized for use in vacuum.

A three-stage variant will stand 313 feet tall, using a single BE-4 for the second stage and a single hydrogen-powered BE-3 engine in its third stage. The BE-3 already is in use with Blue Origin’s sub-orbital New Shepard rocket, designed to carry tourists, researchers and small payloads to the edge of space and back from a launch site in Texas.
posted by snuffleupagus at 12:43 PM on September 28, 2018

Amazon is actually the infrastructure we need for fully automated gay space communism, we just need to seize it.

I can be ready in 2 days, comrade.
posted by bradbane at 2:21 PM on September 28, 2018 [5 favorites]

This article from the Los Angeles Times about counterfeit products in Amazon Is a good companion piece.

Amazon is squeezing the market from so many angles that it’s really hard to see how everyone else doesn’t get squashed.
posted by jimw at 2:36 PM on September 28, 2018 [2 favorites]

It's impossible to be online in North America, Europe, or Japan without putting some jingle in Bezos' jeans every day, because AWS and S3 provide the hosting and/or data storage for innumerable websites, online services, phone apps, and so on.

And as I recall, that includes this site, which runs at least in part on AWS.
posted by jimw at 2:41 PM on September 28, 2018

at by, The Whelk: Amazon doesn't pay little in taxes despite barely being profitable. It pays little in taxes because it's barely profitable, because in the US, profits are what one is taxed. As such, it's fairly clear Amazon manipulates their balance sheet deliberately, to be just profitable enough to not trigger being investigated.

The idea that Amazon plows it back into R&D is laughable. It's all tax avoidance, baby.

Once upon a time, it would be the shareholders who would revolt under such a scheme, since this means they share nothing. The real mystery of Amazon is why their shareholders haven't done so.
posted by aurelian at 5:17 PM on September 28, 2018 [4 favorites]

I assume it’s cause they’re in on the plan to just wait out/undercut/buy out every other possible competition until they’re the only thing standing.
posted by The Whelk at 5:43 PM on September 28, 2018 [1 favorite]

That's the conventional wisdom, yes. But they've largely been in that position for years.

No, I think it's all, if profits are what get taxed, we just won't have profits. The shareholders are indulging in speculation - which is fine as long as bigger fools exist.
posted by aurelian at 7:24 PM on September 28, 2018

I bought a Citizen watch from Amazon that started losing time after a couple of months, obviously a counterfeit product. Won't be buying any more goods from this shoddy company no matter how cheap they are.
posted by Narrative_Historian at 3:00 AM on September 29, 2018

Important to note are the inroads amazon has made into search and advertising - they get a massive amount of eyeballs on valuable product search and then sell advertisements in the results. They very much want to become the platform rather than the supplier - includes logistics, they have a number of their own planes.

Not true they don't spend on R&D, massive amount of investment in alexa and amazon video just in London
posted by JonB at 5:04 AM on September 29, 2018 [1 favorite]

For years the idea of owning stock was one of reaping profits through dividends. But those can be taxed. Better to do things like this.

Why pay taxes when those profits can be plowed into business, 'expenses,' like buying the competition or ever-expanding vertical integration. Bezos is no super-villain. Super-villans have an end goal. Bezos wants to spread his power out across the Universe. The fact that we have a terraplutocratoma is a real pain. Especially since it keeps threatening to go metastatic. It is possible that the cosmic radiation will help keep it check but maybe the antibodies will kick-in.

A real answer would of course to be for an actual Progressive political party to start talking about enforcing financial regulations, establishing healthy funding systems for political campaigns and getting millionaires share of representation in the House and Senate to fall below, 10%, at most.
posted by Ignorantsavage at 5:41 AM on September 29, 2018 [1 favorite]

-Newsonomics: The Washington Post's ambitions for Arc have grown — to a Bezosian scale
-Amazon's treasure trove of data

When Amazon invited cities to compete for its second global headquarters a year ago today, it got reams of data from the 238 entrants — enough to learn details of the cities' future plans that a lot of their residents don't even know about.

Why it matters: The information effectively provided Amazon with a database chock full of granular details about the economic development prospects of every major metropolitan area in the United States (and some in Canada). For a rapidly-expanding tech behemoth like Amazon, that database could help it make expansion decisions that go way beyond the new headquarters.

Companies have conducted site searches in the past, but none have come close to the scale of the Amazon HQ2 search. That's because Amazon is "not just looking for HQ2," says Joe Parilla of the Brookings Institution. "They're looking for where they're going to put the next data center, the next logistics center, the next R&D facility."

• Amazon's warehouses are within 20 miles of 31% of the U.S. population, while Walmart — its competitor — owns stores within 20 miles of 98% of the population, says Cooper Smith, an industry analyst at Gartner L2.
• "Given they are siting new facilities like mad, this is a huge gift provided by taxpayers," Richard Florida, a professor at the University of Toronto, tells Axios.

Much of the quantitative data that Amazon picked up from cities is publicly available, Parilla says. What matters is the qualitative data cities offered up — they let Amazon in on their wildest dreams.

• The sort of details that might be in a typical HQ2 application include plans for new train stations or shopping complexes — information the city's own residents wouldn't have, he says...

posted by kliuless at 5:43 AM on September 29, 2018 [8 favorites]

They very much want to become the platform rather than the supplier - includes logistics, they have a number of their own planes.

The counterfeit goods article in the LA Times claims that they make a much, much better margin on third-party Marketplace sales than they do on items they stock and sell themselves. From the article:

Combined with transaction fees, fulfillment services and advertising, Amazon can take up to half a seller’s revenue. By comparison, Amazon earns less than 5% profit margins on goods it sells directly, said Juozas Kaziukenas, founder and chief executive of Marketplace Pulse, an e-commerce analytics firm. Amazon declined to verify its profit margin.

I'd love to see some deep dives on the whole ecosystem around Amazon Marketplace. There was an article a few years ago about some of the sellers who go into their local big box stores, stack up on the deals, and ship them into Amazon warehouses to be fulfilled by them. For a company and industry with a reputation for cutting out middle-men, it seems to have created an odd new class of them.
posted by jimw at 8:53 AM on September 29, 2018

The real mystery of Amazon is why their shareholders haven't done so.

There's no mystery, it's simply that you, like many others, fail to understand what Amazon is actually doing with their money and why they operate the way they do. R&D is part of it, but more goes into scaling. Doesn't really seem like tax avoidance, much less evasion, to me.

Regardless, it's not as if there has been any shortage of information on this if you listen to what Bezos is saying rather than what people are saying about him.
posted by wierdo at 10:43 AM on September 29, 2018 [2 favorites]

The idea that Amazon plows it back into R&D is laughable. It's all tax avoidance, baby.


So in other words, the Republican talking point about higher taxes stifling business growth is actually true!


Once upon a time, it would be the shareholders who would revolt under such a scheme, since this means they share nothing. The real mystery of Amazon is why their shareholders haven't done so.

Yes, evil capitalists should be demanding big fat payouts now, to hell with the company's long term viability. Or maybe it's more evil to plow those profits back into the company to ensure it becomes a steady performer over the long run. *twirls moustache* Hmmm... which is more evil that I can inflict on the world?


I assume it’s cause they’re in on the plan to just wait out/undercut/buy out every other possible competition until they’re the only thing standing.

Just like Walmart did! Wait, who will think of Walmart?
posted by 2N2222 at 4:16 PM on September 29, 2018

That article on Amazon counterfeiting is eye-opening. I once ordered a product from Amazon that was way, way watered down from a supposedly identical one from Walmart, and I've been suspicious of used CDs to the point where I rarely buy them. I've noticed lots of reviews lately for various items complaining they are not original. I didn't realize the scale or that the same seller could, unknowingly, be selling both genuine and fake versions, which would partly explain why you can have both glowing and very negative reviews side by side. Bet Amazon carefully controls the mix so that only about 10% of the reviews are bad and buyers can shrug them off as random or cranky. I certainly will be continuing to reduce my Amazon purchases further wherever possible. I'd rather pay a bit more than risk fakes, not to mention supporting that guy and his Cancer.
posted by blue shadows at 4:19 PM on September 29, 2018 [1 favorite]

The counterfeit goods article in the LA Times claims that they make a much, much better margin on third-party Marketplace sales than they do on items they stock and sell themselves. From

I would have thought this was obvious. Retailing is an inherently low margin business. Amazon can do better than brick and mortar stores now that they have the scale to get cheap shipping and get better prices from suppliers, but there is still only so much cost they can cut without sacrificing the short shipping times that make them competitive with B&M for many classes of purchase.

Having built that infrastructure, the incremental cost of handling other people's goods is near zero, but can be priced as if Amazon were incurring the full proportional cost. The seller benefits both by not incurring high fixed costs to run their own ordering and fulfillment service and by Amazon passing along much of the savings in shipping cost. They would have to be a large fraction of Amazon's size to get shipping rates as low as what FBA charges even with their markup. When you're paying $2-$3 a package, and quite possibly zero if the order included an Amazon.com item as well, even a 50% markup is cheaper than any similarly quick shipping elsewhere.

With the storefront only merchants, they have even smaller incremental costs to deliver the service. The only thing that really costs them anything directly is payment processing, and I am nearly certain their margins on that are at least as good as Stripe, Braintree, or PayPal, if not better.

Add it all up and of course the third party sellers make bucket loads of cash. It's plainly obvious in hindsight. The exact same dynamic is at work with AWS. They have to overprovision for redundancy, growth, and events like Black Friday since they are running the physical infrastructure to run their business anyway, so it started as a near zero incremental cost cash cow that could then easily pay for the further increases in capacity required by its own growth while getting the benefit of Amazon's already massive equipment orders garnering enormous discounts while charging only modestly less than or comparably to the competition who are apparently making some money.

This all works because of the massive size of the underlying retail business. I suppose at this point it wouldn't really matter if it (meaning physical items sold by amazon.com on the website) did dry up now that the ancillary businesses have gotten enormous in their own right, but it wouldn't have been possible without the large scale of the retail business before they started doing all the stuff that is now generating mountains of cash because a large fraction of those services are delivered by what would otherwise be idle resources amazon.com the web retailer would be paying for anyway. It's a hell of a lot cheaper to add 10% to the size of your warehouse than it is to build and run an entirely separate warehouse, same with datacenters, and everything else one can outsource to Amazon.

This is all a long winded way of saying that even with their margins being as high as they are, they are providing a significant economic benefit despite their problems, which are legion. The problem isn't with the business model, the problem is lax regulation, the law actively encouraging or even essentially requiring the vast majority of the bad outcomes, and rapacious assholes being allowed to act out their petty power fantasies and abuse workers, suppliers, etc. The assholes are assholes, but we let our government make their abusive behavior legal over the past 50 years. There never was a utopia of responsible corporate (or state) governance, but there's a lot of economic and other abuse that has been either outright legalized or allowed by prosecutorial discretion that didn't go on when people were fined and went to jail for such things. Asking people who seek power to please voluntarily restrain themselves once they get it is not a good way to keep powerful people from abusing those who they have gained power over. Unless the executive prosecutes abusive behavior, courts enforce contracts limiting abusive behavior, or shareholders force corporate bylaws disallowing abusive behavior it will continue. Power hungry people only treat people well when there are actual consequences for doing otherwise.
posted by wierdo at 8:41 AM on September 30, 2018