It reminds me of the strategy A&P used 100 years ago to dominate the grocery business. But Amazon is taking it further, now owning the means to transport their goods as well.
It was a bit of a head-scratcher watching the Amazon trucks on the streets of the city slowly replace the UPS/Fed-Ex trucks that use to carry their ubiquitous boxes. I wondered what the other carriers thought about that move....
Seems that was only the opening salvo.
When they also own the container ships and factories in China are other retailers going to disappear — leaving as alternatives only antique stores, used book stores and craft festivals?
Companies owning their transport assets was the norm for a long time. Until they figured out that subcobtracting that two dedicated carriers, in Amazons case FedEx or DHL among others, was better. Read morw profitable.
Amazon simply reached a point where they would have had to co invest woth their carriers. So investing in oen assets made a lot more sense. And Amazon has the scale, and means to control their sypply chain, to maximize utilization of their transpirt assets.
Worth noting so, that Amazon is using a lot of third party drivers, same as DHL and others are doing.
I remember Supreme Court ruled that FedEx must employ all their delivery drivers (they were all contractors before). How are Amazon delivery drivers better?
FedEx does not employee all their delivery drivers. There were a couple of state supreme court laws which classified some contractors as employees under state laws and required back compensation. Fedex stopped using the business model in question in 2011.
Currently for FedEx Home Delivery, which is most similar to Amazon Delivery, FedEx sells delivery routes to independent delivery operators which they then pay to deliver packages on those routes. The delivery operators then employee the drivers and not FedEx. In many circumstances the independent operators and delivery drivers are one and the same. The drivers tried to unionize saying they were in reality employees of FedEx. FedEx refused to recognize the union and a claim was filed with National Labor Relations Board. The NLRB sided with the drivers but their decision was overruled by the DC circuit court of appeals in 2017. By that time a new administration was in charge and the decision of the court was not appealed by the NLRB. The court based their decision by the fact that the independent delivery operators can hire/fire drivers and helpers without input from FedEx and that they can resell the routes independently of FedEx.
Amazon Delivery operates under a similar model. All those Amazon delivery vans you see are run by independent delivery operators which hire the drivers. Each delivery operator runs at least 5 vans with the norm being between 20 - 40.
I can't talk about the US, in Germany they are mainly sub-contractors. Easy to spot by their Yellow AMZN badges. DHL and company are doing the same thing so.
The article makes a pretty good argument about why Amazon won't replace shipping infrastructure. They are in the business of delivering on short-term consumer demand, where the supply chain can ideally be shortened to weeks or days. Owning container ships is about filling them every day for years, which is a bit of a mismatch. Never say never, though!
Surprisingly (for its author) this analysis misses the most remarkable part of the story.
Amazon isn’t getting snarled at Long Beach (I saw some ships moored off Catalina Island the other day, which is incredible) because they aren’t shipping to Long Beach.
Instead they are shipping to the Washington and even Texas. Why isn’t everybody else? Because of the rest of Long Beach’s logistics. While Amazon has its own fleet of trucks so just takes away its cargo itself, right away.
Apparently they even build their own containers in China, ship them to the States full of cargo, and don’t even bother to ship them back, instead just using them domestically.
> Surprisingly (for its author) this analysis misses the most remarkable part of the story.
This is mentioned at the very beginning of the article, in the quote from the CNBC article:
"By chartering private cargo vessels to carry its goods, Amazon can control where its goods go, avoiding the most congested ports."
And another quote mentions Amazon shipping to Washington:
"That CNBC story follows on a similar story in Bloomberg last month that opens with an anecdote about one of Amazon’s workarounds:
'Most cargo ships putting into the port of Everett, Washington, brim with cement and lumber. So when the Olive Bay docked in early November, it was clear this was no ordinary shipment. Below decks was rolled steel bound for Vancouver, British Columbia, and piled on top were 181 containers emblazoned with the Amazon logo.' Some were empty and immediately used to shuffle inventory between the company’s warehouses."
Amazon does build their own containers, but the article states that these 53-foot containers "are not and can not be used for shipping", implying that they are shipped empty and only used for domestic trucking. Presumably this is because they cannot be stacked as high and they do not match the standardized 40-foot size used at large ports.
On the other hand, [1] suggests that newer 53-foot containers may be suitable for ocean shipping. Is it possible that Amazon is moving 53-foot containers to alternative ports in Washington and Texas, because those ports support the 53-foot standard?
It would be interesting to know how difficult it is for a port to switch between different container sizes. Do ships need to be refitted? Are new cranes required?
He’s incorrect in fact, though perhaps not in practice.
A decade ago my (then) company shipped some stuff in 53-foot containers, as well as some “high top” containers. You could get them as easily as any other container but they were more expensive and not everybody could handle them. You do see them every day on the freeways in the US if you know what to look for.
Amazon is building standard 40’ containers and shipping them across the pacific full of goods.
Note that pallet standards vary by country and industry which affects the efficiency of your container choice.
My current company is trying to stay within TEU and other envelopes that are extremely common. For our (small) scale nothing else is worth it.
>For years, Amazon has been quietly chartering private cargo ships, making its own containers, and leasing planes to better control the complicated shipping journey of an online order. Now, as many retailers panic over supply chain chaos, Amazon’s costly early moves are helping it avoid the long wait times
I hate to break it to everyone but Walmart has had it's own ships for the last 12-15 years. It was the only way they could guarantee timely delivery and stable costs, even when things were normal. For some reason the media thinks Amazon is doing something innovative? There is nothing innovative about charting your own ships and buying your own containers.
Now selling stuff at a loss for over a decade and a half to hook the public and then raise prices quietly to where it's less expensive to buy from brick and mortar is the real innovation. Who would have thought a company could do that for 15 + years.
> ...as the second largest U.S. importer, we’ll continue to partner with our vendors to tackle supply chain challenges together this season and beyond to ensure we can deliver for our guests. We also chartered our own container ship to regularly bring Target merchandise from overseas ports to the U.S. As co-managers of the ship, we can avoid delays from additional stops and steer clear of particularly backed-up ports.
At this point we should be considering Amazon et al as a new kind of States that supercede the existing national states, with the latter increasingly weakening to the point of becoming completely absorbed. I 'm surprised there isn't yet a global giant Security corp that will replace armies, the last function that states still have a monopoly on.
There is historical precedent here: the Dutch East India company. There are times where certain commercial, for profit companies gain so much power that they become effective states. DEIC had military forces and projected power quite far abroad. One can only hope no such development of Amazon's powers occurs.
Another example would be the railroad and oil monopolies of the late 1800s USA. To own the tracks and oil, the transportation system itself, and dictate terms without negotiation, that is no free market, that is despotism by another name.
Re security and the railroad and oil monopolies in the late 1800s, go look up Pinkerton [0]. On their own website, they mention "establishing the first criminal database" — a private company not the state.
"From our roots serving as an intelligence agency during the Civil War, Pinkerton has continued to build an impressive track record establishing the first criminal database, being the first company to hire a female detective, and being a forerunner for the secret service. Discover how Pinkerton has played a historic role in the risk management industry for over a century by following our company and our accomplishments through the years in the timeline below...."
I don't think those are comparable as they were clearly less powerful than the kingdoms they served. If amazon moved their HQ outside the US it would be a major problem
I think the analogue would be Amazon Logistics projecting their power into _space_ in order to protect their eventually-patented Planetary Logistics Ships
They do collect taxes (Prime subscription, cut from sellers), enforce compliance (sellers can't sell cheaper elsewhere), provide infrastructure (own delivery network), and "nationalize" services (start selling common items from Amazon Basics while delisting the originals).
It's always felt weird to be that people in favor of small governments want to let them go rampant.
I would be one of those "small government" people. And it's not so black and white. Just because we see private organizations becoming huge behemoths running rampant in the market, doesn't mean that we want that from a small-government perspective. If anything, this is 100% a failure of government if we collectively agree that Amazon shouldn't be that big or behaving in a certain way. Why haven't we had a referendum about breaking up Amazon? Or any other hot-topic for that matter. We barely have one every few decades and still can't seem to make our minds up (e.g. Brexit or the Catalonian referendum for secession).
Right now, there are huge swaths of government laws and regulations that prevent the market from adjusting to Amazon becoming so large. Even something as simple as copyright laws that affect the legality of scraping data has an effect of propping up Amazon. You have to look N-levels away from Amazon and their lack of competition to appreciate how we are effectively promoting/allowing something like Amazon to occur.
Private contracted armies already exist. Weapons manufacturers are publicly traded and I'm sure could buy out all the PMCs when the timing is favorable. So yeah, maybe one day we will see a global giant security corp.
Extranational MegaCorps aren't a new idea in SciFi, heck Star Frontiers in the 80s had them, and I'm sure that was ripped off from Traveller, and the Alien movie of course had the bigbad corporation.
(I don't think anyone there pointed out that 53 feet is not a container that can go on a container ship! But people were very suspicious of the original reporting along similar lines to the OP here)
But it can go on container ships. And Amazon, running their own ships, could make it happen more than any other company. That said, the article probably confuses the land-based usage by Amazon.
https://www.gatewaycontainersales.com.au/all-about-53ft-cont...However in 2007, the container shipping line APL started using 53ft containers for the Asia Pacific route between China and the US. These were built to handle the same conditions as their 40ft equivalents, and if converting them you can expect the same long life as you would the 40ft containers used today.
Unlike the 40ft equivalents there aren’t that many sitting about, as in 2013 APL stopped taking the 53ft containers.
This is good feedback on the stratechery article we're discussing here, which makes the 53-foot point.
However, your quote seems to suggest they are _not_ currently used on ships? It says APL used 53-foot containers between 2007 and 2013, no?
But sure, Amazon could be creating their own custom ship configurations, as the OP points out too, OP just said standard container ships and infrastructure for loading/unloading and dealing with them (and standardization is of course the point of containers) aren't set up to take 53-foot containers.
Walmart comes in, forces hundreds of other stores out of business, decimates mom and pop businesses, creates a massive workforce of underpaid employees, and then Amazon comes in, does the exact same thing, except 'online', and then starts getting into every other business they can think of, and the US Government (and people) just sit there and watch?
There seems to be some selective amnesia about how great mom & pop businesses were. People drove an hour out of their way to Walmart because it was that much better. Not just the prices, but also selection and return policies (Walmart was the pioneer of long term hassle free returns).
Similarly, Amazon is succeeding because it is genuinely a much better experience than going into a store. You order things, they show up at your door. If there is a problem Amazon refunds your money.
If the government should do anything its invest in a same-day/next-day shipping infrastructure that can be used by any business (say, via the post office or maybe a new package logistics agency).
Amazon used to be a better experience. Now you can’t trust that the thing you ordered is what will actually be delivered. I was a prime customer for more than 15 years, but I cancelled this year because I no longer trust Amazon to deliver what I actually ordered, not some scammy knock off.
(I like your idea about USPS parcel service though :))
> you can’t trust that the thing you ordered is what will actually be delivered
I see this all over HN, news articles, and reddit ... yet I've never experienced it. Nor has anyone in friend/family circle. I don't doubt it happens, but it makes me wonder what kind of purchase bubble I'm in that prevents such an observance. Is this more prevalent with certain types of goods?
My personal experience as well, but, y'know, plural of anecdote.
The thought does cross me that maybe I just don't recognize it. Then, while it is unambiguously harmful to the genuine vendor, what is the consumer harm (assuming it is not just garbage, or like, toxic etc.)?
That being said, there is a lot of stuff on amazon I'm honestly surprised is worth the space it takes up in their warehouses. And I have knowingly bought some low-quality stuff on amazon. But perhaps with the critical caveat of knowingly, I have yet to have a counterfeit foisted upon me.
It might not also be immediately obvious also, a SanDisk SD card bought fulfilled by Amazon might be a fake and just write a bit slow or die after a year. How many people would notice a fake?
Petty theft proliferates only because people are willing to let it.
I live in a city that is stereotyped with rusting factories and falling down houses. We don't really have a petty theft problem because there's still political will to not tolerate petty theft. The police resources to proactively go after it don't really exist but they come if called. The thieves here are really clumsy and tend to break ribs and get black eyes slipping on ice in June or falling down one stair so that tends to dissuade people from making a regular income stream out of it so you're just left with opportunistic theft. When the police do happen to catch a thief they prosecute.
I'm no fan of Amazon, but their no-hassle return policy really makes scammy items a non-issue. If you get the wrong thing, just send it back and get a refund.
Yeah, it sucks that you may have to go through this process one or more times, but at least it's there.
> If the government should do anything its invest in a same-day/next-day shipping infrastructure that can be used by any business (say, via the post office or maybe a new package logistics agency).
Trend for half a decade has been to push private companies to fill the gaps and why the rise of DHL etc a few decades back. For any goverment to go against that grain would be a very expensive nightmare, even without the social and buisness politics.
Besides, if any western goverment had a service that good, the push to break it up would be emence and that's even presuming that such a service could be run cost effective to make it appealing.
I'm struggling to think of any country that has anything comparable and drawing a blank. Though mindful that the costs of shipping from china, sure do seem to be a huge factor in helping buisness's operate there. I've had items that have shipped from China to the UK at a price in which would just cover the packaging and to ship the same item using the UK postal service, just across the road would of cost me more than the item and postage.
In many ways Amazon do open their services to others, though to do that you have to operate from their sales store and as we have seen with mobile app stores - you can drag things on for ages, even with blatant issues.
> There seems to be some selective amnesia about how great mom & pop businesses were.
This isn't about quality. It's about competition.
When Walmart or Amazon is an effective monopoly, even in a given region, they have massively outsized power to affect the way things are done there.
It doesn't matter if you're the best retailer in the world; that doesn't mean we, as a society do or should give you license to take over from every other retailer.
If the government should do anything its invest in a same-day/next-day shipping infrastructure that can be used by any business (say, via the post office or maybe a new package logistics agency).
We're already halfway there.
Where I lived until recently, Amazon rented/contracted to use USPS trucks for last mile deliveries after Postal Service hours.
It was always amusing to see one of those little USPS trucklings roll up to my house, stuffed with Amazon packages, late at night, on a Sunday, or on a Postal Service holiday.
This. As annoying Amazon can be sometimes, the customer experience is still among the top. Everything is as frictionless as possible; returns are usually a breeze. Even my last direct call, where seller used deceptive picture to sell me something was resolved within 15 minutes.
I search in vain a memory of mom and pop store, where I did not have to spend inordinate amount of time to resolve any issue.
Amazon was successful, because it filled a need that Bezos noticed that it could be better.
If find it funny how Aliexpress got so shitty in that regard over the years.
Heed my words. Aliexpress was faster, more pleasant experience back in 2010 than it is now, both as a website, and a service.
A lot of their features were copied almost 1-to-1 by Amazon, just for them to later be deleted on Aliexpress.
Most famous, being the inventoryless fulfilment (vs. inventory carrying fulfilment used at the time by Amazon.) They dropped it around 2013-2014 in most markets, and Amazons started rolling it out at around 2015.
But it's the best sham experience there is! So frictionless!
I notice that everyone puts all product details in the title of their product because the filters are next to useless. It's like going into a supermarket where all of the products are now on one giant shelf and you have to manually search through the entire shelf because the store doesn't put any effort into putting them into effective aisles, or mandate that the sellers put them in the appropriate aisle.
I don't know why Amazon's filtering is like this - for comparison eBay, which seems less organised on the surface, has very granular filters inside categories. eg - searching for 'buttons' on eBa gives additional filters to narrow by colour, share, type , material, and application... Amazon offers 'works with Alexa' instead.
USPS is the only unreliable parcel provider in my location. UPS, DHL, and Fedex will deliver on time, every time, but apparently USPS just doesn't care enough and often causes my packages to be returned as undeliverable! It's literally impossible to switch even parcel delivery to a different delivery agent (even to pay more).
I'd rather see more competition here, not government-subsidized systematic elimination of all competition.
Don't forget that Wal-Mart made its bones by marketing that everything in the store was "made in the USA." Most likely, in order to divert attention to the fact that they were killing Main Street. Now, I'm willing to bet that almost everything in the store is made overseas. They dropped that nonsense when they started achieving critical mass in the space.
Yes, Wal-Mart too started an Aliexpress like business. I bet, it's only a matter of time when the wall in between their online, and offline business will begin to disappear.
People drove an hour out of their way to Walmart because it was that much better. Not just the prices, but also selection
Sort of. People just shopped differently in those days. If your local stores didn't have what you wanted, you ordered from a catalog.
But the difference is that today, people don't bother checking their local stores first. They just go straight to Amazon and put their neighbors or of business.
Walmart was the pioneer of long term hassle free returns
Not really. High end department stores were doing it for generations. Six months later and no receipt? No problem. My mom used to do this all the time.
People aren't obligated to shop anywhere, and it isn't their fault if their neighbours' businesses aren't viable. You can't say the customers who have nothing to do with your business and no desire to go there are the ones who 'put you out of business'.
> Have you never lived in a community? In a society? Have you never gone to a block party? Said hi to a neighbor? Gone to a bar? Cared even a little bit about the neighborhood in which you live?
Yes I'm heavily involved as a leader in my local community and spend about 70 days a year volunteering in it and supporting the people who live in it. How does that compare to you?
Supporting your local community doesn't mean propping up unviable businesses. It's a luddite argument, like paying people to dig holes and fill them back in again.
If I opened a store next to your house selling last week's newspapers and you never buy any is it your fault I went out of business? Nonsense.
Really not following the HN commenting guidelines here lol. The above commenter was just stating a point on their responsibility to local businesses. From that you assumed way too much about them and their community connections.
> But the difference is that today, people don't bother checking their local stores first. They just go straight to Amazon and put their neighbours out of business.
Amazon didn't become dominant because of their low prices. They became dominant because they are the everything store. It's a single place to buy disparate items rather than needing to check out at seven different marginally-cheaper speciality shops.
This is why Amazon is better for Main St than Walmart. A mens clothier on Main St gets shut down by Walmart. Owner and employees work at Walmart. With Amazon, they can become Amazon retailers. In theory at least.
It's because one of Amazon's products is for the government: employing a huge number of people with no education or credentials, in a job that pays above minimum wage.
In the Earnings Call in July of this year, they said they now employe 950,000 warehouse workers. They're probably over the 1 MM mark right now due to the holidays. Yes, there are plenty of people working there that are overqualified, but that is the beauty of what Amazon is doing. Their onboarding and recruiting for this is incredibly smooth, fast, and will give virtually everyone a chance. And it pays above minimum wage. There's not many places that provide that sort of service in the United States.
They apparently have a huge turnover rate which is why they invest in a “smooth” onboarding.
> According to data analysed by the Times, Amazon was losing “about 3% of its hourly associates each week”, translating to an annual employee turnover of roughly 150% per year.
They already re-employ people who had previously left. Eventually they’ll run out of people willing to take the jobs if they just focus on on-boarding efficiency rather than working conditions people don’t hate.
Much of that turnover is the choice of the employee. They aren’t looking to build a long career in these instances. They’re looking for extra money or filler while between jobs.
I know guys that driver Uber/Lyft and do delivery and work at Amazon occasionally for extra money. So long as you remain in good standing they will hire you back quickly with the mutual understanding you’re just doing a quick thing.
Retail, as an employment sector, exists with or without amazon/walmart... and generally also employs low income people. Calling that a service is a bit much.
Sure, and from here on out complexity and alternative might have beens make it unresolveable.
That said, the idea that countries/government perpetually need companies to invest and "make jobs" is ridiculous rhetoric. It describes China in the 80s, or Russia in the 90s.
But the economy isn't trash - unemployment has plummeted and is now back to 2018 levels, which were already historic lows. Income is up. It's an employee's market.
You're getting hammered about the market competition being good for consumers. But even on the labor side, these two aren't the same: Walmart minimum wage is $12 / hour, Amazon just went up to $18.
Conversely, the "that's a market" folks should deep read the article's last bit on how hard it is to be an "Anti Amazon Alliance" e-tailer. Amazon is piling up previously uncorrelated strategic advantages, so that you have to be an expert in way too many things for a small company to compete.
- demand sourcing
- warehousing
- last mile logistics
- defect management
- now, freight forwarding
I think their innovation in these areas is amazing and will some day benefit everyone, but it will eventually take a new type of antitrust (which recognizes cross-leveraging monopolies for efficiency) to keep Amazon from retaining all of the value generated.
Except isn't there a gigantic loophole related to, uhhh, lots of "Amazon" workers actually being employed by subcontractors rather than by Amazon.com Inc., to whom this minimum does not apply?
The kinds of businesses they're subcontracting to aren't "mom & pop" in the sense that's generally used to mean. They're remora: they exist to feed off of the scraps Amazon drops.
Some means of firewalling the retail and the fulfillment parts whether by a breakup or not is probably going to be an antitrust policy I'd support, yeah.
Similar (albeit only somewhat) to British Telecom being forced to firewall its telecoms infrastructure from its directly-sold telecoms services a long time back, which was a huge improvement for (among other things) competition in the UK DSL market.
You need to believe that retailers are complete potatoes if they can't do that. If you can't do such basics, you will sink as a businessman long before Amazon, or anything.
This however may well be the case.
I will take that American business is very pampered, living off very protected business environment, and world's richest consumers. It's hard to not to make money here.
Retailers of all sizes can do those things. But go ahead, start an e-commerce business, and implement those things without Amazon or Shopify. Have a couple of good quarters, dish out for some marketing to speed up your growth. Then, watch the look-alike product appear on Amazon at a price 15% below your unit costs, because they do everything on the list more efficiently, didn't have to ramp up processes or prove their market, and are still on the part of the growth curve where Amazon supplies them at cost. Survive until the holidays and bulk up your inventory for black friday spending, then get swamped in chargebacks because your Amazon-platformed competition undercut your prices with a bundle deal including stuff you don't sell. Cheer up though -- if your product is really great, you'll get to see that competitor displaced by an Amazon Basics brand a few weeks later. America's rich customers and friendly government were not for you.
At the end of that process, you have a situation where:
* Amazon wins
* The consumer wins (they get the product they wanted all along, at the best possible price, with the best possible shipping)
* The original Amazon retailer semi-wins (they got a "free" burst of profit for 6 ~ 24 months before they had to switch categories when Amazon stole their category)
* The original non-Amazon retailer loses (they got outcompeted by a giant of scale, possibly overall losing money)
Agree with these outcomes in the short term. Amazon is at a point in its trajectory where it is still genuinely innovating in order to build dominance, and that is creating a surplus that can be shared with consumers and platform participants. It has stayed at that point -- which Bezos calls "day 0" -- for an amazingly long time!
On the inevitable "day 1", Amazon will start coasting on its structural dominance and being net-extractive from consumers and platform participants. At that point they will be ripe for disruption themselves... but if their dominance has eroded previously healthy markets (for demand acquisition, warehousing, last mile logistics, etc.), they might spend longer in senescence than they did improving things. That's why I think antitrust is a good tool, that should eventually be applied to catalyze fresh growth.
If we measure "innovation" by solving hard CS problems, sure.
But one definition of innovation is:
> make changes in something established, especially by introducing new methods, ideas, or products.
Focussing on the eComm side:
Amazon made and continues to make changes in how people find stuff, pay for stuff, and get stuff. Even something as seemingly simple as Amazon Prime for free+fast shipping. Or keeping a credit card on file and jumping straight to "checkout complete" first, and letting the user modify shipping/billing details for a while after the order is "complete".
None of it was invented at Amazon and all of it is trivial to implement on a small or perhaps medium scale.
Does the consumer even really win? Once Amazon/whoever has a monopoly, they get to decide when and how to innovate, and the prices. Is the product now as good and as cheap as it could have been with more competition? Their PR and lawyers will say “yes” and who can prove otherwise?
Well the Chinese knock offs usually appear way before the Amazon basics one (I agree the gap here is shrinking).
So assume Amazon gets ‘taken care’ of magically - what’s the solution for the bigger problem here?
Unless we go back to a world of strong nationalistic sentiment where customers are willing to put their money towards’Made in USA’ - I don’t know how this gets solved. Bezos famously said ‘nobody wants to pay more for a thing’ (paraphrase).
Amazon's own markups are huge. Half the times, Amazon's stuff costs more than at upmarket conventional retailers. I fail to understand how people don't see it.
Mom and pop shops, brick and mortar in general, have largely gone the way of horse drawn carriages. Technology has made them obsolete. There are definitely problems with mega corporations taking over, but Walmart and Amazon are filing in niches in a technological ecosystem where real world small shops aren't viable, and that's a good thing for consumers.
Whatever the solution ends up being, it won't involve the return of brick and mortar - online shopping and Amazon style logistics are here to stay. Breaking up Amazon so that the shipping and warehouse part of the business gets spun off on its own might make sense, with established shipping companies able to compete.
Luddism never works - you can't eliminate automation and do things less efficiently just to arbitrarily provide work for people.
> Luddism never works - you can't eliminate automation and do things less efficiently just to arbitrarily provide work for people.
This isn't just about automation. It's also about vertical integration into one company. If all we care about is efficiency then why break up the railroad barons or company towns?
Because competition, despite some inefficiencies, makes for a more robust market. Also, we don't want our kids working in the mines.
Idk what robustness is saving us from - if you’re big enough, you get bailed out. Amazon is clearly big enough now. There’s lots of bank competition but they still needed a bailout.
Banks didn't need a bailout. They needed to be allowed to fail. And restore the regulations that would've stopped them from overleveraging so much in the first place. (Or at least prosecute those knowingly involved in subprime mortgages.)
Bailouts from taxpayers aren't a sign of robustness either. They are a sign of fragile, easily bought government and large players dominating markets.
I agree, a brutalist fixation on efficiency isn't good. I just see rapid delivery and online shopping as things that are going to stick around, and those two things have completely broken most of the old brick and mortar models.
If it was just big box stores, we could have eventually pulled back and imposed a balance by limiting what range of goods and services could be offered by any one store, or come up with ways to prop up mom and pop. Amazon made those old models irrecoverably obsolete though. The question is going to be how to achieve a healthy market while keeping the benefits of vertical integration. Splitting the logistics division of Amazon away from the online store and content services might work.
But, you know, it sort of proves in an interesting point. Market/Technical/Cultural forces will push things one direction, but groups can choose to pay the higher costs to go in alternate directions.
It will be interesting to see where cultural sub-groups maintain either existing (but now niche) or otherwise alternative vestiges of the current-mainstream when the rest of the economy moves onto something else.
Are bookshops like this? A legacy of the pre-online/pre-megaseller era, but maintained by the bookish minority? Now potentially augmented by a coffee/tea shop and a greater focus on community events? Where else is this happening?
The legal theories around corporate regulation started changing in the 1970s and are now the philosophy of “conservative” attorneys almost universally.
In short, if a series of actions doesn’t raise retail prices, it’s fine. Walmart beat the drum of “Made in the USA” and “Low Prices” until it didn’t matter anymore. Amazon arose during the era of impotent regulators, and just had to rope a dope Wall Street that it would someday somehow turn massive capital investment into cash.
Despite the economic engine unleashed by anti-trust actions like the breakup of AT&T and to a lesser extent standard oil, we probably won’t see significant changes for 30 years or more when demographic shifts and the cohorts of judges, etc running the show now fade away.
The government does nothing for several reasons. 1) People prefer Walmart and Amazon to driving down town to some mom and pop store. 2) Walmart and Amazon do provide jobs (the quality is questionable) and the government needs its citizens to have jobs. 3) Although people may have lower wages, the economies of scale give people greater buying power. Stores downtown need to pay rent and heat and carry inventory. The money for that needs to come from somewhere.
That being said, the SEC and FTC need to start doing their jobs. They have failed us in the 21st century. We need to rollback all these mega-mergers and stop allowing them to move forward, not just in tech but also in banks and media.
Why do you thing certain people LOVE "small government"? It has nothing to do with their freedoms. It has everything to do with more corporate tax loopholes and a toothless set of regulatory agencies that have no resources to do anything meaningful to protect the public good.
The government got weaker, and they got stronger. It's not even a fair fight.
General Motors comes in, forces hundreds of furriers out of business, creates massive workforce of underpaid employees and the govt just sits there and watches?
It's even worse, because GM actively sabotaged, in some cases by buying and then dismantling, competitors ( in a larger sense), "streetcars" (trams/light rail). They literally forced cities to move to buses they provided, and service deteriorated and made cars necessary for everyone. And the governments just sat there and watched, and effects are still there today in the US.
He meant furries. It's a little known fact that before the internal combustion engine, furryism was much more popular due to the greater availability of horsehair for costumes. Notable furries included Kenneth Grahame of Wind in the Willows fame and by all accounts, King Edward VII, who was sent a Russian Bear costume by his cousin the Tsar. UwU.
The competition benefits consumers. Shopping is much more convenient than before Walmart and Amazon and they help keep prices low— that’s why I wouldn’t be a fan of the government interfering with the two companies.
What competition? The whole point is that they are crushing the competition, rendering themselves inescapable. That's not at all good for the consumer. The logical endpoint of this kind of horizontal domination and vertical integration is the classic dystopian trope of "The Corporation" controlling every aspect of life.
(Which is literally a thing that has already happened, by the way - the East India Company being the classic example. It was simply called "The Company", had its own flag and military, and completely ruled India.)
The East India Company controlled about half of global trade. Amazon has less than 10% of the retail market in the U.S. Amazon is at least 2 orders of magnitude away from the East India company’s share of global trade.
One intended effect of Amazon’s PR strategy is to create a sense of momentum about their business. Obviously that is working if people are comparing it to the East India company.
> The East India Company controlled about half of global trade. Amazon has less than 10% of the retail market in the U.S. Amazon is at least 2 orders of magnitude away from the East India company’s share of global trade
Amazon indeed has a much smaller share than the East India Company had, but I think you may have exaggerated a bit with "at least 2 orders of magnitude". It should have been "at least an order of magnitude".
• 2019 global trade was $19.0 trillion [1]
• 2019 US retail was $4.85 trillion [2].
• Amazon 2019 US retail was $0.22 trillion [3].
• Amazon 2019 global retail was $0.35 trillion [4].
I'm using 2019 because the US retail Amazon data at Statista.com [3] requires an account to view the graph but the visible text on the page includes the 2019 numbers.
That puts half of global trade at 43.2x Amazon US retail (1.6 orders of magnitude) and 27x Amazon total global retail (1.4 orders of magnitude).
I was simply pointing out that far from being a fanciful 80s sci-fi trope, "The Corporation" is a real thing that does actually happen. A single company controlled half of global trade. Do we want that again? Must we wait until it has already occurred before we try to roll it back? Is 10% of the entire retail market normal?
The online marketplace certainly engenders more efficient competition between sellers.
The landscape has changed but small businesses are still selling stuff. There are over 1.9 million small and medium sized business which use the amazon marketplace.
Mom and pop stores are now mom and pop sellers with amazon taking a cut. They make less money but don't have to pay rent for a commercial property.
Amazon is big but its certainly not an unprecedented level of horizontal domination. There's still walmart, ebay, alibaba, shopify...unless you're only looking at book sales.
Vertical integration wise it's trying to go there with its foray into business shipping + whole foods/amazon basics etc but seeing as its not close to dominant in terms of producing goods in any sector that I know of it's not inherently problematic.
Obviously things are different and worse in some respects (and better in others), but comparing it to the East India Company is very over the top at this point.
Shopfiy has risen as a competitor, giving independent businesses an alternative means of transacting with customers. Amazon has plenty of competition. eBay is another.
Keeping prices low is good when you're wearing your consumer hat.
Keeping prices low is not necessarily so good, and can even be bad, when you consider it from the many other roles you play as a human being in a complex modern society.
For the most part, Amazon does what they say they do. Sure, they have their problems with fraud, counterfeits and reviews, but at least they don't start a marketing campaign "we have the most honest reviews of all web shops".
That doesn't necessarily mean everyone loves them, being trustworthy is only one aspect of likability. You can like the results and communication without approving of the means.
The missing link here is that the U.S. government policymaking process is very much tied to citizen sentiment. Politicians who attack popular things can find themselves out of power.
As long as most people are OK with Amazon, there will not be much public demand for government to make new policy to constrain them.
Policymaking is the key process because it’s not illegal in the U.S. to outcompete other companies, regardless of how big or small they are.
If Amazon was able to compete with Walmart and push them out, then isn't competition working and why do you think we needed the Government to intervene? One day someone else will push Amazon out.
The question is, "at what cost in the intervening time?"
We've also not seen the combination of scale, network effects and technological capability that's available to companies like Amazon today, making monopoly power even more potent. It's not 100% clear that the potential for their displacement is remotely as viable as has historically been the case for companies.
Not sure if your comment simply stems from a misunderstanding or you intended it as a pithy way of saying that, as consumers bear the cost, investors will see the opportunity to relieve their pain and move to compete.
Either way, though, the problematic piece (and primary rationale for antitrust law) is that it's the consumers who are bearing the cost.
Why should the government intervene? It's called competition, and Amazon is winning. Some day someone will do the same to them. The government should merely enforce a level playing field and prevent market manipulation.
If your argument was valid, it would be not re-iterable.
The fact that you can plug Walmart/Sears/IBM/etc into it means there was something others were able to outcompete them on with even though the incumbent had scale.
For example, right now, I source my items from Costco/Target/Best Buy/Home Depot/Lowes/Staples/Winco (grocery store), Trader Joe’s, and I make minimal use of Walmart and even less of Amazon.
Sears and IBM at their peaks weren't at Walmart or Amazon's scale. Amazon's scale in their respective market is even more dominant than Walmart... they're approaching over half of all global ecommerce. Second place isn't close. Walmart covers <25% brick and mortar retail.
Also, look at it from the perspective of a small business. If you want to sell things online you're at a competitive disadvantage by not selling on Amazon. There are a number of companies that have cited this frustration. When you do sell on Amazon you're giving up some sales data which Amazon can then use to decide to undercut your product with their basics line, which very possibly comes from the same Chinese manufacturers at lower Amazon-negotiated prices.
What does it even mean to say Amazon has 50% of the global e-commerce market? I cannot even find Amazon sourcing and selling the goods I am searching for 90% of the time. They do not even offer a filter to show only items shipped and sold by Amazon.com, it is always some no name reseller. I only buy because I know Amazon will refund me.
Small businesses are also at a competitive disadvantage by not having the prime corner spot in downtown.
It just means you have to compete by selling something else that people want. If you want to play in the 2% profit margin cheap goods market, then you probably will not have a good time competing against others who have already optimized it.
Amazon has cornered the cheap goods online market (i.e. a more comfortable version of AliExpress). So do not compete with them on that if you want to earn more. If I am looking for something of decent quality, and you can figure out how to source it and guarantee that quality, then people will buy directly from your website (I do). Or Costco or Best Buy or another retailer will want to pick it up.
Oxo is another good example. They were able to expand their marketshare because they saw a market where people wanted to spend more to be assured of a higher quality good. Walmart was and still is selling the same stuff under the Mainstays brand, yet Oxo has grown because they correctly predicted that people would be willing to spend x% more for y% higher quality (or perception of quality).
The big difference that makes the analogy not useful is that being the landlord of every corner spot in downtown means people face a high cost when going to a different vendor in a different physical location.
Amazon is a website, the cost of visiting a different website is pretty much zero.
Sure, but as Amazon captures more of the online shopping market... it gets increasingly more difficult to sell something to someone outside of Amazon (which is also why Prime exists).
The cost of not being on Amazon increases as Amazon's size increases. Is there a point where that becomes unfair?
Everything is life is unfair. The question is where does the government need to intervene.
In my opinion, not yet in the case of Amazon. As I listed, they numerous competitors, and one hardly needs Amazon to obtain their goods. It is trivial to throw up a non Amazon retail website.
At least I can think of many more businesses where consumers do not have an option and extremely high switching costs that need to be dealt with first. Such as a home’s wired internet service provider. That is an unfair advantage that needs the government.
I would say the iOS/Android duopoly is another big one.
The inconvenience of needing to go to a different website (which already exist) is not.
Memory is short and books/blog posts/videos are written by the winners (like Amazon and Walmart) and people can't see the forest for the trees. You live on your knees and act like sinners. Wake up. Stand up and realize you're not bad, not racist, not gay, not evil, just you, a human. Stop letting people tell you who you are. Then Amazon and Walmart and all these companies can come around and they'll succeed, so far as they can convince you that you're nothing. You are everything all at once, wake up, smell the cosmos.
You can tell how minimal HN's exposure to small scale mom and pop retail is by the fact that it's considered an unmitigated good around here. For every hardware store being more flexible than robotic BigCo policies about working hours or teaching a teenager to drive a forklift there's a grocer systemically short changing its employees. It's very much a mixed bag.
I personally hate for secondary political reasons but people need to stop looking at retail through rose tinted glasses. It's always sucked on average. Now it just sucks homogeneously.
Ignoring the social benefits, how would that improve competition? Amazon already pays more that that, it would be their competitors struggling with increased costs.
You mean deregulated. Online selling is not a free market, since Amazon owns buyers (subscription, platform, recommendation on their own devices), has a special deal with USPS, and uses contracts that prevent sellers from selling cheaper elsewhere. It is a deregulated one (which naturally evolves away from free).
Slavery worked. Feudalism worked. Aristocracy worked. Child labor worked (and very well too). Fascism worked as another commenter noted. Why did we do away with all those 'working things'. We should have kept them.
Except those things didn't work. Well, I guess child labor did in the short term sense. However, slavery, feudalism, aristocracy, and fascism were all remarkably inefficient, and only able to maintain their existence through force.
You actually believe that the contemporary industrial order can be maintained without force? The current order of things is massively contigent on vast amounts of potential and actual force, both intra-nationally and internationally. The deployment of police against striking workers or anarchist activists, or the military against countries that threaten to disrupt the order ... these are as much a part of "the system" as the psychological manipulation of desire to maintain consumption.
Slavery was very efficient. Slaves were fed and sheltered at low cost and produced outsize yields and profits. It was a heinous, evil, but efficient system. The Civil War was fought precisely because slavery was so profitable.
It's efficient for the slave owners, but not for the economy as a whole, as the slaves are unable to build up human capital and shift into more productive work.
"Well, I guess child labor did in the short term sense."
It's still working, in the global south, to make products shipped and sold all around the global north... but those of us in the north just don't see it; we no longer see children shuffling off to work, because, thanks to Capitalism's profit-over-people ideals, the labor force that has "disgusted" the consumers in the north (child labor) (and therefore properly threatened the profit of those companies using child labor) has been moved to the south... and those consumers in the north don't really "care" that a bunch of brown and asian children are doing the work now.
Yes, it is a problem, however it's not completely being ignored. For example, Canada successfully pushed for provisions to the CPTPP to push Vietnam to ban child labor.
Liberalism was just the early form of capitalist advocacy. Neoliberalism is the advocacy to return to those 'good old days' of mid 1800s where true capitalism existed in the most pure form. Neoliberals want to do it in a few decades. Far-right like in the US want to do it within the next 6 months by selling out everything and letting 'the market' rule.
I'm not a conservative, I'm a rationalist. I don't make arguments based on "but poor mom and pop lost their jobs!!!". Instead, take a look at the pros and cons at a holistic, societal level and decide what is best quantifiably. Luckily, we don't even really have to do this often, because the free market usually gets it right.
Despite what a naive view of American politics might have you believe, both the far left and the far right want to abolish capitalism and markets in favor of totalitarian beurocratic control, they just have different flavors of how to get to and how to manage that state. There is very little difference in economic and social policy between historical communist and fascist nations. Only rational centrists who fight for liberal democracy and free markets support the best path forward for society.
Citation needed. The "free market" - that is, sitting back and allowing everyone to act in their own perceived self-interest - routinely ties itself in perverse knots, and has pushed us over the precipice into irreversible environmental catastrophe.
The market is not efficient. The market is not rational. The market does not care about you.
The free market is the reason the USA is the richest country in history and has far outpaced the wealth gains of Western Europe who early on was resistant to free markets because of aristocratic feudalism (right wing) and later became resistant to them because of socialist ideas (left wing).
On both sides of history, the USA has so far remained in the center in both eras and that has helped us grow immensely faster than them such that today the USA is wealthier than all of Europe combined despite having half the population and natural resources.
Even Communist china learned the hard way that free markets are the only way to prosperity and after they adopted Deng's free market reforms in the 1970s, they subsequently pulled 700M+ people out of poverty.
Of course we need some regulation to protect the environment. I never said a 100% regulation-free market is what is needed. What we need is to preserve private property, encourage entrepreneurship and innovation and preserve the incentive of hard-work.
> The free market is the reason the USA is the richest country in history and has far outpaced the wealth gains of Western Europe who early on was resistant to free markets because of aristocratic feudalism (right wing) and later became resistant to them because of socialist ideas (left wing).
You're very wrong. One of the main proponents of free markets and trade, since before the US was even a thing, has been the UK, which pretty much fits the definition of "aristocratic feudalism". And the "socialist ideas (left wing)" is pretty much bullshit.
> On both sides of history, the USA has so far remained in the center in both eras and that has helped us grow immensely faster than them such that today the USA is wealthier than all of Europe combined despite having half the population and natural resources.
The US has many things going for it, all of which helped make it as powerful and rich as it is.
In no particular order:
* it's separated by entire oceans from any possible actual adversary
* the last war it fought on it's own territory, with associated destruction and death which is, of course, bad for wealth and development for the majority of the population, was in the 1860s. For reference, much of Europe was destroyed, twice, in the 20th century, and some of it as late as the 1990s(former Yugoslavia) or today ( Donbas).
* abundant natural resources, for pretty much everything
* generous immigration policies
* very serious issues elsewhere in the world, while the US remained calm ( e.g. the World Wars or various famines or various presecutions of specific types of people, e.g. jews), coupled with the above, meant that lots of people, and lots of very smart people, moved to the US
* US capitalist (neo)colonialism in Latin America or Southeast Asia, which forced the creation new markets and cheap labour (e.g. the United Fruit Company)
* specifically post-WW2, a combination of the above made the US the only intact world power, which allowed it to take a leadership role in the world
* and yes, of course, free trade and markets. However, markets in the US have never been fully free, there has always been regulation, most often after serious issues ( e.g. the 1929 Wall Street crash or Standard Oil being broken up in 1911), but still.
You can't point to a single one and say that's the only reason, all of the above contributed to the current US position.
Amazon was a founder-driven company since inception which means he had the opportunity to turn things upside down, demand accountability, competence, shut down divisions etc..
Regular CEO's have no such power, they are political beings who manage the gears already in place, placate unions, investors, their own executives etc..
It will be really interesting to see how long they continue with dynamic innovation after Bezos.
Some companies do keep it up, Apple has being doing reasonably well without jobs, Walmart was able to continue to expand a long a vector for a long time.
The title is pointlessly click-baity. What precisely is Amazon striking back at?
After reading the article 3 times, it seems like a large business is solving a business and logistics problem with vertical integration. What is Amazon striking at? The nebulous concept of logistics?
Since Apple started using it a decade plus ago, it became popular with businesses hiring an army of PR contractors to sneakily place articles like how amazing they are, "leaks," "insider revelations" into the mainstream press, writing about themselves from 3rd person.
This misses the point. Of course it is possible to build 53’ containers; you cannot ship them on conventional large trans-ocean container ships. The article you link makes this point specifically, and the company is offering containers for use as shelters.
You should really read the article. Ben is arguing that 53 foot containers exist, but not for ocean shipping, only land. The link you've posted says the same.
"The USA and Canada, however, have been using 53ft long containers for road and rail transport since 1989"
There is a clear de-marcation line between the retailer part and the ... global post-office (?) part that I would be amazed if the whole thing is not broken in two pretty soon.. I mean its a perfect target, gives political kudos and will barely affect the end result.
Yeah the consolidation vs de-consolidation a.k.a. bundling vs unbundling pendulum appears to be a cycle in the economy. At the height of each cycle there's a sense that it's permanent. I remember in the late 1990s to early 2000s everyone was saying large conglomerates were dead.
The last part on App Tracking Transparency flies over my head
> This very much applies to Facebook’s ad ecosystem, where disparate e-commerce sellers effectively pool all of their conversion data in one place — Facebook — such that they all benefit from better targeting.
It’s not like Amazon has a strong app presence, and all the push they do on black friday and other events to make more users go through their app makes me think it’s a big dnough problem for them to throw real money at it.
In that respect, ad targeting being limited inside apps doesn’t seem like a big deal…am I missing something ?
Amazon internalizes both the supply and demand of their behavioral data, rather than relying on external vendors. Apple transparency, GDPR, etc. are manhole covers coming from the sky on data vendors.
GDPR prevents third party sites from selling data without user consent, but it doesn’t affect much of the ad business on facebook/instagram for instance.
I’d see Amazon having a decisive advantage regarding spying on vendors and applying that to Amazon Basics products (stuff they’re already under investigation) but it would that less a matter of Apple Transparency or user privacy and more sheer industrial espionage.
Most people I talk to don't know AWS has a managed blockchain product, quantum computing service, or an analytics suite for financial analysts and traders.
They seem to have their fingers in every pie, and people don't seem to really notice or care until it's already big or too late.
Some of those are just 'us too!' offerings rather than serious attempts. Like wtf would anyone use a managed blockchain for anyway?
But yeah Amazon are big and dangerous in general, both to commerce and society, I'll give you that.
Twenty years ago I trusted them above any other online retailer, those were the days when people still felt iffy about typing their card details into a web page. But these days Amazon is full of bullshit 5-star reviews for cookie cutter chinese consumer tech, twelve different manufacturer names and the items are variations of the same two or three models, probably from the same factory ... and then it arrives and is crap quality and badly translated instructions. And all the dark patterns to try and trick me to sign up to goddam prime. Had enough of this predatory bs.
> The intended takeaway of this article — which originated as a digital special report — is clear: Amazon is better and smarter and richer than any other retailers, and isn’t suffering the same sort of supply chain challenges that everyone else is this Christmas.
And it's only going to get more better, more smarter, and more richer. And so on.
From the investor call last quarter, Amazon made it very clear that they were sacrificing their profits this quarter to make sure that the customers wouldn't see the supply chain issues. This is part of why their stock tanked so badly the day after.
Quick googling would suggest that steel used be be ~$550/tonne pre-pandemic. An empty 20' container weights 2.3 tonnes, a 40' container 3.9 tonnes. So raw steel cost would be $1300 for a 20' container and $2100 for a 40' container (completely ignoring that I might be looking at the wrong grade of steel, or other ingredients like the antifouling paint).
> Unlike 20ft and 40ft shipping containers | storage containers, 53ft shipping containers | storage containers are not utilized for international shipping.
Yep. I once had a whole bunch of stainless steel tanks fabbed in China, loaded into a container, and shipped to us on the East Coast. Shipping was ~2.5k for this giant container.
I fail to understand what's so "revolutionary" in "buying cheap stuff from China for resale online," and being more cost conscious than others at that?
Most 3rd party merchants on Amazon still ship by regular post, generously subsidised by US taxpayers.
Some of them ship by Sunyou. Sunyou just airships everything to US, and then sends by bulk post at commercial rates from there.
The few merchants using "fulfilment by Amazon" still have to get their stuff to USA on their own. Global supply chain service is only available to sellers selling to Amazon itself.
That Stratechery guy barely understands about what he is writing about.
healthy competition breeds innovation but an oligopoly decimates both sides of the supply and demand curve of a market. We're trying to determine if amazon has crossed that line. It is much more political then it is made out to be and concept of fairness only gets enforced when there is enough agitation in the masses in a democracy. In other words, amazon is not going anywhere any time soon.
It was a bit of a head-scratcher watching the Amazon trucks on the streets of the city slowly replace the UPS/Fed-Ex trucks that use to carry their ubiquitous boxes. I wondered what the other carriers thought about that move....
Seems that was only the opening salvo.
When they also own the container ships and factories in China are other retailers going to disappear — leaving as alternatives only antique stores, used book stores and craft festivals?