Amazon has been doing this in parts of Germany since 2009. The results haven't been nearly as dramatic as the article predicts. As others have indicated, the limiting factor isn't so much speed of delivery as the inclination to physically inspect items before buying them. That said, Zappos, now a part of Amazon, has succeeded in doing that in one of the markets that tends the most towards such. Even so, there are still a lot of places to buy shoes.
When Zappos first came out I thought they'd tank. I purchase new basketball/running shoes every 6months, and never ever make a new purchase without trying it on. Playing basketball or running with an even slightly uncomfortable shoe can lead to blistering, back problems, ankle sprains, etc.
But my gf at the time thought it was brilliant. What I learned was that a lot of women's shoes are purchased based on anything except comfort. The quality can be shoddy, the wear can cause excruciating pain, yet some top brands sell for hundreds and even thousands a pair. Swing by the Nordstrom's women's shoe dept sometime and take a look at the quality of build. Eavesdrop a bit and take inventory of the questions the clients ask about. (Zappos is started by a bunch of ex-Nordy folks).
To this day I've only purchased 1 pair of shoes on Zappos, and that's after I had bought it previously at the dept store (New Balance 993, imo best shoes for walking/running in case you're wondering).
I suspect it's partially in American thing. In most European cities, the shops are around the corner. There's little effort involved, so Amazon doesn't sufficiently offset the advantages of instant gratification and being able to physically see stuff to make such a dramatic impact. Also, the different European attitude towards regulation has resulted in many cities actively protecting the kind of independent stores that make local shopping different from anonymous shopping malls full of the same franchises.
There are plenty of areas in which brick-and-mortar shops will take a hit from online competitors, but I suspect the impact in Europe will be considerably smaller than in the land of strip malls and Wal-Marts, where commercial efficiency has already trumped the "user experience", and Amazon is simply a better option with few disadvantages.
I expect to eventually see big retail outlets where there is only stock for trying things out. No buying at the store but you could complete your online order while at the store and have it same day/ next day.
Similar to Dell's failed entrance into Asia, Americans are uniquely content with purchasing plenty of merchandise without ever physically examining the product.
I think, non-dramatic european response may, in-part, be due to comparatively sparse product options on Amazon's european stores compared to its US .com offerings. I have used Amazon.fr while in Paris and have been disappointed by the limited offerings. Price is an issue, too: on Amazon.fr: when shopping for a TV, for instance, the prices were cheaper at Parisian retail stores.
Highly disagreed. I think assuming that people want an in-store experience when the extra information from online shopping is such a net gain is just an old way of thinking. Look at some of the work coming out of the best retailers, are from some of the researchers at Accenture Technology Labs into the Store of the Future.
For many things, I care more about the information - does it work, does it fit, what do the reviews say? - than I do about touching the object. Even small retailers are starting to do this - if you look at http://www.marinelayer.com/ - they offer approximations of sizing based on your height and weight.
Germany is about as different a market as one could get in the "advanced" economies. Drawing any conclusions from the effect it has or hasn't had on German retail is essentially and fundamentally flawed
> Amazon has long enjoyed an unbeatable price advantage over its physical rivals. When I buy a $1,000 laptop from Wal-Mart, the company is required to collect local sales tax from me, so I pay almost $1,100 at checkout.
This is such an over blown argument. Sure, Amazon is ~7% (where I live) cheaper than traditional stores due to sales tax. But that $1000 Wal-Mart laptop has a $900 sticker price on Amazon, and most non electronic items are 20-40% cheaper than in stores.
If laws change and I have to start paying sales tax on Amazon, it won't change a thing about my buying habits.
Edit: They also have an inventory many times larger than any brick and mortar store. Whenever I go shopping, I have to choose between the least crappy option Wal-Mart decides to stock. On Amazon, I get exactly the one I want.
Indeed, when you look at surveys that ask people why they prefer shopping online, things like "24/7 convenience", "saves time", and "better selection" usually end up ahead of "costs less money, even after shipping" and taxes are usually a small part of that.
The lack of sales tax hurts local tax entities far worse than it hurts Amazon's competitors.
I live in the same county as Amazon's HQ, I pay full sales tax on everything there, it hasn't changed my shopping habits one bit, amazon is just such a better deal most of the time.
I think the big advantage of amazon's tax-exemption isn't necessarily competition from physical retailer's, but rather from the online presence of those same physical retailer's. For example, I was checking out target's website the other day. They were offering some online only prices on things, I loaded an item into the cart, but at checkout, when the tax and shipping was added, I backed off because it was too expensive. On amazon, due to the no-tax and (usually) no shipping charges, I probably would have made that impulse buy.
Exactly. I live in Oregon where there's no sales tax no matter where I buy something. I still get most non-grocery items on Amazon. More selection, cheaper, and I love the reviews. I don't think I've ever been disappointed by a highly reviewed Amazon item.
But you're picking a fairly non-representative product for this issue. I doubt any of us are going to be buy a laptop from Walmart, looking at their stock, I don't think many other people are either. They have a couple but this is not their bread and butter (which actually is their bread and butter).
This is already happening in China. Because of the nature of shipping companies here it's not unusual to buy a product (typically off of http://taobao.com) and get it later that day or the next day. Many of these businesses are based in Shanghai and if you live there delivery happens nearly instantly. One online shop, http://cheers-in.com/ delivers cold beer in Shanghai in 1 - 2 hours from an order. Stuff like this is absolutely fantastic and it would be amazing to see it come to the US.
Great for consumers like us, but terrible for all of the people who work ridiculous hours under constant stress on warehouse floors or do deliveries day in and day out. I try to buy from brick & mortar shops purely because running a shop is a job that has a shred of dignity left in it.
Amazon failed to collect/remit ~270M in sales tax in Texas and has owed millions for years. So what did the state of Texas do about it?
They struck a deal to erase the 270M owed, as long as Amazon starts collecting sales tax starting 7/1, create 2000 jobs and invest 200M in Texas. They were likely already planning more infrastructure in Texas, but threatened to reverse course and pull out of the state entirely.
The way I see it, Amazon bluffed the state of Texas to the tune of 270 million dollars and all I might get out of it is next day delivery?
Companies are only required to pay state sales tax if they have a physical presence in that state. Amazon wasn't bluffing, Texas was. We went through the same thing in California. Amazon agreed to pay the sales tax, but only after it had decided to open distribution centers in the state.
I recently got an email from Amazon stating the amount I owed sales tax on in my home state of Tennessee, with a link to a tn.gov site where I could pay. Amazon actually seems to ship a lot of things to Memphis, so I'm not sure why they don't collect it directly.
A general policy that "online stores pay sales tax" also benefits Amazon vs. small internet retailers.
A while ago I sold a few bumper stickers online and ended up using cafepress. I could have made a better profit by printing the stickers in bulk and mailing them to people, but I'd have to spend $100+ on paperwork just for the privilege of paying sales tax just in case I sell any to New Yorkers.
If small internet businesses had to pay taxes to the 40+ states that have sales tax plus to all the other jurisdictions (cites, counties, who knows what) in the U.S. it would be almost impossible to sell stuff and comply with the the law.
Actually a general policy that "businesses that deliver things pay sales tax per jurisdiction that they deliver thins to" (the way "online stores pay sales tax" is implemented) benefits Amazon vs small local retail stores that deliver.
Where I usually live in the US, there are at least 6-7 tax jurisdictions within 20 min. by car. For businesses in Wenatchee that may deliver within an hour's radius, there are a very large number of tax jurisdictions. Most brick-and-mortar businesses ignore the rule and figure if they don't tell the state they are delivering things, they won't get looked at too closely, but it means they are in violation of the law.
The tax argument comes up in every discussion like this. It's a nice advantage, but I seriously doubt their sales are very different in areas they charge tax and those where they don't.
I have to pay Amazon sales tax because they have a distribution center near me. I remember a few years ago I noticed that they were charging me tax when they didn't used to, but it never figured into my buying.
The truth is Amazon's prices are generally better anyway, so they still hold an advantage. Shipping was always a bigger problem for me. I would keep lists of things to get and then when I decided I wanted really wanted something I'd order enough to qualify for the $50 or $100 order free shipping.
Now I've had Amazon Prime for a few years, and it's fantastic. I don't have to pay extra for two day shipping, and overnight is just $5 or so. Two day is almost always fast enough. Since Amazon has made everything so easy (and I don't have to worry about shipping or waiting too long) I buy more than enough for Prime to pay for its self.
It'll destroy larger B&M stores but I doubt it'll fully outdo local specialty shops. What you'll see is a stratification between hyper specialty B&M that sell luxury items only a tiny subset of people want, but are willing to pay out the nose for, and places like Amazon filling the role of Target and Walmart, being the catch-all for everything else that most people need on a week-to-week or month-to-month basis. While you might be able to buy a certain brand of organic mustache wax on Amazon, I don't see a day coming where they'll be able to do that same-day.
I bought 2 things on Amazon this week, both with free 2 day shipping with Prime
Item 1 spent 13 hours on a UPS truck driving around my city and was delivered about 7pm in the evening 2 days after ordering.
Item 2 was delivered 14 hours after purchasing by Amazon Fresh at 9am.
For the same price of shipping, which service would you rather have?
EDIT To Add: The delivery guy for the 14 hour item works for Amazon - the whole experience was produced by Amazon without needing a third party. UPS is another company that will be in trouble if Amazon can make this scale.
UPS could also benefit greatly if they play their bargaining game right and form a good partnership. Breaking into shipping is difficult, even for a company as large as Amazon.
It depends on how well I know the item. If it's a commodity where I've bought exactly the same thing before (Charmin Extra-Strong Toilet Paper), then price rules all. If it's a new item that I'm not sure what I need about it (chef knife, bar stool, etc.), then seeing the item in person helps determine which item I need.
If amazon decides to built its own transportation organisation, yes. But such a thing would make most sense in metropolitan areas, in rural ones I'm not sure. Maybe here it's better to use the existing specialist. But then amazon built it's own top-notch distribution and warehousing infrastrucrure, so maybe I'm wrong.
This is the trojan horse. Once Amazon has a large presence in each major centre, the next logical step for them is use some of their massive space as a showroom (think Ikea but on a much larger scale).
[Edit: To clarify, the showroom and warehouse would be in the same complex but separated. Shoppers + heavy merchandise + fast moving robots is a recipe for disaster.]
Then they can satisfy both the "I want to see it before I buy it" crowd as well as the "I know what I want - just give me the best price" crowd.
Mark my words. Amazon has the Costco's, Walmart's and Best Buy's of the world squarely in their crosshairs.
*Of course there will of course always be specialty categories that are too niche to fit in this model, thus many specialized retailers will still exist.
More technology driven hyper-deflation on the way.
The future: high inflation in food, energy, fuel, and consumables, hyper-deflation in everything else except to the extent that it depends on or consumes the former.
Isn't this just one step away from Amazon just being another brick-and-mortar? If this is the case, is not having an actual store that is accessible by customers (and coincidentally, the neccessary staff), that much of a operational advantage?
Or is this just a case of the more efficient company (Amazon) beating out less efficient companies (Best Buy, Barnes and Nobles, etc...)?
"I have no idea how Amazon made any money on my order (the whole bill was less than $30) but several people on Twitter told me that they’ve experienced similarly delightful service."
Therein lies the problem. At some point there will have to be revenues to justify the company's valuation. I suppose their goal is to initially obliterate all competition in entirety and then have everyone purchase from Amazon. I'm doubtful this will work. Of late, there has been a trend towards experience stores - with manufacturers creating their own stores instead of distributing to retailers. Many luxury brands do this and even some non-luxe ones, such as Samsonite, have been getting into the game. There's some value added here, and it's something Amazon won't be able to directly compete with.
This is crazy - I ordered 3 things from Amazon today through Prime and started wondering if/when a day would come when you'd have same day delivery from Amazon and what it would look like. I figured it would happen someday, but thought the complexities would be too much to handle for a while. Looks like they're way ahead of me. This is why I love Amazon.
I think this will come into it's own with driverless car technology. Once we combine the current automated warehouses with automated delivery the timescale and costs will drop dramatically.
The only advantage local retail stores have is immediacy. You can buy it as fast as you can drive there (and park/find it in the store/wait in line). Amazon has almost every other advantage. Ive come to find shopping local retail stores more and more frustrating. Shopping without reviews or videos, and having to flag down employees to help you locate items. It's really hard to beat online shopping with one day or two day shipping. Not impossible, but challenging. Target, Best Buy, and other generic mass retailers would be hurt the most
Because the last mile is always so expensive and subject to theft, I think we'll eventually have a centralized local pickup location for all sorts of small deliveries. We'll just stop there on the way home if something has arrived.
That will even include your postal mail if the postal service ever wakes up. There's no need to physically deliver mail every day if people could see what mail they've received remotely and can pick it up or request deliver if they can't leave home.
Remember when home videos were going to obliterate movie cinemas? Who would go out when they can watch a movie on their couch?! For a while too things dipped. Then people realized there was a social element to going to the movies that made it a compelling experience. Add to that iMax and 3D etc. Heck, who would bother going to an Apple store when you can buy everything online!
Amazon is to shopping what McDonalds is to food. We all know what happens when you have McDonalds every day.
I rarely go to the movies because I can watch netflix on my couch (and save $20-$30). Movie attendance still grows because of economic growth, but in relative numbers it's falling (down 4% in the US/2011).
"I’d gotten next-day Saturday service for free. I have no idea how Amazon made any money on my order (the whole bill was less than $30) but several people on Twitter told me that they’ve experienced similarly delightful service."
I've got news for you- they didn't make any money on your order. Amazon is profitable but has razor-thin margins on the whole. They take losses on several markets, including Prime, gambling that the entire seamless, low-cost user experience will cause enough people to spend enough money to push them over the edge of profitability.
I for one have serious doubts about whether what the author describes (based to a large extent on pure speculation) would be a profitable business model. It's one thing to keep huge amounts of inventory in centralized locations and ship items out across the country over the course of days. It's quite another to stock all that inventory redundantly throughout every state. So if I want to buy a specific pair of shoes that I can't find at Foot Locker, is Amazon going to stock 50 pairs on the off-chance that somebody down the street is going to buy them? Probably not.
In fact, the USPS runs a similar business model. One would then logically think (if this article is any indicator) that UPS and FedEx would go belly-up. I mean after all, if I can distribute mail to somebody's house for $0.50 in a day, how could UPS and FedEx compete with that? The reality is just the opposite. UPS and FedEx enjoy such enormous margins when compared to the USPS, that they want no part of the markets in which the USPS operates and it's too late for the USPS to compete with UPS and FedEx on parcels and important packages. I don't agree with the author's prediction at all.
When Amazon lets me physically try out the feel of things while browsing them, see how well built a tool is, or how a piece of clothing fits, it might have a chance of killing local retail.
Until then, I like to see which pants fit best, which knife is most comfortable in my hand, which tablet is most responsive. Yes, if I already know what I want, I'll go to Amazon. But if I'm not entirely sure and I want to compare things, I'll go to a local store.
At long last, the dreams of the Coyote ordering from Acme and getting immediate delivery of his latest gadget to catch the Roadrunner come closer to fruition.
[+] [-] wheels|13 years ago|reply
[+] [-] cglee|13 years ago|reply
But my gf at the time thought it was brilliant. What I learned was that a lot of women's shoes are purchased based on anything except comfort. The quality can be shoddy, the wear can cause excruciating pain, yet some top brands sell for hundreds and even thousands a pair. Swing by the Nordstrom's women's shoe dept sometime and take a look at the quality of build. Eavesdrop a bit and take inventory of the questions the clients ask about. (Zappos is started by a bunch of ex-Nordy folks).
To this day I've only purchased 1 pair of shoes on Zappos, and that's after I had bought it previously at the dept store (New Balance 993, imo best shoes for walking/running in case you're wondering).
[+] [-] rickmb|13 years ago|reply
There are plenty of areas in which brick-and-mortar shops will take a hit from online competitors, but I suspect the impact in Europe will be considerably smaller than in the land of strip malls and Wal-Marts, where commercial efficiency has already trumped the "user experience", and Amazon is simply a better option with few disadvantages.
[+] [-] robryan|13 years ago|reply
[+] [-] AncientPC|13 years ago|reply
Similar to Dell's failed entrance into Asia, Americans are uniquely content with purchasing plenty of merchandise without ever physically examining the product.
[+] [-] NatW|13 years ago|reply
[+] [-] jordo37|13 years ago|reply
For many things, I care more about the information - does it work, does it fit, what do the reviews say? - than I do about touching the object. Even small retailers are starting to do this - if you look at http://www.marinelayer.com/ - they offer approximations of sizing based on your height and weight.
[+] [-] philip1209|13 years ago|reply
[+] [-] wahsd|13 years ago|reply
[+] [-] Caerus|13 years ago|reply
This is such an over blown argument. Sure, Amazon is ~7% (where I live) cheaper than traditional stores due to sales tax. But that $1000 Wal-Mart laptop has a $900 sticker price on Amazon, and most non electronic items are 20-40% cheaper than in stores.
If laws change and I have to start paying sales tax on Amazon, it won't change a thing about my buying habits.
Edit: They also have an inventory many times larger than any brick and mortar store. Whenever I go shopping, I have to choose between the least crappy option Wal-Mart decides to stock. On Amazon, I get exactly the one I want.
[+] [-] suresk|13 years ago|reply
The lack of sales tax hurts local tax entities far worse than it hurts Amazon's competitors.
[+] [-] InclinedPlane|13 years ago|reply
[+] [-] pyoung|13 years ago|reply
[+] [-] pkulak|13 years ago|reply
[+] [-] mathattack|13 years ago|reply
[+] [-] dinkumthinkum|13 years ago|reply
[+] [-] CitizenKane|13 years ago|reply
[+] [-] muyuu|13 years ago|reply
For people like me who hate the process of shopping, and don't want to be cornered by salespeople in brick-and-mortar stores, it sounds like heaven.
With this and Japanese-style vending machines all over the place, I can get away with almost 0 human interaction with strangers. :P
[+] [-] msutherl|13 years ago|reply
[+] [-] fsckin|13 years ago|reply
They struck a deal to erase the 270M owed, as long as Amazon starts collecting sales tax starting 7/1, create 2000 jobs and invest 200M in Texas. They were likely already planning more infrastructure in Texas, but threatened to reverse course and pull out of the state entirely.
The way I see it, Amazon bluffed the state of Texas to the tune of 270 million dollars and all I might get out of it is next day delivery?
I'll take what I can get, I guess.
[+] [-] tsotha|13 years ago|reply
[+] [-] ww520|13 years ago|reply
[+] [-] darkarmani|13 years ago|reply
[+] [-] dubya|13 years ago|reply
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] PaulHoule|13 years ago|reply
A while ago I sold a few bumper stickers online and ended up using cafepress. I could have made a better profit by printing the stickers in bulk and mailing them to people, but I'd have to spend $100+ on paperwork just for the privilege of paying sales tax just in case I sell any to New Yorkers.
If small internet businesses had to pay taxes to the 40+ states that have sales tax plus to all the other jurisdictions (cites, counties, who knows what) in the U.S. it would be almost impossible to sell stuff and comply with the the law.
For AMZN the overhead is nothing.
[+] [-] einhverfr|13 years ago|reply
Where I usually live in the US, there are at least 6-7 tax jurisdictions within 20 min. by car. For businesses in Wenatchee that may deliver within an hour's radius, there are a very large number of tax jurisdictions. Most brick-and-mortar businesses ignore the rule and figure if they don't tell the state they are delivering things, they won't get looked at too closely, but it means they are in violation of the law.
[+] [-] MBCook|13 years ago|reply
I have to pay Amazon sales tax because they have a distribution center near me. I remember a few years ago I noticed that they were charging me tax when they didn't used to, but it never figured into my buying.
The truth is Amazon's prices are generally better anyway, so they still hold an advantage. Shipping was always a bigger problem for me. I would keep lists of things to get and then when I decided I wanted really wanted something I'd order enough to qualify for the $50 or $100 order free shipping.
Now I've had Amazon Prime for a few years, and it's fantastic. I don't have to pay extra for two day shipping, and overnight is just $5 or so. Two day is almost always fast enough. Since Amazon has made everything so easy (and I don't have to worry about shipping or waiting too long) I buy more than enough for Prime to pay for its self.
[+] [-] mathattack|13 years ago|reply
[+] [-] ddt|13 years ago|reply
[+] [-] tomfakes|13 years ago|reply
Item 1 spent 13 hours on a UPS truck driving around my city and was delivered about 7pm in the evening 2 days after ordering.
Item 2 was delivered 14 hours after purchasing by Amazon Fresh at 9am.
For the same price of shipping, which service would you rather have?
EDIT To Add: The delivery guy for the 14 hour item works for Amazon - the whole experience was produced by Amazon without needing a third party. UPS is another company that will be in trouble if Amazon can make this scale.
[+] [-] anusinha|13 years ago|reply
[+] [-] PotatoEngineer|13 years ago|reply
[+] [-] hef19898|13 years ago|reply
[+] [-] mthoms|13 years ago|reply
[Edit: To clarify, the showroom and warehouse would be in the same complex but separated. Shoppers + heavy merchandise + fast moving robots is a recipe for disaster.]
Then they can satisfy both the "I want to see it before I buy it" crowd as well as the "I know what I want - just give me the best price" crowd.
Mark my words. Amazon has the Costco's, Walmart's and Best Buy's of the world squarely in their crosshairs.
*Of course there will of course always be specialty categories that are too niche to fit in this model, thus many specialized retailers will still exist.
[+] [-] api|13 years ago|reply
The future: high inflation in food, energy, fuel, and consumables, hyper-deflation in everything else except to the extent that it depends on or consumes the former.
[+] [-] JoeCortopassi|13 years ago|reply
Or is this just a case of the more efficient company (Amazon) beating out less efficient companies (Best Buy, Barnes and Nobles, etc...)?
[+] [-] peppertree|13 years ago|reply
[+] [-] dr_|13 years ago|reply
Therein lies the problem. At some point there will have to be revenues to justify the company's valuation. I suppose their goal is to initially obliterate all competition in entirety and then have everyone purchase from Amazon. I'm doubtful this will work. Of late, there has been a trend towards experience stores - with manufacturers creating their own stores instead of distributing to retailers. Many luxury brands do this and even some non-luxe ones, such as Samsonite, have been getting into the game. There's some value added here, and it's something Amazon won't be able to directly compete with.
[+] [-] ktr|13 years ago|reply
[+] [-] Gustomaximus|13 years ago|reply
[+] [-] bennesvig|13 years ago|reply
[+] [-] stretchwithme|13 years ago|reply
That will even include your postal mail if the postal service ever wakes up. There's no need to physically deliver mail every day if people could see what mail they've received remotely and can pick it up or request deliver if they can't leave home.
[+] [-] ianb|13 years ago|reply
[+] [-] S201|13 years ago|reply
[+] [-] jusben1369|13 years ago|reply
Amazon is to shopping what McDonalds is to food. We all know what happens when you have McDonalds every day.
[+] [-] ricardobeat|13 years ago|reply
I rarely go to the movies because I can watch netflix on my couch (and save $20-$30). Movie attendance still grows because of economic growth, but in relative numbers it's falling (down 4% in the US/2011).
[+] [-] dkrich|13 years ago|reply
I've got news for you- they didn't make any money on your order. Amazon is profitable but has razor-thin margins on the whole. They take losses on several markets, including Prime, gambling that the entire seamless, low-cost user experience will cause enough people to spend enough money to push them over the edge of profitability.
I for one have serious doubts about whether what the author describes (based to a large extent on pure speculation) would be a profitable business model. It's one thing to keep huge amounts of inventory in centralized locations and ship items out across the country over the course of days. It's quite another to stock all that inventory redundantly throughout every state. So if I want to buy a specific pair of shoes that I can't find at Foot Locker, is Amazon going to stock 50 pairs on the off-chance that somebody down the street is going to buy them? Probably not.
In fact, the USPS runs a similar business model. One would then logically think (if this article is any indicator) that UPS and FedEx would go belly-up. I mean after all, if I can distribute mail to somebody's house for $0.50 in a day, how could UPS and FedEx compete with that? The reality is just the opposite. UPS and FedEx enjoy such enormous margins when compared to the USPS, that they want no part of the markets in which the USPS operates and it's too late for the USPS to compete with UPS and FedEx on parcels and important packages. I don't agree with the author's prediction at all.
[+] [-] ori_b|13 years ago|reply
Until then, I like to see which pants fit best, which knife is most comfortable in my hand, which tablet is most responsive. Yes, if I already know what I want, I'll go to Amazon. But if I'm not entirely sure and I want to compare things, I'll go to a local store.
[+] [-] sageikosa|13 years ago|reply