Everything Business Thread

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Everything Business Thread

Postby Buc2 » Sun Aug 20, 2017 2:17 pm

I thought a "business" thread might be something fun to have around here. I figured it probably should go in the politics sub-topic since a lot of business-related topics can touch on government regulations and political issues.

First up: Amazon. I don't know about you guys, but I've found my usage of Amazon.com has increased dramatically in just the past 1-2 years. If I wasn't able to use my daughter's Prime account, I'd definitely have my own. I'm still a careful shopper. Amazon.com hasn't taken that away from me. Yet anyway. By careful shopper, I mean that I still shop around to make sure I'm getting a good deal, factoring in the cost, or lack there of in Amazon Prime's case, of shipping. As a Christmas gift this past year, one of my daughters got me a Kindle. I've probably already used to it read 10-12 novels. I just loaded all 5 GoT books on it. I'm debating the purchase of an Alexa or, at the least, putting it on this year's Christmas list. I'm going to a wedding this weekend and one of the items the bride & groom had on their wedding registries was an Echo Dot which I purchased for them.

Below is an article that talks about what Amazon is exactly. I found it quite interesting. While many of us are aware of some of the stuff in this article, there is stuff you may not be aware of. Regardless of how much or how little you know about Amazon, you have to agree that it is one hellava success story to date.

What is Amazon, really?

In the beginning, Amazon.com sold books.

Today Amazon is a titan of e-commerce, logistics, payments, hardware, data storage, and media. It dabbles in plenty more industries. It’s the go-to site for online shoppers and merchants alike, a modern necessity that independent sellers love to hate. Prime, Amazon’s signature $99-a-year membership program, has an estimated 85 million subscribers in the US, equivalent to about two-thirds of American households. To even call it an e-commerce company feels completely inadequate.

Behind every Amazon business decision is the “flywheel” philosophy. Amazon CEO Jeff Bezos borrowed the term from business consultant Jim Collins back in the early days of Amazon. It describes a cycle in which a company cuts prices to attract customers, which increases sales and attracts more customers, which allows the company to benefit from economies of scale (bundling together logistics and other routine costs), until, ultimately, the company can cut prices again, spinning the flywheel anew.

The flywheel is the best encapsulation of Amazon’s dual ambitions: to be customer-obsessed, and to conquer the modern commercial world. Those ambitions were clear early on. Bezos named his company after the world’s biggest river. He also considered and purchased the web address for “relentless.com.” Type it into your browser now—it redirects to Amazon. (In another tab, please.)

Bezos put customers first at the expense and sometimes to the dismay of his shareholders. Amazon went public in May 1997, bled money for the next six years, and barely eked out a profit for the decade after. To Bezos, those losses and other quarterly numbers mattered less than keeping prices low and customer service exceptional, so that the flywheel could keep on turning. Amazingly, Bezos eventually convinced Wall Street to mostly disregard his company’s lackluster quarterly earnings, too.

Amazon never cared about profits <<Link to a chart

Amazon did $136 billion in sales in 2016. This year, sales on Prime Day, Amazon’s company-branded version of Black Friday, surpassed Amazon’s sales on either Black Friday or Cyber Monday. Amazon declared it the “biggest global shopping event in Amazon history.” The stock has done phenomenally well by any standard, and even more so considering the company still barely turns a profit. An investor who put $100 into Amazon’s IPO would have turned it into $63,990 on the company’s 20th anniversary this May.

Amazon stock shows Jeff Bezos' long game has paid off <<Link to a chart

Amazon is a logistics company

The secret to Amazon’s massive success in e-commerce is its endlessly complex logistics empire. Amazon promises two-day free shipping for all Prime customers and free two-hour “Prime Now” delivery in certain cities on more than 25,000 qualified items. It takes more than UPS and FedEx to make that happen.

At last count, Amazon’s delivery infrastructure included more than 180 warehouses, 28 sorting centers, 59 local package delivery stations, and 65 hubs for its two-hour Prime Now deliveries. Investment bank Piper Jaffray estimates that 44% of the US population lives within 20 miles of an Amazon warehouse or delivery station. Amazon’s proposed $13.7 billion acquisition of Whole Foods could add another 431 distribution nodes in bougie neighborhoods to that network.

In 2013, the company reportedly started a shipping project called Dragon Boat, which would slowly take over all shipping and logistics direct from manufacturers in China and India to its customers across the United States. In addition to its delivery hubs, Amazon owns a fleet of more than 4,000 trucks and has reportedly leased more than 20 airplanes to ferry its customers’ packages across the country and between fulfillment centers. The company has mastered its growing shipping empire through analyzing the data from every package it’s ever shipped—the delivery of each package is algorithmically optimized for speed and efficiency of resources. In 2015, Amazon spent $11.5 billion on shipping, nearly double what it did the year before.

Of Amazon’s 351,000 employees, Amazon says more than 90,000 work in the company’s fulfillment centers. Testimonies from workers inside the centers paint a picture of a ruthless workplace driven by the demand for productivity above all else. Workers describe a point system, where every small infraction like tardiness or checking back in late from breaks are catalogued and count against them. Bathroom breaks were discouraged because they interfered with productivity. Employees are ranked and less-performing workers are let go.

The white collar jobs are similarly demanding—in 2015, the New York Times reported:
At Amazon, workers are encouraged to tear apart one another’s ideas in meetings, toil long and late (emails arrive past midnight, followed by text messages asking why they were not answered), and held to standards that the company boasts are “unreasonably high.” The internal phone directory instructs colleagues on how to send secret feedback to one another’s bosses. Employees say it is frequently used to sabotage others. (The tool offers sample texts, including this: “I felt concerned about his inflexibility and openly complaining about minor tasks.”


Amazon's quarterly headcount (full- and part-time employees) <<Link to a chart

The need for efficiency has also brought a keen interest in robotics: Amazon purchased Kiva Systems, a company that makes robots for warehouses, in 2012 for $775 million. The robots—flat, motorized squares at move in a grid—retrieve shelves from which humans pick items that people have ordered. Amazon has deployed about 80,000 of them in 25 fulfillment centers worldwide.

Warehouses that use robots still need human workers. Amazon in 2017 committed to hiring an additional 120,000 part- and full-time workers in the US. But Amazon has also invested in automation efforts, such as robots that can pick items off of shelves and delivery drones, that could reduce the amount of human work that goes into its shipping processes.

Amazon Prime is the heart of Amazon

Amazon Prime was introduced at a hectic time for the company: it was 2005, Amazon stocks were tumbling upon each quarterly earnings report, and investors were starting to get restless waiting for the online shopping revolution.

But Bezos told the world (through the New York Times) to wait it out, saying the customer-oriented plan he was putting in motion “won’t pay off for years.”

“If we take care of customers, the stock will take care of itself in the long term,” Mr. Bezos said.

More than 10 years later Amazon Prime is a billion-dollar business for the company, offering the original perk of two-day shipping, but having massively expanded to music streaming, a Netflix-like video service, free photo storage, free e-books, access to special portions of the e-commerce website, and discounts on other services within Bezos’ orbit like the Washington Post.

“Our goal with Amazon Prime, make no mistake, is to make sure that if you are not a Prime member, you are being irresponsible,” Bezos told shareholders in May.

The plan is working: 63% of US Amazon users subscribe to Prime, and estimated to reach more than half of American households by the end of the year.

Amazon Prime is conquering America <<Link to a chart

Prime doesn’t just lift $99 off of regular Amazon users each year—it’s proven to be a powerful customer loyalty program. The average Prime user spends $1,300 each year on the site, with 78% of Prime users still citing free 2-day shipping as the main reason for coughing up the fee.

That money adds up for Amazon. Last quarter, the company reported more than $1.4 billion in revenue from its subscription services alone. The money mainly comes from Prime subscriptions, but also includes standalone audiobook, music, video, e-book, and comic services that Amazon operates. But more importantly, it shows a commitment from customers that they plan to come back to Amazon. A lot.

Amazon is a cloud-services company

Amazon is a hardware company—that doesn’t really care about hardware

Amazon is a moonshot factory

Go to the article URL to read the 3 sub-topics above: https://qz.com/1051814/what-is-amazon-really/

Is Amazon a monopoly?

Amazon’s proposed $13.7 billion acquisition of Whole Foods reignited concerns that the Everything Store has become a monopoly. Amazon is a brutal competitor but it has so far largely evaded antitrust scrutiny because in crippling competing businesses, it has also made life better for consumers.

When Amazon entered the ebook market in the late 2000s, Bezos priced bestsellers at $9.99, a significant discount to what new hardcover books typically sold for. The tactic drove customers away from traditional publishers and helped Amazon gain a controlling share of online book sales. When the US government later scrutinized Amazon as part of a price-fixing case against Apple and the “big six” book publishers, it characterized Amazon’s behavior as “loss-leading” rather than “predatory,” noting that Amazon’s overall ebook business was profitable.

It happened similarly with diapers. In 2009, Amazon sought to acquire Quidsi, a fast-growing e-commerce startup whose brands included Diapers.com, Soap.com, and BeautyBar.com. After Quidsi rebuffed Amazon, Bezos’s company cut prices for diapers and other baby products by up to 30%. A year later Amazon debuted Amazon Mom, a service with a year of free two-day delivery, as well as additional “subscribe and save” discounting on diapers. Quidsi theorized that Amazon would lose $100 million on the efforts but it didn’t matter; Amazon’s target on Quidsi spooked the startup’s investors and ate into Diapers.com’s growth.

In November 2010, Quidsi sold to Amazon for $540 million. The Federal Trade Commission determined the deal was not anticompetitive. In 2011, Amazon stopped taking new members to Amazon Mom. In 2012, it aggressively reduced discounts on baby products.

In a January 2017 note for the Yale Law Journal, technology and antitrust researcher Lina Khan argued that Amazon’s customer-first policies have allowed it to escape antitrust scrutiny, even as it consolidates control over ever-more industries. Antitrust is a complex matter that requires establishing the market in question and with Amazon, which in theory competes against all retail and more, that is never a simple question.

One of Amazon’s key weapons in defeating competitors is its ultra-low prices. In recent decades, regulators have shied away from declaring this sort of pricing anticompetitive, assuming instead that the market is a natural check that prevents companies from dropping prices to unsustainable levels. But if Amazon has made one thing clear over its 20-year career, it’s that it doesn’t fear losses or subscribe to the usual market logic.
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Re: Everything Business Thread

Postby Zarniwoop » Sun Aug 20, 2017 2:35 pm

great idea for a thread Buc2

interesting article....yesterday I listened to a special on NPR about Google and their anti-trust lawsuit in Europe...fascinating stuff
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Re: Everything Business Thread

Postby NYBF » Sun Aug 20, 2017 3:00 pm

As an avid Amazon shopper, do you use smile.amazon.com ?

By adding the smile. to the front of the url, Amazon will donate 0.5% of your purchase to a charity of your choice.
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Re: Everything Business Thread

Postby Buc2 » Sun Aug 20, 2017 3:04 pm

Zarniwoop wrote:great idea for a thread Buc2

interesting article....yesterday I listened to a special on NPR about Google and their anti-trust lawsuit in Europe...fascinating stuff

Google. Another mega-company. It's really amazing what the advent of the internet has done. Many companies have had to adapt or die in the wake of its invention. Now we're seeing the closing of many brick & mortar stores that have been around since the 19th century because they just weren't able to/refused to adapt their business models to compete with this technology. It will be fascinating to watch these mega-companies continue to evolve and what governments will try to do to control them (or to take advantage of them). It's almost like watching the beginnings of mega-companies that eventually grow into these evil mega-corporations depicted in sci-fi flicks like Cyberdine Systems in Terminator or the Tyrell Corporation in Blade Runner.
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Re: Everything Business Thread

Postby Zarniwoop » Sun Aug 20, 2017 3:09 pm

Buc2 wrote:
Zarniwoop wrote:great idea for a thread Buc2

interesting article....yesterday I listened to a special on NPR about Google and their anti-trust lawsuit in Europe...fascinating stuff

Google. Another mega-company. It's really amazing what the advent of the internet has done. Many companies have had to adapt or die in the wake of its invention. Now we're seeing the closing of many brick & mortar stores that have been around since the 19th century because they just weren't able to/refused to adapt their business models to compete with this technology. It will be fascinating to watch these mega-companies continue to evolve and what governments will try to do to control them (or to take advantage of them). It's almost like watching the beginnings of mega-companies that eventually grow into these evil mega-corporations depicted in sci-fi flicks like Cyberdine Systems in Terminator or the Tyrell Corporation in Blade Runner.



Yep, the Google show was great. They talked about why they are being sued in Europe but not it in the US and its basically because of a slight difference in how we define monopolies and how we define what Google's business is.

Most people think that our anti-trust laws are made to break up companies that get too big...but that isn't the case. A company can control 95% of the market and we won't necessarily go after them. The government only goes after massive companies that are exploiting their scale to hurt the customer in some way...I realize there is substantial overlap between those two, but they certainly aren't one in the same.

While I do think technology in some ways certainly helps starts up in terms of being able to market their product in ways they otherwise wouldn't, I think in the end, as you say, it will more greatly help the large multinationals even more.
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Re: Everything Business Thread

Postby Buc2 » Sun Aug 20, 2017 3:11 pm

NYBF wrote:As an avid Amazon shopper, do you use smile.amazon.com ?

By adding the smile. to the front of the url, Amazon will donate 0.5% of your purchase to a charity of your choice.

I do. :)
But only just recently as I wasn't aware of that feature until just a few months ago.

Here's what our Prime site says we've gotten donated to date:
AmazonSmile Donations
$4.67 generated

Not much, but it's a start.
Last edited by Buc2 on Sun Aug 20, 2017 3:15 pm, edited 1 time in total.
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Re: Everything Business Thread

Postby Zarniwoop » Sun Aug 20, 2017 3:12 pm

i had never heard of that..thanks for bringing it up NYBF
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Re: Everything Business Thread

Postby Rocker » Sun Aug 20, 2017 4:14 pm

NYBF wrote:As an avid Amazon shopper, do you use smile.amazon.com ?

By adding the smile. to the front of the url, Amazon will donate 0.5% of your purchase to a charity of your choice.



I implore everyone to do their research on the charity they contribute to. For years I donated to WWP. I stopped after finding out how much of the money went to actually helping wounded vets. Needless to say; I contribute elsewhere now.
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Re: Everything Business Thread

Postby Babeinbucland » Sun Aug 20, 2017 7:11 pm

Buc2 wrote:
NYBF wrote:As an avid Amazon shopper, do you use smile.amazon.com ?

By adding the smile. to the front of the url, Amazon will donate 0.5% of your purchase to a charity of your choice.

I do. :)
But only just recently as I wasn't aware of that feature until just a few months ago.

Here's what our Prime site says we've gotten donated to date:
AmazonSmile Donations
$4.67 generated

Not much, but it's a start.

Yes every little bit does help for sure! My non profit generated over $300 last year from folks who used us as their smile charity. It doesn't sound like a lot but when you figure that Amazon donates $2.50 for every $500 worth of purchase it actually was on purchases of over $80,000 from all of our donors from Amazon. We will never know most of these people but we were so humbled and grateful by their choosing us. Ebay will let you give 10% of your sales to charities too.
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Re: Everything Business Thread

Postby Babeinbucland » Sun Aug 20, 2017 7:31 pm

Rocker wrote:
NYBF wrote:As an avid Amazon shopper, do you use smile.amazon.com ?

By adding the smile. to the front of the url, Amazon will donate 0.5% of your purchase to a charity of your choice.



I implore everyone to do their research on the charity they contribute to. For years I donated to WWP. I stopped after finding out how much of the money went to actually helping wounded vets. Needless to say; I contribute elsewhere now.

Agreed. I was pretty devastated when I found out about WWP. We actually co-sponsored events with them until one of our donors informed us of their issues. We had to distance ourselves from them completely:(
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Re: Everything Business Thread

Postby Buc2 » Thu Jan 25, 2018 10:04 am

In the past 48 hours:

Facebook's Chief Marketing Officer resigns
Twitter's Chief Operating Officer resigns
Snapchat's VP of Product resigns and "quits tech" for good

Something going on here?
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Re: Everything Business Thread

Postby Zarniwoop » Thu Jan 25, 2018 10:06 am

Nice bump...I forgot about this thread and we are jamming far too much into the random politics thread.


I wonder if these firings are harassment related.
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Re: Everything Business Thread

Postby Buc2 » Thu Jan 25, 2018 12:26 pm

Zarniwoop wrote:Nice bump...I forgot about this thread and we are jamming far too much into the random politics thread.


I wonder if these firings are harassment related.

Didn't have time to look earlier. Here's what I'm seeing from Google searches...

Facebook Chief Marketing Officer Resigns "To Help Democratic Party Win Midterms"

Twitter's chief operating officer, Anthony Noto, has resigned to become the CEO of the financial services startup SoFi.

Tom Conrad, is quitting to spend some time outside the tech industry. “It’s time for me to put my energy outside of tech, into music, food, photography and things closer to art than entrepreneurship.”

At first look, nothing nefarious here. We'll see. Just seems kinda odd to see execs from 3 top social media companies all resign around the same time.
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