is Amazon getting worse?

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June 10th, 2015 at 10:33:13 PM permalink
reno
Member since: Oct 24, 2012
Threads: 52
Posts: 787
I have been ordering from Amazon since 1999. I probably make about 4 or 5 purchases a year from this company. And I am convinced that Amazon is getting worse.

Their sales pitch for Amazon Prime is growing increasingly loud & obtrusive.

For example, I keep stumbling upon mundane, ordinary household items that can only be purchased if you join Amazon Prime. In my case, I was looking for Tums Regular Strength Peppermint. Non-Prime members can purchase a 4 pack. But if you want to buy just 1 bottle, you have to join Prime. There's a loophole, whereupon I can buy it from a third party, and Amazon will process the payment, but there is a mandatory $3 shipping charge, even though my order is already well past the $35 threshhold for Amazon free shipping. So now Amazon wants $7 for a bottle of Tums that every Walgreens, Target, and CVS sells for $4. Huh?

It's all part of Prime Pantry, which includes popular household items we're all familiar with: Bounty, Tide, Lysol, Cheerios, Tums, Crest, etc. The rest of us non-Prime peasants are banned from this elite, exclusive shopping paradise.

This is a foolish mistake on Amazon's part. If I can buy these items anywhere, they're not giving me an incentive to join Prime. They're just punishing me for not joining Prime. That's their perogative, it's their website. But they're needlessly missing out on some lost revenue. This policy doesn't benefit Amazon, it benefits Walgreens. Surely the profit margin on Crest & Cheerios is wide enough for a retailer as massive as Amazon that it's worth their while to sell it to all customers, not just Prime customers.

I'd be more annoyed if Tums was a rare, obscure item. But it's not. I'll just buy the Tums tomorrow when I swing by the supermarket for the milk & eggs. Amazon's loss, not mine.
June 11th, 2015 at 12:33:26 AM permalink
Evenbob
Member since: Oct 24, 2012
Threads: 105
Posts: 10375
Amazon is trying to become a private club,
like Sams Club. You need to pay a membership
fee all at once, and you're in. It's a bunch
of crap.
If you take a risk, you may lose. If you never take a risk, you will always lose.
June 11th, 2015 at 6:15:55 AM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 97
Posts: 6020
Amazon has been quietly trying to change their model. They do not own a lot of the stuff you buy there.

First, there is the obvious third party sites referred to above. But for other items, any person can buy retail items, send them to Amazon, pay a warehouse rental fee, then let Amazon sell them. Then there is Prime which is trying to mimic Netflix. The higher-margin items they can still sell themselves.

Retail is not hugely profitable. Stuff that keeps moving you can make cash on. But the rest not as much. When you have to pay shipping it is even worse. AMZN is one of those story stocks that sell for a high multiple based on ideas. Bezos and Musk are the same guy, run a marginal company but keep pushing the story and PR to get investor dollars. AMZN has the name now, and you go there or eBay first. This still does not change their margins.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
June 11th, 2015 at 8:35:16 AM permalink
reno
Member since: Oct 24, 2012
Threads: 52
Posts: 787
Quote: Evenbob
Amazon is trying to become a private club,
like Sams Club. You need to pay a membership
fee all at once, and you're in. It's a bunch
of crap.


Yes, exactly.

The only reason the Sams Club & Costco business model works is becasue their prices are substantially lower than regular retail. Amazon's prices are not nearly low enough to compete with Costco or Sams Club.

True, Amazon Prime offers lots of free streaming video. But at this point Amazon has pissed me off, so I'm sticking with Netflix just on principal. (I'm stubborn and petty.)
June 11th, 2015 at 8:56:53 AM permalink
reno
Member since: Oct 24, 2012
Threads: 52
Posts: 787
Quote: AZDuffman
Retail is not hugely profitable. Stuff that keeps moving you can make cash on. But the rest not as much. When you have to pay shipping it is even worse.


True, Amazon spends an enormous sum on shipping. (Though I'm guessing that UPS & U.S. Mail offer them an incredible discount due to volume.)

But consider the competition. Target has 1,900 stores. WalMart has 4,100 stores! All those buildings need maintenance, upkeep, utilities, security, janitors, lease (or mortgage) payments, and tens of thousands of employees to stock the shelves and operate the cash registers. Which do you think is a bigger expense: A) Amazon's shipping costs, or B) Walmart's cost to operate 4,100 stores? I'd go with answer B. (So how is it that WalMart will sell me Tums but Amazon won't?)

I concede that Amazon still spends a huge amount of money on distribution warehouses. But looking at the map of Amazon fulfillment centers below, I don't see 4,100 red pins on it.

June 11th, 2015 at 10:31:53 AM permalink
Evenbob
Member since: Oct 24, 2012
Threads: 105
Posts: 10375
Quote: reno


True, Amazon Prime offers lots of free streaming video. But at this point Amazon has pissed me off, so I'm sticking with Netflix just on principal. (I'm stubborn and petty.)


Their video sucks compared to N-flix. I tried it
for a month and the selection is bad and
the streaming messes up all the time.
If you take a risk, you may lose. If you never take a risk, you will always lose.
June 11th, 2015 at 11:48:00 AM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 97
Posts: 6020
Quote: reno


But consider the competition. Target has 1,900 stores. WalMart has 4,100 stores! All those buildings need maintenance, upkeep, utilities, security, janitors, lease (or mortgage) payments, and tens of thousands of employees to stock the shelves and operate the cash registers. Which do you think is a bigger expense: A) Amazon's shipping costs, or B) Walmart's cost to operate 4,100 stores? I'd go with answer B. (So how is it that WalMart will sell me Tums but Amazon won't?)


I won't swallow "B" so easy. What has to be looked at is ratios. Sure WMT pays more, but they sell more. What has to be done is take the costs to operate the fulfillment centers and shipping and find out what the cost is per dollar of sales. Remember marginal costs. Once WMT has their store open the cost to sell one more unit of Tums is effectively zero, AMZN has to pay full shipping for each next unit. (Assume both packages are F.O.B. at the store or center)

And this may be the answer. AMZN perhaps makes so little after the pick, pack, and ship that it is not worth the small incremental revenue? OTOH, if you give them $70 of pure profit then the equation changes. All IMHO of course.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
June 11th, 2015 at 1:03:25 PM permalink
reno
Member since: Oct 24, 2012
Threads: 52
Posts: 787
Quote: AZDuffman
Once WMT has their store open the cost to sell one more unit of Tums is effectively zero, AMZN has to pay full shipping for each next unit.


My order included a 24 pack of AA batteries for $10.32. (FYI, Duracell ProCell batteries are a bargain.) Those batteries automatically came with free shipping because I was well over the $35 minimum. Compare the weight of 24 batteries compared to the weight of Tums. How could it possibly be cheaper for Amazon to mail me 24 batteries than 1 bottle of Tums?!? (150 tablets in this Tums bottle.) It would have cost them almost nothing to add the Tums to my box of stuff. But they're smarter than us, and they've decided that only Prime members get free shipping on antacid.

That business model makes no sense.
June 11th, 2015 at 1:11:26 PM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 97
Posts: 6020
Quote: reno
Quote: AZDuffman
Once WMT has their store open the cost to sell one more unit of Tums is effectively zero, AMZN has to pay full shipping for each next unit.


My order included a 24 pack of AA batteries for $10.32. (FYI, Duracell ProCell batteries are a bargain.) Those batteries automatically came with free shipping because I was well over the $35 minimum. Compare the weight of 24 batteries compared to the weight of Tums. How could it possibly be cheaper for Amazon to mail me 24 batteries than 1 bottle of Tums?!? (150 tablets in this Tums bottle.) It would have cost them almost nothing to add the Tums to my box of stuff. But they're smarter than us, and they've decided that only Prime members get free shipping on antacid.

That business model makes no sense.


You are assuming the Tums comes from the same center. It may well not.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
June 11th, 2015 at 1:26:50 PM permalink
reno
Member since: Oct 24, 2012
Threads: 52
Posts: 787
Ok, I got a couple facts wrong.

Here I am complaining about Prime Pantry, assuming that if I just joined Prime I could get free shipping. Wrong! Even Prime members must pay $6 in shipping for items in Prime Pantry. Ha ha! They're screwing everyone! (This is confusing: I thought the whole point of joining Prime was for the damn free shipping.) And Prime shipping is usually 2 days, but the items in Prime Pantry take 5 days.

So to recap: www.walgreems.com sells Crest, Tums, Lysol, Cheerios, etc to anyone, and the shipping is free if your order is over $25. For those exact same items, Amazon charges $99 per year for "free" shipping, and then $6 per order for "free" shipping.

What a rip-off.
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