7 ms·

I know this problem isn't unique to Amazon, but what are people's thoughts on the potentially unsustainble levels of e-commerce. I know plenty of people who are

by tabeth 10y ago

I know this problem isn't unique to Amazon, but what are people's thoughts on the potentially unsustainble levels of e-commerce. I know plenty of people who are in serious debt (primarily student and credit card) and still blow tons of money on Amazon. Given that the general levels of debt are approaching 2008 levels [1], is this something to be worried about in general, or is it irrelevant? The main reason for asking is that if large percentages of Amazon's growth can be attributed to a rise in consumer debt, then wouldn't Amazon be disproportionally damaged by another recession and/or some sort of debt bubble burst? [1] http://money.cnn.com/2017/02/16/pf/americans-more-debt-in-2016/ http://money.cnn.com/2017/02/16/pf/americans-more-debt-in-20...

EGreg 10y ago
Ease of use means a lot. And the US obsession with consumer culture has trained people that buying is good, and "ending is better than mending".
- tonyedgecombe 10y ago
  I don't think it's just the US, most developed countries seem to be going down the same road.
TulliusCicero 10y ago
> I know plenty of people who are in serious debt (primarily student and credit card) and still blow tons of money on Amazon. I don't think this is specific to Amazon. As a whole, Americans seem to be too lax about taking on consumer debt.
- Diamons 10y ago
  Because some believe this country won't last the next 10 years
  - notheguyouthink 10y ago
    On that note, where is safe to put your money i wonder? Is there more and less stable mediums to hold your money?
  - ryanmarsh 10y ago
    If you're 40 you've probably experienced 2 to 3 boom/bust cycles (depending on the industry) as an earner. I think that kind of volatility and hope for the next windfall leads people to believe debt will work itself out. Or as is oft misattributed to Steinbeck: "... in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires."
    - Arizhel 10y ago
      As an engineer, boom/bust cycles like this remind me of system instability with insufficient damping. It doesn't work itself out; the oscillations get larger and larger, and then something breaks. Remember the Tacoma Narrows Bridge?
      - TulliusCicero 10y ago
        But the oscillations aren't getting larger. The great recession sucked, but it was nowhere near as bad as the great depression.
        Arizhel 10y ago
        They are getting larger. You're looking too far back. After the Great Depression, policies were enacted which served as dampers to improve system stability. They worked for quite a while. But eventually these policies were eroded or repealed, and other societal factors came along which degraded stability, so the oscillations picked up again, and grew larger and larger (think 80s S&L crisis, '00 dot-com crash), culminating in the '08 recession. Now we're going to have a much bigger one with Trump and the GOP in office. If this one doesn't cause a collapse, the next one will.
- notheguyouthink 10y ago
  Yup. I've never really had a problem with debt, but i feel likewise to debt, Americans (myself included) spend without forethought. A few months back i decided to sign up for Simple.com Bank _(a Bank, not CU unfortunately)_, as they let me preallocate all my purchases. Every single bill, and every single purchase i pre-plan by several weeks. Want a new game? Mark it on the goals, and save $1/d for it. I don't limit myself on what i can buy, just when. This little mental change means that 3 weeks from now i likely won't care about what i was so excited for 3 weeks prior. It's worked wonders for me, especially with large purchases. I wanted an Amp, to which i was aiming for around $600 for. Now, weirdly enough i can easily afford this and am willing to draw from my buffer to spend this $600. However i preallocated the money a while ago, and now i'm sitting at this special $600 which i could spend, but something is urging me not to spend it. Part of me feels like i could _gain_ $600 if i just simply don't spend it. It's quite the bizarre assertions i feel like. The number of pre-saved goals i've later removed because i wanted the money more than the item.. it's weird. Anyway, i'm deviated like hell. Apologies.
  - TulliusCicero 10y ago
    > Anyway, i'm deviated like hell. Yeah you are. Don't you know you're supposed to spend everything you make every paycheck and then some?
  - magic_beans 10y ago
    Spend the money on experiences! Travel, go to shows, hit the road... $600 is worthless in and of itself.
    - notheguyouthink 10y ago
      Meh, you can enjoy things. If anything, i dislike travel. I like my guitar, i heavily enjoy playing it, and frankly i do need a new Amp. Though i think this is a great example of how mentally, how it's working for me. I actually need an Amp, but by saving the money ahead of time, suddenly i get a chance to mentually "unspend it".. it's bizarre, but it's how i feel. I literally have $600 sitting in my account right now that i'm having a hard time spending, because it's more real than the Amp. Quite interesting.
aphextron 10y ago
>the main reason for asking is that if large percentages of Amazon's growth can be attributed to a rise in consumer debt, then wouldn't Amazon be disproportionally damaged by another recession and/or some sort of debt bubble burst? It's not quite the same thing. The majority of the blow in 2008 was from subprime mortgage lending. High levels of consumer debt are not necessarily a bad thing in general. Particularly for Amazon, you're talking about short term revolving credit. They are not financing big ticket long term payment plans like a mortgage. Thus their exposure is minimal.
- sokoloff 10y ago
  The concern is not that Amazon has direct credit counterparty risk, but rather that if a dramatic credit contraction happens that Amazon customers will see a sharp downtick in credit availability and thus spending power. Said differently: if many of your customers are using credit to fund their purchases and credit dries up, you can be screwed.
throwaway729 10y ago
> The main reason for asking is that if large percentages of Amazon's growth can be attributed to a rise in consumer debt, then wouldn't Amazon be disproportionally damaged by another recession and/or some sort of debt bubble burst? I don't think so, and I think I'm a prototypical example of why. > I know plenty of people who are in serious debt (primarily student and credit card) and still blow tons of money on Amazon. I "blew" tons of money on Amazon while I had student debt. I bought batteries, phone cases, specialty food items (not even luxury -- in fact, kinda the opposite. Just hard to find.), music, pens, paper, lots of books (especially textbooks), pet supplies, clothes, etc. I would've bought all that stuff anyways. Life doesn't stop just because you're in debt. You still need to eat, sleep, feed yourself, talk to people, and take an occasional mental break with a movie or book. Amazon isn't fueling new spending among consumers. It's largely off-setting spending that would happen anyways. I barely ever visit Target and literally haven't stepped food in a Walmart in maybe half a decade. Pre-Amazon, I'd be in one of the two at least once a week. I went to Target last week and remembered why I buy everything on Amazon. The experience is terrible and, in many cases, you end up paying more at brick and mortar even after shipping!
jlmorton 10y ago
That is a very sensationalist way to view debt loads. First of all, there are today 20 million more Americans than there were in 2008. Second, there has been real income growth. When considering the sustainability of debt levels, it makes much more sense to look at something like household debt service payments as a percent of disposable income, or total household debt versus GDP. To be fair, interest rates have a big part in debt service payments, but I think if you look at this chart of debt service payments vs disposable income, you'll see we're in a very different position than 2008: https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP

by tabeth 10y ago

EGreg 10y ago

Ease of use means a lot. And the US obsession with consumer culture has trained people that buying is good, and "ending is better than mending".

tonyedgecombe 10y ago
I don't think it's just the US, most developed countries seem to be going down the same road.

TulliusCicero 10y ago

> I know plenty of people who are in serious debt (primarily student and credit card) and still blow tons of money on Amazon. I don't think this is specific to Amazon. As a whole, Americans seem to be too lax about taking on consumer debt.

Diamons 10y ago
Because some believe this country won't last the next 10 years
- notheguyouthink 10y ago
  On that note, where is safe to put your money i wonder? Is there more and less stable mediums to hold your money?
- ryanmarsh 10y ago
  If you're 40 you've probably experienced 2 to 3 boom/bust cycles (depending on the industry) as an earner. I think that kind of volatility and hope for the next windfall leads people to believe debt will work itself out. Or as is oft misattributed to Steinbeck: "... in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires."
  - Arizhel 10y ago
    As an engineer, boom/bust cycles like this remind me of system instability with insufficient damping. It doesn't work itself out; the oscillations get larger and larger, and then something breaks. Remember the Tacoma Narrows Bridge?
    - TulliusCicero 10y ago
      But the oscillations aren't getting larger. The great recession sucked, but it was nowhere near as bad as the great depression.
      - Arizhel 10y ago
        They are getting larger. You're looking too far back. After the Great Depression, policies were enacted which served as dampers to improve system stability. They worked for quite a while. But eventually these policies were eroded or repealed, and other societal factors came along which degraded stability, so the oscillations picked up again, and grew larger and larger (think 80s S&L crisis, '00 dot-com crash), culminating in the '08 recession. Now we're going to have a much bigger one with Trump and the GOP in office. If this one doesn't cause a collapse, the next one will.
notheguyouthink 10y ago
Yup. I've never really had a problem with debt, but i feel likewise to debt, Americans (myself included) spend without forethought. A few months back i decided to sign up for Simple.com Bank _(a Bank, not CU unfortunately)_, as they let me preallocate all my purchases. Every single bill, and every single purchase i pre-plan by several weeks. Want a new game? Mark it on the goals, and save $1/d for it. I don't limit myself on what i can buy, just when. This little mental change means that 3 weeks from now i likely won't care about what i was so excited for 3 weeks prior. It's worked wonders for me, especially with large purchases. I wanted an Amp, to which i was aiming for around $600 for. Now, weirdly enough i can easily afford this and am willing to draw from my buffer to spend this $600. However i preallocated the money a while ago, and now i'm sitting at this special $600 which i could spend, but something is urging me not to spend it. Part of me feels like i could _gain_ $600 if i just simply don't spend it. It's quite the bizarre assertions i feel like. The number of pre-saved goals i've later removed because i wanted the money more than the item.. it's weird. Anyway, i'm deviated like hell. Apologies.
- TulliusCicero 10y ago
  > Anyway, i'm deviated like hell. Yeah you are. Don't you know you're supposed to spend everything you make every paycheck and then some?
- magic_beans 10y ago
  Spend the money on experiences! Travel, go to shows, hit the road... $600 is worthless in and of itself.
  - notheguyouthink 10y ago
    Meh, you can enjoy things. If anything, i dislike travel. I like my guitar, i heavily enjoy playing it, and frankly i do need a new Amp. Though i think this is a great example of how mentally, how it's working for me. I actually need an Amp, but by saving the money ahead of time, suddenly i get a chance to mentually "unspend it".. it's bizarre, but it's how i feel. I literally have $600 sitting in my account right now that i'm having a hard time spending, because it's more real than the Amp. Quite interesting.

aphextron 10y ago

>the main reason for asking is that if large percentages of Amazon's growth can be attributed to a rise in consumer debt, then wouldn't Amazon be disproportionally damaged by another recession and/or some sort of debt bubble burst? It's not quite the same thing. The majority of the blow in 2008 was from subprime mortgage lending. High levels of consumer debt are not necessarily a bad thing in general. Particularly for Amazon, you're talking about short term revolving credit. They are not financing big ticket long term payment plans like a mortgage. Thus their exposure is minimal.

sokoloff 10y ago
The concern is not that Amazon has direct credit counterparty risk, but rather that if a dramatic credit contraction happens that Amazon customers will see a sharp downtick in credit availability and thus spending power. Said differently: if many of your customers are using credit to fund their purchases and credit dries up, you can be screwed.

throwaway729 10y ago

> The main reason for asking is that if large percentages of Amazon's growth can be attributed to a rise in consumer debt, then wouldn't Amazon be disproportionally damaged by another recession and/or some sort of debt bubble burst? I don't think so, and I think I'm a prototypical example of why. > I know plenty of people who are in serious debt (primarily student and credit card) and still blow tons of money on Amazon. I "blew" tons of money on Amazon while I had student debt. I bought batteries, phone cases, specialty food items (not even luxury -- in fact, kinda the opposite. Just hard to find.), music, pens, paper, lots of books (especially textbooks), pet supplies, clothes, etc. I would've bought all that stuff anyways. Life doesn't stop just because you're in debt. You still need to eat, sleep, feed yourself, talk to people, and take an occasional mental break with a movie or book. Amazon isn't fueling new spending among consumers. It's largely off-setting spending that would happen anyways. I barely ever visit Target and literally haven't stepped food in a Walmart in maybe half a decade. Pre-Amazon, I'd be in one of the two at least once a week. I went to Target last week and remembered why I buy everything on Amazon. The experience is terrible and, in many cases, you end up paying more at brick and mortar even after shipping!

jlmorton 10y ago

That is a very sensationalist way to view debt loads. First of all, there are today 20 million more Americans than there were in 2008. Second, there has been real income growth. When considering the sustainability of debt levels, it makes much more sense to look at something like household debt service payments as a percent of disposable income, or total household debt versus GDP. To be fair, interest rates have a big part in debt service payments, but I think if you look at this chart of debt service payments vs disposable income, you'll see we're in a very different position than 2008: https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP