17 ms·

I've said before on hackernews, but people never seem to grasp the scope of Amazon. They aren't an e-commerce website anymore; that's just the tip of the iceber

by mabbo 10y ago

I've said before on hackernews, but people never seem to grasp the scope of Amazon. They aren't an e-commerce website anymore; that's just the tip of the iceberg. Bias: I spent a good five years there. In logistics alone: hundreds of warehouses in a dozen countries; hundreds of delivery stations, a fleet of drivers (independent contractors all) in the tens or hundreds of thousands; a fleet of airplanes (and an airport I hear?); and I read an article a while back saying they were buying a big ol' container ship because why not? Oh and the drones of course, whenever they get off the ground (eh? see what I did there?) Then you add on AWS, Kindle, the prototyped no-cash-register stores, and whatever else they've got cooking that no one knows about. This company is my best bet for "Weyland-Yutani" from the "Alien" series.

ericcholis 10y ago
Also under logistics, "seller-fulfilled prime", adding good quality shippers to their delivery network.
- nommm-nommm 10y ago
  I thought "seller-fulfilled prime" was just the seller shipping however they want as long as it was comparable to prime in shipping time. But only select sellers will be offered this.
mattmanser 10y ago
It is impressive. Do you think there's a chance of decline if Bezos leaves and the next Ballmer comes along? Profits up, but ultimately company declines and lets competitors eat it's lunch?
- ra1n85 10y ago
  I don't. Amazon is successful because of its fast moving, demanding culture. No product is ever left to coast - everyone is pushed to be bigger, faster, cheaper, etc. Amazon realizes this, and does a lot to reinforce its culture internally. They do an excellent job of this, even in remote offices. I think Bezos has done a terrific job of building something that will succeed without him. And that's a good thing for him - he's free to play with space travel, now.
- pm90 10y ago
  That risk will always be there. But it seems like he has built a culture that will allow it to continue onward. If you think about it, Bezos is not like Jobs, where the latter had an outsized impact on deciding what things Apple would or would not make.
- skipants 10y ago
  Are you sure this isn't purely a perceived decline? Microsoft's stock is the highest it's ever been and they made a profit of $52B in their last fiscal year.
  - Infinitesimus 10y ago
    I think that's mattmanser point. Profits look great and the stock price is happy, but mindshare in the consumer space, and perceived innovative edge (see the huge miss on phones)
    - mattmanser 10y ago
      Yes, definitely still a great company, but they've lost their complete dominance.
  - jlmorton 10y ago
    They made $16.7 billion in their last fiscal year, and 2015 and 2016 represented their lowest profits over the past 10 years.
    - oblio 10y ago
      Low profits tend to happen in the first years of a transition to subscription. See Adobe for another example.
    - adventured 10y ago
      You're using a non-recurring charge to try to make a wider point. 2015 had a $10 billion non-recurring, non-cash charge. Without that, your entire premise collapses. The easiest way to poke a giant hole in what you're proposing, is to look at cash production from operations, which is the ultimate gauge of profitability. Their cash production the last two years is not the lowest over the past 10 years. Net operating cash flow for 2016: $33 billion. Higher than 2015, 2014, 2013, 2012.
      - jlmorton 10y ago
- mabbo 10y ago
  The culture is really pervasive at Amazon. Bezos started it, but now that the pinwheel is spinning, he doesn't need to do much to keep it going. His major replacement potentials are Andrew Jassy (AWS CEO) and Jeff Wilke (CEO of Consumer, ie e-commerce and logistics). Both of those guys have done a fantastic jobs in the business they are in. I don't think Amazon would want to pull either of them into a roll of owning both though, lest they lose focus. I suspect they'd break them off as separate sub-companies (like Alphabet/Google did), and put someone else as the CEO of the overarching company.
NicoJuicy 10y ago
But their core business ( selling products online) is selling too much counterfeit products ( as mentioned here). But if the sales on Amazon would collapse, in an instant it would all be gone... ( except AWS) PS. Don't know why i'm getting downvoted..
- mabbo 10y ago
  I remember reading one of the quarterly earnings reports last year. It said: Amazon as a whole (including AWS) made $500m that quarter. It also said that AWS made $600m that quarter. What this means is that everything Amazon does that is not AWS lost $100m in a quarter. If you reduce the size of that, Amazon will make more money.
ehsankia 10y ago
The breadth they are reaching really is impressive. The only other company which can really be compared with is Google and Microsoft. So far, Google's relationship with Amazon has been very weird, I'm curious to see how it evolves over time.
- oblio 10y ago
  Let's not kid ourselves. Samsung and the other Korean chaebols, Mitsubishi and the Japanese keiretsus or even 3M have at least similar breadth.
  - JBReefer 10y ago
    Absolutely, but those are rarely discussed. I don't really get why, all of the firms you listed are incredible.
    - 794CD01 10y ago
      Probably because you only hang out on english-language forums full of people with similar views to your own.
  - adventured 10y ago
    Amazon is ~24 years old and already larger than all of them except Samsung (which they'll catch soon enough). For example, Amazon is drastically larger than 3M. Four times the market cap, four times the sales. Not to mention 3M's business has been contracting for years, meanwhile Amazon is full speed ahead. So that gap will grow dramatically in just a few years. Amazon will hit $200 billion in sales in a few years, while 3M will have seen zero growth (Amazon will be 7x larger then). Your comparison doesn't make much sense today. It'll make zero sense tomorrow. Samsung is the sole company in that group that will be comparable in just three or four more years.
    - oblio 10y ago
      You've only nitpicked 3M out of the group. Go look up some figures for the chaebol and the keiretsu ;)
zeteo 10y ago
What people also don't seem to realize is that the US has serious anti-monopoly laws on the books (even if enforcement has been kinda lax lately). Remember Microsoft in the 90s? With Amazon running many competitors' infrastructure (e.g. Netflix is on AWS, FBA shenanigans etc.) I wouldn't be surprised if it got hit with some legal action aimed at breaking it up at this point.
- milesward 10y ago
  Does monopoly law apply when they have healthy competitors in every sector? This has seemed to be the escape hatch for the large tech companies: go do everything, not just eat one sector.
- tribune 10y ago
  There is still real competition in the cloud computing space, though. Plus, it's a hard sell that Amazon has done anything with AWS that is anti-consumer or monopolistic. The benefits to consumers are clear, and I don't think there's any reason for regulators to come after them right now.
- smallnamespace 10y ago
  One area where anti-monopoly law seems vague to me: does law clearly define what a market is? Like, MS got hit for leveraging their 'OS market' monopoly to break into the 'browser market', even though they are both pieces of software. If you draw distinct markets aggressively enough, then everything is its own market and many companies are monopolists in their own narrow niche. Also, what if technological changes turn two originally separate markets into a unified entity -- should it be anticompetitive if a monopolist does that?
  - deleted 10y ago
    [deleted]
  - dangrossman 10y ago
    This wiki article does a pretty good job at explaining how the "relevant market" gets determined in competition law: https://en.wikipedia.org/wiki/Relevant_market#Definition_and_use https://en.wikipedia.org/wiki/Relevant_market#Definition_and...
chrisper 10y ago
You forgot their own semi trucks and the Amazon Original Shows!
replicatorblog 10y ago
100%. It's also arguably the most irreplaceable. Just go through the thought exercise of imagining if a big tech company just vanished overnight. We'd all remember what they did and how the services work so companies could try to recreate the value proposition. This is how I imagine it playing out among the "Big 4." Apple: If Apple vanished tomorrow I could get an Android phone that lacked some of the polish of iOS, but my day-to-day would be largely unchanged. Their laptops are still the best IMO, but could deal with a Lenovo if needed. Google: Bing is fine. There are no shortage of online collaboration tools. Their dominance in AI is impressive, but it's not hard to imagine Microsoft reasserting themselves in Google's absence. Self-driving cars and life extension startups are well-capitalized. Their services are amazing, but not unique. Facebook: Social media will find a way. If FB vaporized, something would fill the gap. Twitter would be given a new lease on life. Amazon: It's almost impossible to imagine any company filling the gap they would leave. Who has the tech chops, willingness to deal with the grimy logistics and poor margins of retail, build out the cap ex of distribution, and deal with the politics of it all. Amazon is the most untouchable, irreplaceable company in tech. If I had to bet on one of these four companies existing 100 years from now it would be Amazon without question.
- Gelob 10y ago
  Walmart
  - hacknat 10y ago
    Walmart is going to build the largest hosting company in the world?
    - ajamesm 10y ago
      If you're a tech company, and your stack is so tightly coupled to Amazon that it represents an existential threat to your server fleet, you were never going to make it anyway.
      - hacknat 10y ago
Pigo 10y ago
Do you own any Amazon stock after having worked there for that period of time? I'm not a finance guy, at all, but that's the one company I've always considered putting a couple bills into and root for. Queue someone telling me how awful an idea that is, and to just keep throwing into my 401K...
- mabbo 10y ago
  > Do you own any Amazon stock after having worked there for that period of time Amazon pays SDEs about 1/4 of their income in the form of RSUs, vesting twice a year. I joined at $187, and sold my shares over time to cover various expenses (wedding, house downpayment, sold the last ones for an upcoming kitchen renovation). > Queue someone telling me how awful an idea that is, and to just keep throwing into my 401K Here's the thing... when you buy and sell stocks directly, you are implicitly competing with professionals at the game of 'what is the stock actually worth?'. The professionals you play against do nothing all day but analyze the stocks they've made bets on, build models, look at data, read reports. You might beat them by luck in the short term, but they'll beat you in the long-term at this game. You're both gambling, but they know the true odds better than you do. My recommendation: Use a robo-advisor to spread your money over a diverse set of ETFs and auto-rebalance them. My friends are early employees over at WealthSimple (google them), a start-up that does this. Or read what it is their robo-advisor does, and do that yourself to save the 0.5% fee.
  - prdonahue 10y ago
    0.50% (50 bps) is excessive. If you don't want to do yourself but still want the benefits of rebalancing (and tax-loss harvesting), suggest checking out Wealthfront (https://www.wealthfront.com/ https://www.wealthfront.com/) instead.
    - mabbo 10y ago
      It's high for America, low for Canada. Afaik, WealthFront haven't opened a Canadian arm yet, while Simple are based here.
  - 10y ago
adamsea 10y ago
This was not mentioned in the article, but I'd say this puts Amazon at the forefront of the issue of the disappearing "good job" in America ... as you mention, Amazon prefers contractors over employees.
- 91bananas 10y ago
  Maybe for "unskilled labor" but I don't believe that to be true for engineering talent?
powera 10y ago
Compare that to Berkshire Hathaway rather than to GOOG/FB and it's not quite as impressive.
hourislate 10y ago
Interesting points and Amazon is a great company not disputing that but the older I get the less I want. My spending on Amazon has fallen over the last 18 years to so little I am thinking about dropping Prime. AWS is in a competitive market with Google, MS, etc. Logistics are more self serving for Amazon in my opinion. I'm under the impression their planes are used to move fright between US Hubs and maybe to bring higher dollar freight from China instead of 2 weeks on the water. Walmart already leases (and has for years) it's own container ship. It's on a 1 month month cycle out of China. Container ships typically sail out every Friday night out of China. Spend two weeks loading and 12 days on the water to US and Canadian ports. So Walmart still uses others to ship freight. The last mile for delivery is also competitive, USPS, UPS, FEDEX, DHL, etc, aren't going to sit still. Trucking is incredibly competitive industry. Most fright moves by rail coast to coast with trucks picking up at regional terminals. There is still a lot of long haul but it's more expensive. A full 52ft trailer from NY to TX can run around $1700, it's the LTL where most Truckers make their money. I was under the impression that Amazon leased trailers and didn't lease any tractors. Giving private operators contracts to haul. No cash register stores might be a hit with some folks but price is really important to a lot of America if you have a family. I also wonder if RFID ink could be used for bar codes where you just push your cart through a reader portal and it scans the whole cart at once. No lines and seconds to check out with just the bagging to do. I appreciate what Amazon has done. They basically made anyone they compete with become more efficient. Quite the driving force and fantastic for the consumer. Lets hope they continue.
zouhair 10y ago
You say it in a tongue and cheek manner but I feel letting corporations getting this big is quite dangerous and will be the death of democracy.
bogomipz 10y ago
>"I've said before on hackernews, but people never seem to grasp the scope of Amazon. They aren't an e-commerce website anymore; that's just the tip of the iceberg" I don't think this is some kind of special perspective that you have from working there. I think people seem to grasp their ambitions pretty well. Their fleet of planes, the delivery drones for last mile, Alexa, Prime Pantry, AWS etc, all of these developments have received good coverage in mainstream media.
jd20 10y ago
My vote would've been "US Robotics" from "I, Robot". They have arguably the best virtual assistant on the market, Alexa. Paired with their expertise in automation, I'm imagining a future where Amazon robots would do the vacuuming, wash dishes, and do my laundry. (And of course order more cleaning supplies from Amazon, when I get low.)

by mabbo 10y ago

ericcholis 10y ago

Also under logistics, "seller-fulfilled prime", adding good quality shippers to their delivery network.

nommm-nommm 10y ago
I thought "seller-fulfilled prime" was just the seller shipping however they want as long as it was comparable to prime in shipping time. But only select sellers will be offered this.

mattmanser 10y ago

It is impressive. Do you think there's a chance of decline if Bezos leaves and the next Ballmer comes along? Profits up, but ultimately company declines and lets competitors eat it's lunch?

ra1n85 10y ago
I don't. Amazon is successful because of its fast moving, demanding culture. No product is ever left to coast - everyone is pushed to be bigger, faster, cheaper, etc. Amazon realizes this, and does a lot to reinforce its culture internally. They do an excellent job of this, even in remote offices. I think Bezos has done a terrific job of building something that will succeed without him. And that's a good thing for him - he's free to play with space travel, now.
pm90 10y ago
That risk will always be there. But it seems like he has built a culture that will allow it to continue onward. If you think about it, Bezos is not like Jobs, where the latter had an outsized impact on deciding what things Apple would or would not make.
skipants 10y ago
Are you sure this isn't purely a perceived decline? Microsoft's stock is the highest it's ever been and they made a profit of $52B in their last fiscal year.
- Infinitesimus 10y ago
  I think that's mattmanser point. Profits look great and the stock price is happy, but mindshare in the consumer space, and perceived innovative edge (see the huge miss on phones)
  - mattmanser 10y ago
    Yes, definitely still a great company, but they've lost their complete dominance.
- jlmorton 10y ago
  They made $16.7 billion in their last fiscal year, and 2015 and 2016 represented their lowest profits over the past 10 years.
  - oblio 10y ago
    Low profits tend to happen in the first years of a transition to subscription. See Adobe for another example.
  - adventured 10y ago
    You're using a non-recurring charge to try to make a wider point. 2015 had a $10 billion non-recurring, non-cash charge. Without that, your entire premise collapses. The easiest way to poke a giant hole in what you're proposing, is to look at cash production from operations, which is the ultimate gauge of profitability. Their cash production the last two years is not the lowest over the past 10 years. Net operating cash flow for 2016: $33 billion. Higher than 2015, 2014, 2013, 2012.
    - jlmorton 10y ago
mabbo 10y ago
The culture is really pervasive at Amazon. Bezos started it, but now that the pinwheel is spinning, he doesn't need to do much to keep it going. His major replacement potentials are Andrew Jassy (AWS CEO) and Jeff Wilke (CEO of Consumer, ie e-commerce and logistics). Both of those guys have done a fantastic jobs in the business they are in. I don't think Amazon would want to pull either of them into a roll of owning both though, lest they lose focus. I suspect they'd break them off as separate sub-companies (like Alphabet/Google did), and put someone else as the CEO of the overarching company.

NicoJuicy 10y ago

But their core business ( selling products online) is selling too much counterfeit products ( as mentioned here). But if the sales on Amazon would collapse, in an instant it would all be gone... ( except AWS) PS. Don't know why i'm getting downvoted..

mabbo 10y ago
I remember reading one of the quarterly earnings reports last year. It said: Amazon as a whole (including AWS) made $500m that quarter. It also said that AWS made $600m that quarter. What this means is that everything Amazon does that is not AWS lost $100m in a quarter. If you reduce the size of that, Amazon will make more money.

ehsankia 10y ago

The breadth they are reaching really is impressive. The only other company which can really be compared with is Google and Microsoft. So far, Google's relationship with Amazon has been very weird, I'm curious to see how it evolves over time.

oblio 10y ago
Let's not kid ourselves. Samsung and the other Korean chaebols, Mitsubishi and the Japanese keiretsus or even 3M have at least similar breadth.
- JBReefer 10y ago
  Absolutely, but those are rarely discussed. I don't really get why, all of the firms you listed are incredible.
  - 794CD01 10y ago
    Probably because you only hang out on english-language forums full of people with similar views to your own.
- adventured 10y ago
  Amazon is ~24 years old and already larger than all of them except Samsung (which they'll catch soon enough). For example, Amazon is drastically larger than 3M. Four times the market cap, four times the sales. Not to mention 3M's business has been contracting for years, meanwhile Amazon is full speed ahead. So that gap will grow dramatically in just a few years. Amazon will hit $200 billion in sales in a few years, while 3M will have seen zero growth (Amazon will be 7x larger then). Your comparison doesn't make much sense today. It'll make zero sense tomorrow. Samsung is the sole company in that group that will be comparable in just three or four more years.
  - oblio 10y ago
    You've only nitpicked 3M out of the group. Go look up some figures for the chaebol and the keiretsu ;)

zeteo 10y ago

What people also don't seem to realize is that the US has serious anti-monopoly laws on the books (even if enforcement has been kinda lax lately). Remember Microsoft in the 90s? With Amazon running many competitors' infrastructure (e.g. Netflix is on AWS, FBA shenanigans etc.) I wouldn't be surprised if it got hit with some legal action aimed at breaking it up at this point.

milesward 10y ago
Does monopoly law apply when they have healthy competitors in every sector? This has seemed to be the escape hatch for the large tech companies: go do everything, not just eat one sector.
tribune 10y ago
There is still real competition in the cloud computing space, though. Plus, it's a hard sell that Amazon has done anything with AWS that is anti-consumer or monopolistic. The benefits to consumers are clear, and I don't think there's any reason for regulators to come after them right now.
smallnamespace 10y ago
One area where anti-monopoly law seems vague to me: does law clearly define what a market is? Like, MS got hit for leveraging their 'OS market' monopoly to break into the 'browser market', even though they are both pieces of software. If you draw distinct markets aggressively enough, then everything is its own market and many companies are monopolists in their own narrow niche. Also, what if technological changes turn two originally separate markets into a unified entity -- should it be anticompetitive if a monopolist does that?
- deleted 10y ago
  [deleted]
- dangrossman 10y ago
  This wiki article does a pretty good job at explaining how the "relevant market" gets determined in competition law: https://en.wikipedia.org/wiki/Relevant_market#Definition_and_use https://en.wikipedia.org/wiki/Relevant_market#Definition_and...

chrisper 10y ago

You forgot their own semi trucks and the Amazon Original Shows!

replicatorblog 10y ago

100%. It's also arguably the most irreplaceable. Just go through the thought exercise of imagining if a big tech company just vanished overnight. We'd all remember what they did and how the services work so companies could try to recreate the value proposition. This is how I imagine it playing out among the "Big 4." Apple: If Apple vanished tomorrow I could get an Android phone that lacked some of the polish of iOS, but my day-to-day would be largely unchanged. Their laptops are still the best IMO, but could deal with a Lenovo if needed. Google: Bing is fine. There are no shortage of online collaboration tools. Their dominance in AI is impressive, but it's not hard to imagine Microsoft reasserting themselves in Google's absence. Self-driving cars and life extension startups are well-capitalized. Their services are amazing, but not unique. Facebook: Social media will find a way. If FB vaporized, something would fill the gap. Twitter would be given a new lease on life. Amazon: It's almost impossible to imagine any company filling the gap they would leave. Who has the tech chops, willingness to deal with the grimy logistics and poor margins of retail, build out the cap ex of distribution, and deal with the politics of it all. Amazon is the most untouchable, irreplaceable company in tech. If I had to bet on one of these four companies existing 100 years from now it would be Amazon without question.

Gelob 10y ago
Walmart
- hacknat 10y ago
  Walmart is going to build the largest hosting company in the world?
  - ajamesm 10y ago
    If you're a tech company, and your stack is so tightly coupled to Amazon that it represents an existential threat to your server fleet, you were never going to make it anyway.
    - hacknat 10y ago

Pigo 10y ago

Do you own any Amazon stock after having worked there for that period of time? I'm not a finance guy, at all, but that's the one company I've always considered putting a couple bills into and root for. Queue someone telling me how awful an idea that is, and to just keep throwing into my 401K...

mabbo 10y ago
> Do you own any Amazon stock after having worked there for that period of time Amazon pays SDEs about 1/4 of their income in the form of RSUs, vesting twice a year. I joined at $187, and sold my shares over time to cover various expenses (wedding, house downpayment, sold the last ones for an upcoming kitchen renovation). > Queue someone telling me how awful an idea that is, and to just keep throwing into my 401K Here's the thing... when you buy and sell stocks directly, you are implicitly competing with professionals at the game of 'what is the stock actually worth?'. The professionals you play against do nothing all day but analyze the stocks they've made bets on, build models, look at data, read reports. You might beat them by luck in the short term, but they'll beat you in the long-term at this game. You're both gambling, but they know the true odds better than you do. My recommendation: Use a robo-advisor to spread your money over a diverse set of ETFs and auto-rebalance them. My friends are early employees over at WealthSimple (google them), a start-up that does this. Or read what it is their robo-advisor does, and do that yourself to save the 0.5% fee.
- prdonahue 10y ago
  0.50% (50 bps) is excessive. If you don't want to do yourself but still want the benefits of rebalancing (and tax-loss harvesting), suggest checking out Wealthfront (https://www.wealthfront.com/ https://www.wealthfront.com/) instead.
  - mabbo 10y ago
    It's high for America, low for Canada. Afaik, WealthFront haven't opened a Canadian arm yet, while Simple are based here.
- 10y ago

adamsea 10y ago

This was not mentioned in the article, but I'd say this puts Amazon at the forefront of the issue of the disappearing "good job" in America ... as you mention, Amazon prefers contractors over employees.

91bananas 10y ago
Maybe for "unskilled labor" but I don't believe that to be true for engineering talent?

powera 10y ago

Compare that to Berkshire Hathaway rather than to GOOG/FB and it's not quite as impressive.

hourislate 10y ago

Interesting points and Amazon is a great company not disputing that but the older I get the less I want. My spending on Amazon has fallen over the last 18 years to so little I am thinking about dropping Prime. AWS is in a competitive market with Google, MS, etc. Logistics are more self serving for Amazon in my opinion. I'm under the impression their planes are used to move fright between US Hubs and maybe to bring higher dollar freight from China instead of 2 weeks on the water. Walmart already leases (and has for years) it's own container ship. It's on a 1 month month cycle out of China. Container ships typically sail out every Friday night out of China. Spend two weeks loading and 12 days on the water to US and Canadian ports. So Walmart still uses others to ship freight. The last mile for delivery is also competitive, USPS, UPS, FEDEX, DHL, etc, aren't going to sit still. Trucking is incredibly competitive industry. Most fright moves by rail coast to coast with trucks picking up at regional terminals. There is still a lot of long haul but it's more expensive. A full 52ft trailer from NY to TX can run around $1700, it's the LTL where most Truckers make their money. I was under the impression that Amazon leased trailers and didn't lease any tractors. Giving private operators contracts to haul. No cash register stores might be a hit with some folks but price is really important to a lot of America if you have a family. I also wonder if RFID ink could be used for bar codes where you just push your cart through a reader portal and it scans the whole cart at once. No lines and seconds to check out with just the bagging to do. I appreciate what Amazon has done. They basically made anyone they compete with become more efficient. Quite the driving force and fantastic for the consumer. Lets hope they continue.

zouhair 10y ago

You say it in a tongue and cheek manner but I feel letting corporations getting this big is quite dangerous and will be the death of democracy.

bogomipz 10y ago

>"I've said before on hackernews, but people never seem to grasp the scope of Amazon. They aren't an e-commerce website anymore; that's just the tip of the iceberg" I don't think this is some kind of special perspective that you have from working there. I think people seem to grasp their ambitions pretty well. Their fleet of planes, the delivery drones for last mile, Alexa, Prime Pantry, AWS etc, all of these developments have received good coverage in mainstream media.

jd20 10y ago

My vote would've been "US Robotics" from "I, Robot". They have arguably the best virtual assistant on the market, Alexa. Paired with their expertise in automation, I'm imagining a future where Amazon robots would do the vacuuming, wash dishes, and do my laundry. (And of course order more cleaning supplies from Amazon, when I get low.)