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You missed the whole point of my post. I said specifically said Amazon's moats have nothing to do with things like 2-day shipping, which are easily copied. The

You missed the whole point of my post. I said specifically said Amazon's moats have nothing to do with things like 2-day shipping, which are easily copied. The FBA program, as one example, allows any Amazon seller to ship product to Amazon's warehouse, and then have that product be eligible for 2-day (or faster) shipping - with zero effort (and unbeatable fulfillment fees). That program - and the dozens of others like it - will be extraordinarily difficult to copy.

SomeStupidPoint 9y ago
Why would FBA be hard to copy for someone like Walmart that already has the warehouse infrastructure receiving products from different suppliers? It sounds like it's literally just having a corner of the warehouse for their stuff, and applying the same shipping mechanisms already in place in the warehouse. The hardest part would be the interface for the merchants, but even then, Walmart would have most of that in place for tracking their own inventories and interacting with suppliers. I think setting up the infrastructure for 2-Day shipping is harder than the merchant backend for supplying you with items to ship. Of course, Walmart already has 2-Day shipping on selected partner reseller accounts via the marketplace, so I'm not sure why you think they don't already have an FBA equivalent -- they're just smarter than Amazon about brand protection. Which is what Amazon has blundered on, badly: they've created a lot of "Day 2" features that are clearly anti-consumer and it's tarnishing their brand, even as many of their metrics look good. Further, they've taken on a lot of the same anti-employee and anti-small-merchant measures that people dislike Walmart for. That behavior loses them their real moats: customer trust and behavior distinguishers. If Amazon is just a Walmart with the reputation of AliExpress, why wouldn't I just buy off WalMart's website?
- lkbm 9y ago
  > Which is what Amazon has blundered on, badly: they've created a lot of "Day 2" features that are clearly anti-consumer and it's tarnishing their brand, even as many of their metrics look good. Can you clarify what this means / give some examples of what you're referring to? I'm not sure what would a consumer-facing day 2 feature would be other than returns or shipment tracking, which I think they handle well--but I also just learned the term after looking it up upon reading your comment. :-)
  - SomeStupidPoint 9y ago
    It's using the language from the Bezos shareholder letter [0]. I recommend reading it, because I think the vision for how to run a company is very good, even if Amazon isn't living up to it. Returns and shipping aren't "Day 2" features necessarily -- they can be part of a "Day 1" company. Rather, my complaint is that Amazon has created programs like Fulfilled-by-Amazon (FBA) and Featured-Merchant-Algorithm (FMA) that are poorly implemented and anti-consumer: 1. Co-mingled inventories are a fundamentally anti-consumer feature, because they violate consumer control and mean that bad actors can impact the experience of buying from good actors, which undermines consumer trust. The only purpose it serves is simplifying the logistical problem for Amazon. The reason Amazon thinks this is a good idea is because they have converted to data-as-proxy thinking, where they no longer holistically understand consumer needs, they only optimize proxy values like delivery speed. The whole feature reeks of abandonment of Amazon's leadership principles [1] in order to optimize performance metrics. That's "Day 2" thinking in a nutshell. 2. The FMA is similarly problematic because of the fact it essentially hides a vital decision about purchasing from the consumer, and forces buying on Amazon to feel adversarial -- I have to doublecheck that Amazon isn't sending my business to a fraudster and they make it hard for me to control that, except for a small box I have to check every time. Here, Amazon failed to advance the market with new and innovative consumer tools that would allow customers to help police the market (eg, by crowdsourcing an optional fraudster blacklist). That kind of "Well, the data tells the whole story, let's just optimize our metrics" with opaque algorithms is a very "Day 2" way of doing business -- a failure to innovate is stagnation. I could go on about these for a while, but the entire design of the Amazon marketplace is a stagnant mess -- it's no longer innovative, and their reliance on optimization to metrics has allowed people to game them, turning it into a quagmire of people trying to cheat the system (counterfeit, bought reviews, etc). Amazon is devolving into a mess of their own making, by operating in a "Day 2" paradigm, rather than innovating solutions to hard problems. [0] https://www.sec.gov/Archives/edgar/data/1018724/000119312517120198/d373368dex991.htm https://www.sec.gov/Archives/edgar/data/1018724/000119312517... [1] https://www.amazon.jobs/principles https://www.amazon.jobs/principles
jjeaff 9y ago
I really don't think it would be that hard to copy. There are plenty of fulfillment centers out there already that offer similar services, API and all. Walmart could simply buy them and integrate with their own warehousing network and have Amazon outmatched in terms of facilities in a rather short period of time. Amazon didn't invent the 3rd party warehouse idea. They were just the first 3p marketplace to offer it as an added value service.
- zkanter 9y ago
  There are ~2 million FBA sellers and roughly 42 million Prime-eligible SKUs - hundreds of thousands of inbound shipments. You can't just buy a couple of fulfillment centers (with their homegrown WMS software) and be off to the races. For comparison, your average Wal-Mart distribution center has ~100k SKUs and one 'user' (Wal-Mart).
  - Alupis 9y ago
    WalMart's marketplace (3rd part sellers) is just getting off the ground. Give it time... FBA is not a complicated beast like you make it out to be. As the Parent correctly pointed out, there's a plethora of companies that do nothing except fulfillment for distributors. There's nothing "hard" about copying the FBA model. > For comparison, your average Wal-Mart distribution center has ~100k SKUs and one 'user' (Wal-Mart) You seem to be deliberately comparing apples and oranges here. You claim Amazon has 42 million Prime-eligible SKU's, and them compare that to how many SKU's exist in an average Walmart warehouse... forgetting that Prime-eligible SKU's don't all reside in Amazon warehouses... a 3rd party seller can warehouse that inventory on their own. You also don't state how many warehouses Amazon has, nor the average number of SKU's in their warehouses, nor how many warehouses Walmart has, nor account for Walmart stores that serve dual purpose as warehouses. That makes your comparison useless, really. At a point, it becomes sub-optimal to store more SKU's in a single warehouse, so they open a new distribution center and shuffle products around based on expected demand in the region (closer warehouse to the customer means faster delivery at less expense).
    - zkanter 9y ago
martin1975 9y ago
No it won't, Walmart already has distribution centers galore and the $ to buy more. They do lack an external seller platform, and maybe that's not such a bad idea with the amount of fake crap one could get through Amazon...
- athenot 9y ago
  Walmart already has an external seller program. Search for specialty/niche items on their site, and most of the time it's fulfilled by their "marketplace" sellers. https://marketplace.walmart.com https://marketplace.walmart.com
leggomylibro 9y ago
Exactly - and while that low barrier of entry gives Amazon a significant problem with fraudulent items and listings of dubious quality, it also adds a ton of breadth to the marketplace and makes something that actually lives up to the phrase, "The Everything Store." As an example, I found myself in the market for a laser cutter recently. Consumer entries start in the low/mid 4-figures, and Glowforge doesn't appear to be right around the corner. So I figure, the best bang-for-your-buck option is to buy a cheap Chinese model and swap out the cruddy bits. Now where am I going to get a cheap Chinese laser cutter, a nice open-source CNC controller board, and if things go hooey-shaped, a more robust power supply, ventilation, and/or cooling system? Walmart? No, the alternatives to something like that are more along the lines of ebay. The turnaround time would be significant, and I'd still have to vet all of the listings I consider to hopefully avoid fakes. Ditto for AliExpress, and double for TaoBao. Amazon offers prime shipping on most of those items, though, and they have a decent returns policy to boot. The breadth of their catalog is nothing to sneeze at.
- MR4D 9y ago
  Great post! Seems like Walmart should consider buying eBay if they ever want to compete.
- grogenaut 9y ago
  I would love some links on where you're doing your research on laser cutters. My wife recently suggested I buy one which is like, oh god how did this happen, I must make this happen as fast as possible before this opportunity goes away!
  - leggomylibro 9y ago
    I kind of just googled around for information; there isn't a whole lot of well-collated stuff, so I definitely could have missed a better option, but it looks like if you're not going to shell out for a very expensive commercial/industrial unit or wait <undefined> months for Glowforge, you're probably looking at a K40. There's a pretty good wiki for it on the lasercutting subreddit: https://www.reddit.com/r/lasercutting/wiki/k40 https://www.reddit.com/r/lasercutting/wiki/k40 You'll quickly notice that it's not a terribly good laser cutter, although it does come with the 40W necessary to be one and can be upgraded further. There are a variety of upgrades you'll want, but if your budget is $1K, the laser cutter itself will cost you less than half of that; they run $400-450 on ebay. So if this were a Top Gear challenge, you're sitting pretty to improve your cheap lemon with your remaining cash: * The default controller only works with Windows and the software it comes with is likely pirated. If you're used to working with 3D printers, get a RAMPS board and put Marlin or something on it. There are a few guides for going from there to more open control software, or even running off of an SD card with no PC. * Ventilation. Apparently the stock fan doesn't fit that well, and there's no system to blow debris off of the bed when a cut is in progress. That could be a fire hazard and/or bio hazard since the dust from stuff like acrylic is not good for you. * Cooling. It's water-cooled, with a small aquarium pump that you stick in a bucket of water. It looks like that's probably fine if you aren't going to run the laser constantly, but you could always get something with more flow. * Some users say that you should ground the metal housing manually with a thick strand of wire. That's a mildly worrying piece of advice. So it sounds a little hair-raising, but all in all it seems like a manageable risk, and the price is right.
gozur88 9y ago
I'm old enough to have been in the logistics industry when Walmart was king, and they said exactly the same things about Walmart - the company had the market power to force you to label your shipment a certain way, with certain bar codes, so your pallet would go straight into their system with no effort. In the end it didn't really help them when Amazon came along.
dragonsh 9y ago
@zkanter If you think Amazon cannot be beaten just see Alibaba and Chinese e-commerce eco-system almost a decade ahead of Amazon. I am sure once Alipay get listed currently private, will leave amazon far behind. Same day delivery on TMall like buy in morning get in afternoon was available 6 years ago in China. Now you can fly oysters from New Zealand, cod from U.K. and delivered to your home in 24-48 hours in China also 5 years ago. Amazon still has miles to sprint before it reaches there.
- losteric 9y ago
  The CCCP deserves most of the credit there. The reason those services exist is because China has lower wages and much higher density over wider areas. Home delivery has been available for 20 years in parts of the US, but service areas are isolated because there isn't enough demand. Prime Now is still loosing money because there aren't enough people to break even.
fgonzag 9y ago
That's exactly the program that got me off amazon. Shoddy goods, inventory commingling, and private label items. You never know what you're getting into. Not even bought "Shipped and sold by Amazon.com" items are safe now. I've cancelled my prime membership and use a variety of sites now, and I couldn't be happier.

SomeStupidPoint 9y ago

Why would FBA be hard to copy for someone like Walmart that already has the warehouse infrastructure receiving products from different suppliers? It sounds like it's literally just having a corner of the warehouse for their stuff, and applying the same shipping mechanisms already in place in the warehouse. The hardest part would be the interface for the merchants, but even then, Walmart would have most of that in place for tracking their own inventories and interacting with suppliers. I think setting up the infrastructure for 2-Day shipping is harder than the merchant backend for supplying you with items to ship. Of course, Walmart already has 2-Day shipping on selected partner reseller accounts via the marketplace, so I'm not sure why you think they don't already have an FBA equivalent -- they're just smarter than Amazon about brand protection. Which is what Amazon has blundered on, badly: they've created a lot of "Day 2" features that are clearly anti-consumer and it's tarnishing their brand, even as many of their metrics look good. Further, they've taken on a lot of the same anti-employee and anti-small-merchant measures that people dislike Walmart for. That behavior loses them their real moats: customer trust and behavior distinguishers. If Amazon is just a Walmart with the reputation of AliExpress, why wouldn't I just buy off WalMart's website?

lkbm 9y ago
> Which is what Amazon has blundered on, badly: they've created a lot of "Day 2" features that are clearly anti-consumer and it's tarnishing their brand, even as many of their metrics look good. Can you clarify what this means / give some examples of what you're referring to? I'm not sure what would a consumer-facing day 2 feature would be other than returns or shipment tracking, which I think they handle well--but I also just learned the term after looking it up upon reading your comment. :-)
- SomeStupidPoint 9y ago
  It's using the language from the Bezos shareholder letter [0]. I recommend reading it, because I think the vision for how to run a company is very good, even if Amazon isn't living up to it. Returns and shipping aren't "Day 2" features necessarily -- they can be part of a "Day 1" company. Rather, my complaint is that Amazon has created programs like Fulfilled-by-Amazon (FBA) and Featured-Merchant-Algorithm (FMA) that are poorly implemented and anti-consumer: 1. Co-mingled inventories are a fundamentally anti-consumer feature, because they violate consumer control and mean that bad actors can impact the experience of buying from good actors, which undermines consumer trust. The only purpose it serves is simplifying the logistical problem for Amazon. The reason Amazon thinks this is a good idea is because they have converted to data-as-proxy thinking, where they no longer holistically understand consumer needs, they only optimize proxy values like delivery speed. The whole feature reeks of abandonment of Amazon's leadership principles [1] in order to optimize performance metrics. That's "Day 2" thinking in a nutshell. 2. The FMA is similarly problematic because of the fact it essentially hides a vital decision about purchasing from the consumer, and forces buying on Amazon to feel adversarial -- I have to doublecheck that Amazon isn't sending my business to a fraudster and they make it hard for me to control that, except for a small box I have to check every time. Here, Amazon failed to advance the market with new and innovative consumer tools that would allow customers to help police the market (eg, by crowdsourcing an optional fraudster blacklist). That kind of "Well, the data tells the whole story, let's just optimize our metrics" with opaque algorithms is a very "Day 2" way of doing business -- a failure to innovate is stagnation. I could go on about these for a while, but the entire design of the Amazon marketplace is a stagnant mess -- it's no longer innovative, and their reliance on optimization to metrics has allowed people to game them, turning it into a quagmire of people trying to cheat the system (counterfeit, bought reviews, etc). Amazon is devolving into a mess of their own making, by operating in a "Day 2" paradigm, rather than innovating solutions to hard problems. [0] https://www.sec.gov/Archives/edgar/data/1018724/000119312517120198/d373368dex991.htm https://www.sec.gov/Archives/edgar/data/1018724/000119312517... [1] https://www.amazon.jobs/principles https://www.amazon.jobs/principles

jjeaff 9y ago

I really don't think it would be that hard to copy. There are plenty of fulfillment centers out there already that offer similar services, API and all. Walmart could simply buy them and integrate with their own warehousing network and have Amazon outmatched in terms of facilities in a rather short period of time. Amazon didn't invent the 3rd party warehouse idea. They were just the first 3p marketplace to offer it as an added value service.

zkanter 9y ago
There are ~2 million FBA sellers and roughly 42 million Prime-eligible SKUs - hundreds of thousands of inbound shipments. You can't just buy a couple of fulfillment centers (with their homegrown WMS software) and be off to the races. For comparison, your average Wal-Mart distribution center has ~100k SKUs and one 'user' (Wal-Mart).
- Alupis 9y ago
  WalMart's marketplace (3rd part sellers) is just getting off the ground. Give it time... FBA is not a complicated beast like you make it out to be. As the Parent correctly pointed out, there's a plethora of companies that do nothing except fulfillment for distributors. There's nothing "hard" about copying the FBA model. > For comparison, your average Wal-Mart distribution center has ~100k SKUs and one 'user' (Wal-Mart) You seem to be deliberately comparing apples and oranges here. You claim Amazon has 42 million Prime-eligible SKU's, and them compare that to how many SKU's exist in an average Walmart warehouse... forgetting that Prime-eligible SKU's don't all reside in Amazon warehouses... a 3rd party seller can warehouse that inventory on their own. You also don't state how many warehouses Amazon has, nor the average number of SKU's in their warehouses, nor how many warehouses Walmart has, nor account for Walmart stores that serve dual purpose as warehouses. That makes your comparison useless, really. At a point, it becomes sub-optimal to store more SKU's in a single warehouse, so they open a new distribution center and shuffle products around based on expected demand in the region (closer warehouse to the customer means faster delivery at less expense).
  - zkanter 9y ago

martin1975 9y ago

No it won't, Walmart already has distribution centers galore and the $ to buy more. They do lack an external seller platform, and maybe that's not such a bad idea with the amount of fake crap one could get through Amazon...

athenot 9y ago
Walmart already has an external seller program. Search for specialty/niche items on their site, and most of the time it's fulfilled by their "marketplace" sellers. https://marketplace.walmart.com https://marketplace.walmart.com

leggomylibro 9y ago

Exactly - and while that low barrier of entry gives Amazon a significant problem with fraudulent items and listings of dubious quality, it also adds a ton of breadth to the marketplace and makes something that actually lives up to the phrase, "The Everything Store." As an example, I found myself in the market for a laser cutter recently. Consumer entries start in the low/mid 4-figures, and Glowforge doesn't appear to be right around the corner. So I figure, the best bang-for-your-buck option is to buy a cheap Chinese model and swap out the cruddy bits. Now where am I going to get a cheap Chinese laser cutter, a nice open-source CNC controller board, and if things go hooey-shaped, a more robust power supply, ventilation, and/or cooling system? Walmart? No, the alternatives to something like that are more along the lines of ebay. The turnaround time would be significant, and I'd still have to vet all of the listings I consider to hopefully avoid fakes. Ditto for AliExpress, and double for TaoBao. Amazon offers prime shipping on most of those items, though, and they have a decent returns policy to boot. The breadth of their catalog is nothing to sneeze at.

MR4D 9y ago
Great post! Seems like Walmart should consider buying eBay if they ever want to compete.
grogenaut 9y ago
I would love some links on where you're doing your research on laser cutters. My wife recently suggested I buy one which is like, oh god how did this happen, I must make this happen as fast as possible before this opportunity goes away!
- leggomylibro 9y ago
  I kind of just googled around for information; there isn't a whole lot of well-collated stuff, so I definitely could have missed a better option, but it looks like if you're not going to shell out for a very expensive commercial/industrial unit or wait <undefined> months for Glowforge, you're probably looking at a K40. There's a pretty good wiki for it on the lasercutting subreddit: https://www.reddit.com/r/lasercutting/wiki/k40 https://www.reddit.com/r/lasercutting/wiki/k40 You'll quickly notice that it's not a terribly good laser cutter, although it does come with the 40W necessary to be one and can be upgraded further. There are a variety of upgrades you'll want, but if your budget is $1K, the laser cutter itself will cost you less than half of that; they run $400-450 on ebay. So if this were a Top Gear challenge, you're sitting pretty to improve your cheap lemon with your remaining cash: * The default controller only works with Windows and the software it comes with is likely pirated. If you're used to working with 3D printers, get a RAMPS board and put Marlin or something on it. There are a few guides for going from there to more open control software, or even running off of an SD card with no PC. * Ventilation. Apparently the stock fan doesn't fit that well, and there's no system to blow debris off of the bed when a cut is in progress. That could be a fire hazard and/or bio hazard since the dust from stuff like acrylic is not good for you. * Cooling. It's water-cooled, with a small aquarium pump that you stick in a bucket of water. It looks like that's probably fine if you aren't going to run the laser constantly, but you could always get something with more flow. * Some users say that you should ground the metal housing manually with a thick strand of wire. That's a mildly worrying piece of advice. So it sounds a little hair-raising, but all in all it seems like a manageable risk, and the price is right.

gozur88 9y ago

I'm old enough to have been in the logistics industry when Walmart was king, and they said exactly the same things about Walmart - the company had the market power to force you to label your shipment a certain way, with certain bar codes, so your pallet would go straight into their system with no effort. In the end it didn't really help them when Amazon came along.

dragonsh 9y ago

@zkanter If you think Amazon cannot be beaten just see Alibaba and Chinese e-commerce eco-system almost a decade ahead of Amazon. I am sure once Alipay get listed currently private, will leave amazon far behind. Same day delivery on TMall like buy in morning get in afternoon was available 6 years ago in China. Now you can fly oysters from New Zealand, cod from U.K. and delivered to your home in 24-48 hours in China also 5 years ago. Amazon still has miles to sprint before it reaches there.

losteric 9y ago
The CCCP deserves most of the credit there. The reason those services exist is because China has lower wages and much higher density over wider areas. Home delivery has been available for 20 years in parts of the US, but service areas are isolated because there isn't enough demand. Prime Now is still loosing money because there aren't enough people to break even.

fgonzag 9y ago

That's exactly the program that got me off amazon. Shoddy goods, inventory commingling, and private label items. You never know what you're getting into. Not even bought "Shipped and sold by Amazon.com" items are safe now. I've cancelled my prime membership and use a variety of sites now, and I couldn't be happier.