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I often wonder what the story of Sears means for Amazon. I think at first, my thinking was that what did Sears in was not noticing the shift to e-commerce like

I often wonder what the story of Sears means for Amazon. I think at first, my thinking was that what did Sears in was not noticing the shift to e-commerce like Amazon did, and that to unseat Amazon, it will take another shift that an upstart sees that they don't. Then however, I start to wonder what shift might that be? Voice assistants, it seems like Amazon is leading the way, not that it will be taken by surprise. Logistics? Seems like they are a logistics first company. I guess I can't see the future though, like everyone else. I think for now I've settled on that the similarities are just that, similarities. Two things with some common history don't have to share the same fate. And looking for lessons in the history of one to apply to the other might be more of a false equivocation than we think. The times are fundamentally different, so perhaps though their stories echo each other, they are fundamentally different companies.

mercer 9y ago
Yeah, I'm usually pretty quick with my upvote, even for articles that appear interesting at a glance, or articles that might spark interesting conversation, but I didn't do upvote this article. While I found it okay to read, the comparison between Amazon and Sears, fundamental to the whole thing, just feels like too much of a stretch to me. I think the comparison between car insurance and AWS was the breaking point for me.
germinalphrase 9y ago
Probably reliant on a fundamentally new platform(?). If we do end up with a rich AR world (a la Rainbows End), perhaps it will simply be an instant purchase based on lived context (e.g. Run out of something? Instant order. See something you like? Instant order.) That said, seems surprising that Amazon would miss that boat.
- angus-prune 9y ago
  I think you're right that Amazon won't miss this boat (but someone might be able to do it better than them). Amazon are already looking at printing instant-order dash buttons directly on products. I think the things that could threaten amazon's core business one day are: 3D printing. Whether the designs are free or paid for, its not a given that you'll buy the designs through Amazon. You might get the filament through them, but that's a fraction of the value they currently capture. Sharing, rental and communal ownership. Many of the things I buy from Amazon are never used full time. Whether at a local or national scale the norm could shift to communal resources rather than private ownership. Particularly as city apartments get smaller and have less storage. Direct ordering from China or other producers. Amazon have already lost this to alibaba. If we started ordering more everyday things direct, this could hit Amazon. Full AI Ascension. If we completely leave corporeal existence behind, it would put a dent in Amazon's business. Although, on second thoughts, we'd probably be running on AWS...
  - petra 9y ago
    I would add: airbnb like model for warehousing/fullfilment, for capital efficiency and closeness to customers. In Europe: China's railway project. Control of self-driving vehicles by Google for a few years , and insistence they'd be used to build a competitive network against Amazon.
  - shimon 9y ago
    This is a good list. But I'm wondering what makes you think Amazon has lost direct ordering from China to Alibaba? Amazon makes this process pretty smooth, where a Chinese vendor can directly compete alongside other marketplace sellers. For Alibaba, on the other hand, you're going to a special site based on the expectation of getting cheap stuff from China. This means that at least for me, most of my direct-from-China purchases have been from Amazon. Though I'm also often happy to pay a little extra for FBA, which also seems like a great way to maximize value for both consumers and Chinese manufs.
  - gscott 9y ago
    It is so much cheaper to ship an item from China then from within the United States. Shipping is subsidized in China and then the US Post Office will take the item and deliver it the rest of the way for free. If I can wait 4 weeks for an item I try and buy direct from China.
  - octaveguin 9y ago
    There are more mundane ends to Amazon possible. 1. If shareholders turn on the company for some reason, it could cause a chain reaction as the margins are so thin and operations costs growing. Normal tech companies are more insulated from these kinds of problems as they don't require physical assets like traditional companies and take extremely healthy margins. Amazon is balanced on a knife's edge, financially. 2. Actions by the US government could also be a threat worth considering as Amazon is a monopoly now. It currently is thought to not hurt the consumer. At the same time, the value in Amazon is the thought that they could 'turn on the profit faucet anytime' but when that happens, they'll almost certainly not be good for the consumer. 3. Jeff Bezos is also a single point of failure. He's amazing but probably still mortal. Amazon might not weather his absence well.
yourapostasy 9y ago
The article didn't mention that Sears almost sunk itself with overwhelming logistical challenges in the early mail order days. It was a close call; if they didn't get a handle on those challenges back then, the capital inefficiencies would have erased them. This article alludes to the problems [1], but there was one article I can't find now that gave some specific examples of the astounding inefficiencies they successfully grappled with. When starting, it was far from obvious that mail order would succeed, just like it was far from obvious that general retailing over the Net would be successful in many categories when Amazon started. > Then however, I start to wonder what shift might that be? Not possible, but what I would like to see as a shift: Much deeper logistical integration with stakeholders that involve sophisticated, complex, ever-evolving, and hard-to-impossible-to-reproduce trust relationships between manufacturers, the retailer, the transport infrastructure the retailer depends upon, and the end-consumer. Turns the Net retailer into an end-consumer's direct-from-producer supply chain manager, cut out vast swathes of distribution middle layers, and pass savings directly to the end-consumer, in exchange for embedded preferences shared by the end-consumer over a long period of time (decades). There is yet to emerge a retailer I would trust with sufficient monitoring capabilities to deeply embed within my household, auto-manage all the various supplies, lifting the cognitive load of that aspect of household management. Even if one did emerge, they wouldn't have the history established that I would trust they wouldn't change to monetize that trust later on, because existing incentive structures make that trust very difficult to maintain. On a concrete scale, I'd be happy to establish that kind of relationship to auto-monitor and auto-order direct from producers various groceries and consumables, for example. And let machine learning pick up enough data from my habits to establish my preferred level of BIFL-ness/value/zero-wastage (or other quality axes), combining with others in my same selection criteria strata to crowdsource the selection results, and auto-suggest best-fit matches, with accompanying explanations, reviews, and historical reviews (an area Amazon currently has a gap at systematizing---very difficult to find out how many products do over long periods of time). For the producer and retailer, this shifts constant fighting for consumer attention to a vast steady demand that they can plan around and address in many ways logistically; if a producer knew the consumer trusted the product that came in the package was X brand dishwasher soap for example, then the packaging can be plain, completely recyclable, and perhaps even reusable, and even delivery routes can be optimized. However, the way the market currently structures incentives, many metrics are excessively gamed by the producers or it outright goes-to-the-highest-bidder, or producers and retailers work together to dilute initially-high-quality offerings over time. The Holy Grail of many marketing execs is this kind of locked-in preference that simply exists as a consumer's background radiation; I'd be happy to play along with that for specific strata of quality metrics, for an expressed explicit profit margin granted to that supply chain, if I knew I wouldn't get fleeced over time. [1] http://www.searsarchives.com/history/history1900s.htm http://www.searsarchives.com/history/history1900s.htm
stcredzero 9y ago
Logistics? Seems like they are a logistics first company. Perhaps we should be looking at logistics companies instead of retail companies as a model. (P.S. "False equivocation" is a tautology. http://www.dictionary.com/browse/equivocation http://www.dictionary.com/browse/equivocation )
- gorpomon 9y ago
  You learn something every day, thanks!
all_blue_chucks 9y ago
Amazon is actually obsessed with NOT becoming Sears. Internally, companies like Sears are referred to as "Day 2 companies." Day 2 companies are trying to maintain the status quo. Day 1 companies, like Amazon, are constantly trying to be disruptive and innovative. Being called "Day 2" is one of the worst insults within Amazon.
- lovemenot 9y ago
  So if and when Amazon is blindsided, their disruptor may come from such a derided direction? The only constant is change. Until it isn't. More likely though, Amazon gets complacent eventually.
- albertgoeswoof 9y ago
  There will be a day 0 company along soon enough, there always is

mercer 9y ago

Yeah, I'm usually pretty quick with my upvote, even for articles that appear interesting at a glance, or articles that might spark interesting conversation, but I didn't do upvote this article. While I found it okay to read, the comparison between Amazon and Sears, fundamental to the whole thing, just feels like too much of a stretch to me. I think the comparison between car insurance and AWS was the breaking point for me.

germinalphrase 9y ago

Probably reliant on a fundamentally new platform(?). If we do end up with a rich AR world (a la Rainbows End), perhaps it will simply be an instant purchase based on lived context (e.g. Run out of something? Instant order. See something you like? Instant order.) That said, seems surprising that Amazon would miss that boat.

angus-prune 9y ago
I think you're right that Amazon won't miss this boat (but someone might be able to do it better than them). Amazon are already looking at printing instant-order dash buttons directly on products. I think the things that could threaten amazon's core business one day are: 3D printing. Whether the designs are free or paid for, its not a given that you'll buy the designs through Amazon. You might get the filament through them, but that's a fraction of the value they currently capture. Sharing, rental and communal ownership. Many of the things I buy from Amazon are never used full time. Whether at a local or national scale the norm could shift to communal resources rather than private ownership. Particularly as city apartments get smaller and have less storage. Direct ordering from China or other producers. Amazon have already lost this to alibaba. If we started ordering more everyday things direct, this could hit Amazon. Full AI Ascension. If we completely leave corporeal existence behind, it would put a dent in Amazon's business. Although, on second thoughts, we'd probably be running on AWS...
- petra 9y ago
  I would add: airbnb like model for warehousing/fullfilment, for capital efficiency and closeness to customers. In Europe: China's railway project. Control of self-driving vehicles by Google for a few years , and insistence they'd be used to build a competitive network against Amazon.
- shimon 9y ago
  This is a good list. But I'm wondering what makes you think Amazon has lost direct ordering from China to Alibaba? Amazon makes this process pretty smooth, where a Chinese vendor can directly compete alongside other marketplace sellers. For Alibaba, on the other hand, you're going to a special site based on the expectation of getting cheap stuff from China. This means that at least for me, most of my direct-from-China purchases have been from Amazon. Though I'm also often happy to pay a little extra for FBA, which also seems like a great way to maximize value for both consumers and Chinese manufs.
- gscott 9y ago
  It is so much cheaper to ship an item from China then from within the United States. Shipping is subsidized in China and then the US Post Office will take the item and deliver it the rest of the way for free. If I can wait 4 weeks for an item I try and buy direct from China.
- octaveguin 9y ago
  There are more mundane ends to Amazon possible. 1. If shareholders turn on the company for some reason, it could cause a chain reaction as the margins are so thin and operations costs growing. Normal tech companies are more insulated from these kinds of problems as they don't require physical assets like traditional companies and take extremely healthy margins. Amazon is balanced on a knife's edge, financially. 2. Actions by the US government could also be a threat worth considering as Amazon is a monopoly now. It currently is thought to not hurt the consumer. At the same time, the value in Amazon is the thought that they could 'turn on the profit faucet anytime' but when that happens, they'll almost certainly not be good for the consumer. 3. Jeff Bezos is also a single point of failure. He's amazing but probably still mortal. Amazon might not weather his absence well.

yourapostasy 9y ago

The article didn't mention that Sears almost sunk itself with overwhelming logistical challenges in the early mail order days. It was a close call; if they didn't get a handle on those challenges back then, the capital inefficiencies would have erased them. This article alludes to the problems [1], but there was one article I can't find now that gave some specific examples of the astounding inefficiencies they successfully grappled with. When starting, it was far from obvious that mail order would succeed, just like it was far from obvious that general retailing over the Net would be successful in many categories when Amazon started. > Then however, I start to wonder what shift might that be? Not possible, but what I would like to see as a shift: Much deeper logistical integration with stakeholders that involve sophisticated, complex, ever-evolving, and hard-to-impossible-to-reproduce trust relationships between manufacturers, the retailer, the transport infrastructure the retailer depends upon, and the end-consumer. Turns the Net retailer into an end-consumer's direct-from-producer supply chain manager, cut out vast swathes of distribution middle layers, and pass savings directly to the end-consumer, in exchange for embedded preferences shared by the end-consumer over a long period of time (decades). There is yet to emerge a retailer I would trust with sufficient monitoring capabilities to deeply embed within my household, auto-manage all the various supplies, lifting the cognitive load of that aspect of household management. Even if one did emerge, they wouldn't have the history established that I would trust they wouldn't change to monetize that trust later on, because existing incentive structures make that trust very difficult to maintain. On a concrete scale, I'd be happy to establish that kind of relationship to auto-monitor and auto-order direct from producers various groceries and consumables, for example. And let machine learning pick up enough data from my habits to establish my preferred level of BIFL-ness/value/zero-wastage (or other quality axes), combining with others in my same selection criteria strata to crowdsource the selection results, and auto-suggest best-fit matches, with accompanying explanations, reviews, and historical reviews (an area Amazon currently has a gap at systematizing---very difficult to find out how many products do over long periods of time). For the producer and retailer, this shifts constant fighting for consumer attention to a vast steady demand that they can plan around and address in many ways logistically; if a producer knew the consumer trusted the product that came in the package was X brand dishwasher soap for example, then the packaging can be plain, completely recyclable, and perhaps even reusable, and even delivery routes can be optimized. However, the way the market currently structures incentives, many metrics are excessively gamed by the producers or it outright goes-to-the-highest-bidder, or producers and retailers work together to dilute initially-high-quality offerings over time. The Holy Grail of many marketing execs is this kind of locked-in preference that simply exists as a consumer's background radiation; I'd be happy to play along with that for specific strata of quality metrics, for an expressed explicit profit margin granted to that supply chain, if I knew I wouldn't get fleeced over time. [1] http://www.searsarchives.com/history/history1900s.htm http://www.searsarchives.com/history/history1900s.htm

stcredzero 9y ago

Logistics? Seems like they are a logistics first company. Perhaps we should be looking at logistics companies instead of retail companies as a model. (P.S. "False equivocation" is a tautology. http://www.dictionary.com/browse/equivocation http://www.dictionary.com/browse/equivocation )

gorpomon 9y ago
You learn something every day, thanks!

all_blue_chucks 9y ago

Amazon is actually obsessed with NOT becoming Sears. Internally, companies like Sears are referred to as "Day 2 companies." Day 2 companies are trying to maintain the status quo. Day 1 companies, like Amazon, are constantly trying to be disruptive and innovative. Being called "Day 2" is one of the worst insults within Amazon.

lovemenot 9y ago
So if and when Amazon is blindsided, their disruptor may come from such a derided direction? The only constant is change. Until it isn't. More likely though, Amazon gets complacent eventually.
albertgoeswoof 9y ago
There will be a day 0 company along soon enough, there always is