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The product is still taking up their limited shelf space so it's in their best interest to see it get moved. Amazon made their business on the long tail of prod

by m_ke 7y ago

The product is still taking up their limited shelf space so it's in their best interest to see it get moved. Amazon made their business on the long tail of products that rarely get bought but in aggregate add up to a large portion of total sales because they don't have the same physical constraints.

toasterlovin 7y ago
Amazon also has an equivalent of shelf space: search results. They are just as incentivized to maximize revenue per customer search as super markets are incentivized to maximize revenue per shelf space.
- infogulch 7y ago
  Search results are an interesting comparison because their consumer-facing functionality is the same: They both have some limited consumer attention while they are present, and they both want to guide that attention to products that make them more profitable. Except the analogy falls flat when you actually compare the implementation: Amazon's costs to host listings is negligible to negative (they may get more value from having extra listings than it costs to serve them), but that is far from true for grocery stores. Grocery stores have a very small, finite, shelf space compared to Amazon; you can put a lot of items in the "..." after page 3, but grocery stores have to expend labor to count and organize each item at least once a month. Yes stores may be able to return non-selling items for a refund, but do you think it cost them nothing while it was sitting on the shelf? What about the labor of stocking them, cleaning them, heck even packing them back up to return? On Amazon anything that doesn't sell well automagically gets shunted into the depths of page 10+, and they can keep them there indefinitely, at no cost. Stores have a fixed cost associated with every item stocked, this gives them an inventive to sell every item they stock even if they prefer to sell some items over others. But they still want to sell it, even in they have to discount it by huge margins to get rid of it. By contrast Amazon doesn't give a piss about any one of your items in particular getting sold, it can stay there forever as far as they're concerned. I like to say, a sufficiently large quantitative change manifests as a qualitative change. By that, I mean yes the only "real" difference between these scenarios is some of the costs are different, but how those costs become incentives when you have multiple parties actually matters.
  - toasterlovin 7y ago
    I agree that online retailing is fundamentally different, overall. But it is similar in a way that was relevant to the comment I was responding to: Amazon also has an incentive to optimize search results do sales revenue.

by m_ke 7y ago

toasterlovin 7y ago

Amazon also has an equivalent of shelf space: search results. They are just as incentivized to maximize revenue per customer search as super markets are incentivized to maximize revenue per shelf space.

infogulch 7y ago
Search results are an interesting comparison because their consumer-facing functionality is the same: They both have some limited consumer attention while they are present, and they both want to guide that attention to products that make them more profitable. Except the analogy falls flat when you actually compare the implementation: Amazon's costs to host listings is negligible to negative (they may get more value from having extra listings than it costs to serve them), but that is far from true for grocery stores. Grocery stores have a very small, finite, shelf space compared to Amazon; you can put a lot of items in the "..." after page 3, but grocery stores have to expend labor to count and organize each item at least once a month. Yes stores may be able to return non-selling items for a refund, but do you think it cost them nothing while it was sitting on the shelf? What about the labor of stocking them, cleaning them, heck even packing them back up to return? On Amazon anything that doesn't sell well automagically gets shunted into the depths of page 10+, and they can keep them there indefinitely, at no cost. Stores have a fixed cost associated with every item stocked, this gives them an inventive to sell every item they stock even if they prefer to sell some items over others. But they still want to sell it, even in they have to discount it by huge margins to get rid of it. By contrast Amazon doesn't give a piss about any one of your items in particular getting sold, it can stay there forever as far as they're concerned. I like to say, a sufficiently large quantitative change manifests as a qualitative change. By that, I mean yes the only "real" difference between these scenarios is some of the costs are different, but how those costs become incentives when you have multiple parties actually matters.
- toasterlovin 7y ago
  I agree that online retailing is fundamentally different, overall. But it is similar in a way that was relevant to the comment I was responding to: Amazon also has an incentive to optimize search results do sales revenue.