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Perhaps a silly question, but can somebody describe how they might lose $10 billion on Alexa in one year? Amazon seems to be a very poorly run company. So man

by b112 4y ago

Perhaps a silly question, but can somebody describe how they might lose $10 billion on Alexa in one year? Amazon seems to be a very poorly run company. So many issues with search, with spam, with listings, and here's another data point... Just bought a laptop. Waited until it was on sale, after doing Linux compatible research. It shows up. 3 days later, it is even more on sale. This is a product sold and shipped by amazon.com, in both cases. I contact support, and ask for a price drop refund, as there is a $150 price difference now. Nope, guy keeps linking me to "Price match" docs. I explain, I am not comparing vs another supplier, but amazon itself. I am told, just return the laptop and order it again. That there is no other option. For me, there is no return cost, other than a 5 minute detour to drop it off. Free return shipping. For them, they lose the original shipping cost, the return cost, the processing of the return, and will sell it via amazon warehouse, for a $250 price drop. I imagine that to sell a laptop via amazon warehouse, a check that it boots, a drive wipe is done, etc. This is indicative of a company incapable of handling scale correctly. Yet they blather on about loss on returns! And about return scams! And yet, I still get the laptop at the price I want. Only an insane person would act this way, and this insane act is a weird emegent behaviour at amazon. It's telling, to me. Amazon === borked

Rebelgecko 4y ago
Amazon used to be happy to price match themselves within a month or so of a purchase, or do things like let keep a cheap item you wanted to return. My guess is that they did some A/B testing and found that the "irrational" behavior actually saves them money. In your example, if 50% of people don't bother going through the return process they still come out ahead.
- kube-system 4y ago
  I bet this is actually it. I totally would ask for a price difference refund for a few bucks. But I’m not bothering with a return/repurchase for a couple dollars.
- wikfwikf 4y ago
  My guess is that they also might do market segmentation analysis to understand what type of customer you are, and this affects the return policy. For example, you consistently buy small ticket household items and rarely return anything: when you do return something they will be helpful and generous to keep you happy. You buy large amounts of fairly expensive clothes and shoes but return around 50% after trying on. They will accept the returns without issues but won't let you keep anything. You're a bargain hunter who buys expensive laptops or hard drives whenever the discounts look really good. They will make returning stuff a little harder for you since they know you don't have loyalty, and they don't want to facilitate arbitrage. Doing this is computationally no more sophisticated than the work they are already doing to detect professional scammers. They aren't supposed to show different customers different prices, but they can freely use things like this to do stealth price differentiation, since many details of how the return policy is implemented are at their discretion.
  - hotpotamus 4y ago
    Somewhat famously, Best Buy did this and differentiated customers into "Angels and Devils"[0]. I've always assumed there's some sort of credit score system built into every retailer account, and am somewhat conscious to try to keep it positive. [0]https://www.hbs.edu/faculty/Pages/item.aspx?num=32709 https://www.hbs.edu/faculty/Pages/item.aspx?num=32709
jaygreco 4y ago
Hah, this is hilarious. I just went through this 30 or so minutes ago. I explained to the CS person that I would in fact be saving money and carbon. “Nope”, he said, just go ahead and repurchase and return. Insanity. It’s tripping over dollars to save pennies.
- birdyrooster 4y ago
  It's a lack of democracy and autonomy in the workplace. This is what it looks like -- needless waste and bureaucracy.
wikfwikf 4y ago
Why do you assume that Amazon don't know what they're doing here? Although you returned the laptop, the annoying process might have discouraged many others from doing so. The shipping cost and the cost of processing the return are likely much smaller than you expect when accounted for on Amazon's scale. And by making you return and re-order, they are putting the risk on you if the laptop is not the identical product, rather than taking on the costs of administering a price drop refund themselves. Of all the things that Amazon do, analysing the game theory of customer behavior so that they can do as well as possible out of interactions like this seems like one of their biggest strengths. They certainly have thousands of skilled people working on it. As for return scams, I would not take what they say at face value. My opinion is that they have quite sophisticated models for analysing returns, both for detection (to distinguish between the behavior professional scammers and regular customers) and economically (to decide that it's cheaper to give the latter the benefit of the doubt, let them keep returned items, etc). The only flaw is if otherwise legitimate customers start to think they can get away with falsely returning 1 in 20 items or whatever. So they 'blather on' about return scams, not because they are material to their business, but to make it clear that if you cross an invisible line, they will go from not caring about your $120 air fryer that you ended up with two of, to pursuing serious legal and criminal consequences.
samsolomon 4y ago
Not sure I’m buying the argument that Amazon doesn’t know how to scale. I’ve had the exact same thing happen. Price drops after I’ve bought the product and have had to purchase the new one. I’d say that Amazon has the data to determine if it’s more profitable to give the customer a credit or have them ship and return it. So while annoying, I’d say that scale is probably why they are doing this seemingly unintuitive thing.
HDThoreaun 4y ago
They probably have evidence that enough people just drop it instead of returning that this policy saves money. Amazon employs more economics Phds than anyone but the government so I would be surprised if they hadn't studied something as fundamental as the return policy.
andsoitis 4y ago
How common of a use case do you think this is? How common do you think it needs to be for Amazon to invest in special logistics for this pattern (I.e. for it to be a net positive)?

by b112 4y ago

Rebelgecko 4y ago

Amazon used to be happy to price match themselves within a month or so of a purchase, or do things like let keep a cheap item you wanted to return. My guess is that they did some A/B testing and found that the "irrational" behavior actually saves them money. In your example, if 50% of people don't bother going through the return process they still come out ahead.

kube-system 4y ago
I bet this is actually it. I totally would ask for a price difference refund for a few bucks. But I’m not bothering with a return/repurchase for a couple dollars.
wikfwikf 4y ago
My guess is that they also might do market segmentation analysis to understand what type of customer you are, and this affects the return policy. For example, you consistently buy small ticket household items and rarely return anything: when you do return something they will be helpful and generous to keep you happy. You buy large amounts of fairly expensive clothes and shoes but return around 50% after trying on. They will accept the returns without issues but won't let you keep anything. You're a bargain hunter who buys expensive laptops or hard drives whenever the discounts look really good. They will make returning stuff a little harder for you since they know you don't have loyalty, and they don't want to facilitate arbitrage. Doing this is computationally no more sophisticated than the work they are already doing to detect professional scammers. They aren't supposed to show different customers different prices, but they can freely use things like this to do stealth price differentiation, since many details of how the return policy is implemented are at their discretion.
- hotpotamus 4y ago
  Somewhat famously, Best Buy did this and differentiated customers into "Angels and Devils"[0]. I've always assumed there's some sort of credit score system built into every retailer account, and am somewhat conscious to try to keep it positive. [0]https://www.hbs.edu/faculty/Pages/item.aspx?num=32709 https://www.hbs.edu/faculty/Pages/item.aspx?num=32709

jaygreco 4y ago

Hah, this is hilarious. I just went through this 30 or so minutes ago. I explained to the CS person that I would in fact be saving money and carbon. “Nope”, he said, just go ahead and repurchase and return. Insanity. It’s tripping over dollars to save pennies.

birdyrooster 4y ago
It's a lack of democracy and autonomy in the workplace. This is what it looks like -- needless waste and bureaucracy.

wikfwikf 4y ago

Why do you assume that Amazon don't know what they're doing here? Although you returned the laptop, the annoying process might have discouraged many others from doing so. The shipping cost and the cost of processing the return are likely much smaller than you expect when accounted for on Amazon's scale. And by making you return and re-order, they are putting the risk on you if the laptop is not the identical product, rather than taking on the costs of administering a price drop refund themselves. Of all the things that Amazon do, analysing the game theory of customer behavior so that they can do as well as possible out of interactions like this seems like one of their biggest strengths. They certainly have thousands of skilled people working on it. As for return scams, I would not take what they say at face value. My opinion is that they have quite sophisticated models for analysing returns, both for detection (to distinguish between the behavior professional scammers and regular customers) and economically (to decide that it's cheaper to give the latter the benefit of the doubt, let them keep returned items, etc). The only flaw is if otherwise legitimate customers start to think they can get away with falsely returning 1 in 20 items or whatever. So they 'blather on' about return scams, not because they are material to their business, but to make it clear that if you cross an invisible line, they will go from not caring about your $120 air fryer that you ended up with two of, to pursuing serious legal and criminal consequences.

samsolomon 4y ago

Not sure I’m buying the argument that Amazon doesn’t know how to scale. I’ve had the exact same thing happen. Price drops after I’ve bought the product and have had to purchase the new one. I’d say that Amazon has the data to determine if it’s more profitable to give the customer a credit or have them ship and return it. So while annoying, I’d say that scale is probably why they are doing this seemingly unintuitive thing.

HDThoreaun 4y ago

They probably have evidence that enough people just drop it instead of returning that this policy saves money. Amazon employs more economics Phds than anyone but the government so I would be surprised if they hadn't studied something as fundamental as the return policy.

andsoitis 4y ago

How common of a use case do you think this is? How common do you think it needs to be for Amazon to invest in special logistics for this pattern (I.e. for it to be a net positive)?