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Interesting note: Over 50% of the volume and driving force of Amazon's huge merchandise growth mentioned in the article is from small ($100k - $20m a year) mom

by cm2012 12y ago

Interesting note: Over 50% of the volume and driving force of Amazon's huge merchandise growth mentioned in the article is from small ($100k - $20m a year) mom and pop businesses around the country selling on Amazon. I wrote a blog post about it a while ago - http://www.kevinlordbarry.com/amazons-little-known-world-changing-good-deed.html http://www.kevinlordbarry.com/amazons-little-known-world-cha.... a16z touches on this, but it has wider reaching implications than just Amazon's revenue.

jacquesm 12y ago
$20m / year is a mom & pop business?
- cm2012 12y ago
  They are family owned and operated, yes! In almost all the cases I know of. I may be using the term wrong though.
  - deleted 12y ago
    [deleted]
  - moggflunkies 12y ago
    Laughing at that. $20M annual revenue extremely impressive. Especially for "mom and pop" owned business. Mom and dad are either taking home $1M/annually or they are operating a very successful high dollar, low margin business. Both are highly unlikely.
- idlewords 12y ago
  Momma's got needs!
- ctdonath 12y ago
  A million dollars ain't what it used to be.
- exelius 12y ago
  In retail, yes. Retail margins are usually less than 3%; so $20m/yr in revenue would give you less than $600k/yr in profit. Not bad money by any means; but certainly not enough to need a bunch of shareholders. Contrast this with the fact that an average Walmart does over $100 million a year in revenue (though Walmart's margins are closer to 1%), and it's actually not that huge.
  - moggflunkies 12y ago
    Mom and dad are retailing $55,000+/day, 7 days a week, open most holidays.... You guys are stretching the phrase "mom and pop" to lengths it has never been before.
  - arbuge 12y ago
    I am not sure what kind of retail you are referring to (offline grocery perhaps?) but most ecommerce retail operations are running margins significantly higher than 3%. 10-30% is more typical in my experience, and 40-60% for operations selling unique products they make themselves.
    - jljljl 12y ago
      Gross or net margins?
  - andrewtbham 12y ago
    Wal-Mart's margins are 3.3% (Trailing 12 months) http://finance.yahoo.com/q/ks?s=WMT+Key+Statistics http://finance.yahoo.com/q/ks?s=WMT+Key+Statistics
    - exelius 12y ago
      Ah; you're right. I was recalling a statistic that Walmart's margin on specific items can be as low as 1% and must have gotten them confused. :)
  - chops 12y ago
    At first, I thought "you meant $100 billion" not "million", until, on a 2nd or 3rd rereading, I realized you were referring to an average single Walmart store does over $100m in revenue. So I thought I'd throw this comment in here in case others were misreading it as I did.
- us0r 12y ago
  27.5 million is mom & pop in the governments eyes for programming work.
- throwaway283719 12y ago
  Yes, if that's revenue rather than profits.
- superuser2 12y ago
  Sure. I worked summer jobs in IT consultancies with approximately that in revenue. They were owned and managed day-to-day by one guy acting as CEO/COO with his wife doing the books and payroll. They had employees, but were still entirely owned and managed by a literal "mom and pop" whose children I went to school with.
paulhauggis 12y ago
This surprises me. I was a seller 5 years ago on Amazon and seller support was terrible. They use automated bots to ban your seller account and then offer no recourse or support beyond scripted emails. I would think that if sellers like me were bringing in that much revenue for Amazon..that they would treat me a little better. I guess this is the textbook example of why any sort of monopoly is bad.
- JaggedJax 12y ago
  They still treat their sellers like this today. Every seller we've worked with at my company has complaints about some ridiculous Amazon policies or just plain poor treatment and poor support/communication. It doesn't stop people from selling on Amazon though since it's almost a required channel these days.
- hga 12y ago
  The only monopoly I observe them having is in trust. If I see a seller with 96% or better feedback on a minimum volume of business, I have a lot of faith I'll be satisfied one way or another with the transaction. Compare to eBay, where a fairly recent transaction by my father, buying an iPhone, was a scam, the cellular radio didn't work (rest including WiFi did), and the seller, who officially had a good reputation, knew exactly how to game the system so my father was out > $100.
  - zanny 12y ago
    I've been buying more stuff off ebay, mainly on the basis that the site is hugely biased towards the purchaser and not the seller. I've sold stuff as well, but I'm always afraid a purchaser could just say I sold them a fraudulent transaction, trash my rating, and Ebay takes the money back and I'll never get the product back.
    - grogenaut 12y ago
      I'm interested in how you lose as a seller as I've never been able to claw back any of the fradulent sales that I've bought from.

by cm2012 12y ago

jacquesm 12y ago

$20m / year is a mom & pop business?

cm2012 12y ago
They are family owned and operated, yes! In almost all the cases I know of. I may be using the term wrong though.
- deleted 12y ago
  [deleted]
- moggflunkies 12y ago
  Laughing at that. $20M annual revenue extremely impressive. Especially for "mom and pop" owned business. Mom and dad are either taking home $1M/annually or they are operating a very successful high dollar, low margin business. Both are highly unlikely.
idlewords 12y ago
Momma's got needs!
ctdonath 12y ago
A million dollars ain't what it used to be.
exelius 12y ago
In retail, yes. Retail margins are usually less than 3%; so $20m/yr in revenue would give you less than $600k/yr in profit. Not bad money by any means; but certainly not enough to need a bunch of shareholders. Contrast this with the fact that an average Walmart does over $100 million a year in revenue (though Walmart's margins are closer to 1%), and it's actually not that huge.
- moggflunkies 12y ago
  Mom and dad are retailing $55,000+/day, 7 days a week, open most holidays.... You guys are stretching the phrase "mom and pop" to lengths it has never been before.
- arbuge 12y ago
  I am not sure what kind of retail you are referring to (offline grocery perhaps?) but most ecommerce retail operations are running margins significantly higher than 3%. 10-30% is more typical in my experience, and 40-60% for operations selling unique products they make themselves.
  - jljljl 12y ago
    Gross or net margins?
- andrewtbham 12y ago
  Wal-Mart's margins are 3.3% (Trailing 12 months) http://finance.yahoo.com/q/ks?s=WMT+Key+Statistics http://finance.yahoo.com/q/ks?s=WMT+Key+Statistics
  - exelius 12y ago
    Ah; you're right. I was recalling a statistic that Walmart's margin on specific items can be as low as 1% and must have gotten them confused. :)
- chops 12y ago
  At first, I thought "you meant $100 billion" not "million", until, on a 2nd or 3rd rereading, I realized you were referring to an average single Walmart store does over $100m in revenue. So I thought I'd throw this comment in here in case others were misreading it as I did.
us0r 12y ago
27.5 million is mom & pop in the governments eyes for programming work.
throwaway283719 12y ago
Yes, if that's revenue rather than profits.
superuser2 12y ago
Sure. I worked summer jobs in IT consultancies with approximately that in revenue. They were owned and managed day-to-day by one guy acting as CEO/COO with his wife doing the books and payroll. They had employees, but were still entirely owned and managed by a literal "mom and pop" whose children I went to school with.

paulhauggis 12y ago

This surprises me. I was a seller 5 years ago on Amazon and seller support was terrible. They use automated bots to ban your seller account and then offer no recourse or support beyond scripted emails. I would think that if sellers like me were bringing in that much revenue for Amazon..that they would treat me a little better. I guess this is the textbook example of why any sort of monopoly is bad.

JaggedJax 12y ago
They still treat their sellers like this today. Every seller we've worked with at my company has complaints about some ridiculous Amazon policies or just plain poor treatment and poor support/communication. It doesn't stop people from selling on Amazon though since it's almost a required channel these days.
hga 12y ago
The only monopoly I observe them having is in trust. If I see a seller with 96% or better feedback on a minimum volume of business, I have a lot of faith I'll be satisfied one way or another with the transaction. Compare to eBay, where a fairly recent transaction by my father, buying an iPhone, was a scam, the cellular radio didn't work (rest including WiFi did), and the seller, who officially had a good reputation, knew exactly how to game the system so my father was out > $100.
- zanny 12y ago
  I've been buying more stuff off ebay, mainly on the basis that the site is hugely biased towards the purchaser and not the seller. I've sold stuff as well, but I'm always afraid a purchaser could just say I sold them a fraudulent transaction, trash my rating, and Ebay takes the money back and I'll never get the product back.
  - grogenaut 12y ago
    I'm interested in how you lose as a seller as I've never been able to claw back any of the fradulent sales that I've bought from.