Is Amazon Good for the Long Term Economy?

Re: What's good for the economy?

John McGaw

The key is that Target and Walmart are no longer brick-and-mortar in the old sense. At best they are a hybrid, smaller than Amazon, but trying to keep their heads above water. I can't see where having a local physical outlet is that great of an advantage if you still have to order online or order in the store if what you want is not physically present. I buy a lot of stuff from Amazon for no other reason that that they are convenient although I do routinely search for items elsewhere -- then I take the total cost and delivery schedule into account and then buy where it makes the most sense to me. I have an Amazon credit card that gives (defined loosely) 5% cash back so maybe that biases me a bit but cheaper or quicker will still win me over if Amazon doesn't cut it.

Oh, and they do give a minuscule cut to WC the last I heard. At least I keep using the magical URL to get to Amazon.com when I do go shopping in hopes that Ellis is seeing something from it.

No matter how you look at it, retail is a brutal arena and when the fight starts the little guy quite often gets squashed so betting everything on the little guy will not win you much in the end.

Re: Local meat markets are big around here

paul in AZ

Years ago I knew someone who sold small electronics -radios and such- to department stores.

He said that when dealing with Sears they asked for a few examples to study. They dismantled them, calculated the cost of producing them [accurately] to the penny, told the salesman what they would pay and specified any changes to be made to adjust the price. Take it or leave it.

That same style likely persists in the private labelled tools and many other goods in big box stores today.

Re: Local meat markets are big around here

Bill Blasic

I needed a new planer, $599 at big box store and I would have to go get it. Amazon $499 and it was delivered to my door the next day! I'm not poor nor am I rich but good grief why such a difference. If you price match between Walmart and Amazon most everything that I am looking for is basically the same price but Amazon ships everything for free and you need at least a $35 purchase to get free shipping from Walmart. I don't think Walmart will fold anytime soon as I go there early in the AM when there is only 300 or so shoppers where as a couple hours later there are over a 1000 (best guess).

Re: Is Amazon Good for the Long Term Economy?

Jason Roehl in Lafayette, IN

My father-in-law, a beef-cattle farmer, said that his ancestors would say, "It takes one generation to build it up, one generation to maintain it, and one generation to piss it away."

Jeff Bezos has certainly buil up Amazon. How long will he be around? Who will succeed him and what vision will they have?

Steve Jobs built up Apple--he's gone. Apple is still churning out pretty good products, but they haven't been radical innovators since Jobs left and passed away. They're maintaining, but at least they have some upward momentum. I suspect in 20 years or less they'll start going downhill pretty quickly.

Microsoft is maintaining now that Gates is no longer at the helm--very little innovation there that provided them the explosive growth in the '80s and '90s.

Who knows? Maybe in 20 years, retail will be long gone, everything ordered online, and someone will have the "revolutionary" idea to have a store where you can actually see and handle the product you want.

Or, just as DVDs and later, Blu-Ray, seemed the wave of the future, they are in the dustbin of history now as streaming has risen to dominate the on-demand media market. Perhaps in 20 years we will all get our durable goods through "streaming"--we'll all have multi-material 3D printers in our homes that will print out whatever we order online.

The one constant is change, yet many resist and hate it.

Jason

Re: Is Amazon Good for the Long Term Economy?

Don Stephan

Thanks everyone, every comment was well thought out and clear.

As the owner/operator of a one person woodworking studio in a retail area, I can suggest some reasons for price difference between a retail store and a mail order business.

The store must have knowledgeable sales people and will spend non-profitable time every day with window shoppers, curious, secret shopper competitors, and similar. A store in a retail district will pay higher property taxes per square foot than similar cost in a warehouse or unincorporated district. A retail store will have higher insurance rates because children will be on the premises, sometimes with insufficient supervision. A retail store cannot operate and generate income 24/7. A retail store will never enjoy quantity discounts from volume purchasing. Retail stores are expected to offer much higher levels of customer support, before and after the sale, which is an expense to the store. Retail stores have to have attractive landscaping and customer parking. And no doubt there are many more cost advantages of high volume mail order businesses.

Regarding the impact of large volume mail order business squeezing out retail, when national chains squeezed out "mom and pop" retail, at least the jobs - sales, inventory, maintenance and repair - remained in the community. The same was true when one national chain grew at the expense of another. But by their very nature, large mail order businesses operate with fewer employees and will use a growing number of robots and other automation to further lower the number of employees.

Re: Is Amazon Good for the Long Term Economy?

Brian Holcombe

They bring a large benefit in competition and availability. I like the fact that you can buy high quality things, never available locally, and have them in rapid fashion. As example I like whiteside, CMT and Amana router bits, plug in the part number and receive it next day at a great price.

Another benefit to Amazon is TV viewing

Dick Coers

We cut the cable to Comcast over a year ago when fiber optics came through our neighborhood. So the Amazon Prime not only has the quick and "free" shipping, we get a good deal on streaming entertainment.

Re: Sears vs Amazon

Frank S

"A camel is a horse designed by a committee" and we're drowning in camels in this country.

Frank

Napoleon said

Clementine

It is axiomatic that the side which remains behind its fortified line is always defeated.

Re: What's good for the economy?

jessecloud

In a lot of cities, the struggling trollies were bought out and shut down by General Motors. So there was some counter forces to the gradual prolonging.

Where I used to live, they referred to houses in one subdivision as "Chevy Houses". After GM shut down the commuter trolley, a new Chevy was bundled into the cost of the house.

Re: Don't worry too much...

Ed Wozniak

You are probably right and I promise to stop worrying. But if Amazon were to become the sole supplier of a product there would be few incentives for Amazon to dink around with a new version of the product. I guess if an improved version of the product became available that would result in a higher volume and higher revenue Amazon might consider it, but if it wanted more revenue from the product it could just raise the price on the original version and be done with it. They are trying to give us anything we want to buy available to us at our front doors the next day (and even the same day for some items). As they get closer and closer to that goal it will become harder and harder for anybody to sell anything without going through Amazon.

camelids

John K Jordan

>>>"A camel is a horse designed by a committee"

Camels, llamas, alpacas, and other camelids might disagree.

JKJ

Trollies....

Barry Irby

The buying out of the trollies was done by a consortium of several big businesses. GM was one, Firestone, Standard Oil maybe and I can't think of the others. I think it was four companies that banded together to put the trollies out of business to sell more buses, tires and fuel.

Fuel Prices

John Foster

We have not hears much about peak oil lately, and I have no idea whether if and when it will become a concern again. I do believe that low fuel costs, and hence low transportation costs make the ideal retail model one where raw materials and fuel are shipped to areas with low labor costs ( maybe even low employment, safety and environmental standards) and the finished product is shipped long distances back to distribution centers for delivery to the end user. I do believe that if for some reason we got into an era of high energy costs, this business model might need to be re-examined.

For the movement...

David Weaver

...of bulk materials, there may be some issue (though liquid fuels could be dedicated to bulk material movement).

I think the advent of less expensive batteries (storage of 1kw hr 10 years ago was $1,000 and now the average is $156-$200 according to an article I read yesterday) and the likelihood of dry film batteries and changing components (to something cheaper, faster charged, etc, but harder to manufacture) will make it so that we can capture and store a lot in batteries, and thus transport and deliver a lot.

For example, the delivery side of finished goods is probably the most ideal case for battery powered vehicles. They don't go long distances at high speed, they start and stop a lot and they don't go too many miles in a day. But they do the same thing over day in and day out. UPS is starting with 10,000 battery powered trucks in the next 4 years, and amazon has stated an intention to purchase 100,000 of them.

Estimated operating costs for the UPS trucks (operation - one article claimed that they were designed to have a unit cost the same as the newer diesel trucks) is 50% of what a diesel truck would be. We'll see how long they last. Elon musk suggested that the next generation of batteries that tesla introduces will charge and discharge a full cycle 1000 times and still have 90% of its capacity left. Great for a car, but what does that mean for a battery powered truck expected to last 25 years? that sounds like about 3-4 years of use, but a secondary market for those packs will emerge as smart metering becomes mandatory and graded electric rates show up (if you could have 68kw hr of battery capacity left on a 76 kwhr pack, you could probably heat your home most days and provide for all of your needs).

At any rate, when we think of things like peak oil and determine scary scenarios, they just don't take into account what the market will do once it finds alternatives (and investor money will flow to them making sure we get 10 times as many versions of them as we need).

Real life battery life

Bill Tindall, E.Tn.

My son in law manages charging station installment for Proterra, an electric bus company growing rapidly. They guarantee the battery for many years. The "secret"plan was to take back batteries that showed lessened ability to charge and build storage packs at the charging station that could store electricity off hours to charge busses as needed in peak hours. The battery packs are outlasting this plan. None have lost significant capacity. Recent advances in motor efficiency have made the busses even more practical by greatly increasing range.

Shown San Jose fleet

https://www.greencarcongress.com/2019/05/20190507-sjc.html

Re: Real life battery life

David Weaver

Similar usage pattern as delivery trucks.

I ride the bus. They do reasonably well here, I guess (they don't pay fuel tax as far as I know), but one of the drivers told me they get major work (rework, rebuild?) on transmissions three times for each engine.

That kind of travel is in the wheelhouse of battery and electric motors.

BIL has a tesla 3 that he drives 90 miles round trip each day. It's less ideal, but I expected that he'd be out of pocket for something by now (year and a half soon?), but nothing. He uses something like 300 watt hours per mile and his electric rate is 11 cents per Kw/hr. I don't know that he'll ever recover his initial investment, but the next generation probably will.

All of the things that we know to be bad for batteries (temperature, overcharging, overdischarghing ) are all constantly monitored and the batteries last next to forever. If the vehicle isn't dormant, then the draw to maintain the thermal conditions optimal for the battery is fairly insignificant (BIL mentioned that on a hot day, if the car is parked outside, it will spend a fair amount keeping the batteries cool - but not much in the scheme of driving 90 miles a day).

For the bus, transmissions are replaced by controllers and direct drive, the thing that IC engines do worst, the battery and motors do really well. Seems ideal.

I would be really surprised if a huge market for secondary packs and capacity doesn't show up.

no, they have transmissions

Math seems about right.....

Tim Greif - West of Chicago

The commonly stated electric to gas comparison at today's fuel prices says that electric car use compares to operating a normal gas engine car at a gas cost of about $1.00 per gallon.

Your BIL goes 90 miles at 0.3 KWh/mile = 27 KWh.

Electricity cost is 0.11 per KWH, so total cost is $2.97 per trip.

Figure a typical good highway mileage car at 30 mpg, and you're talking about 3 gallons per trip. If that gallon cost $1.00, that's $3.00 per trip, just as predicted.

I know electric looks good, but I'd still be worried about range anxiety.

Re: Is Amazon Good for the Long Term Economy?

ebd

Probably headed toward a de facto monopoly. I purchase locally when I can even at a higher price. The problem is selection. Often the brand or model I want isn't available.

On the other hand Amazon isn't that great either. I ordered, recieved, and sent back four different brand/model trailcams. One was "renewed" which seems to mean returned as defective and sent to me without any other handling.

I think some of their stuff are seconds and some are defectives sent out in the hope that people will keep it beyond the return date or just won't bother. I will not buy any more electronic gear from Amazon. If I do have to order on-line, it won't be from them.