You missed the whole point of my post. I said specifically said Amazon's moats have nothing to do with things like 2-day shipping, which are easily copied. The FBA program, as one example, allows any Amazon seller to ship product to Amazon's warehouse, and then have that product be eligible for 2-day (or faster) shipping - with zero effort (and unbeatable fulfillment fees). That program - and the dozens of others like it - will be extraordinarily difficult to copy.
Exactly - and while that low barrier of entry gives Amazon a significant problem with fraudulent items and listings of dubious quality, it also adds a ton of breadth to the marketplace and makes something that actually lives up to the phrase, "The Everything Store."
As an example, I found myself in the market for a laser cutter recently. Consumer entries start in the low/mid 4-figures, and Glowforge doesn't appear to be right around the corner. So I figure, the best bang-for-your-buck option is to buy a cheap Chinese model and swap out the cruddy bits.
Now where am I going to get a cheap Chinese laser cutter, a nice open-source CNC controller board, and if things go hooey-shaped, a more robust power supply, ventilation, and/or cooling system? Walmart?
No, the alternatives to something like that are more along the lines of ebay. The turnaround time would be significant, and I'd still have to vet all of the listings I consider to hopefully avoid fakes. Ditto for AliExpress, and double for TaoBao. Amazon offers prime shipping on most of those items, though, and they have a decent returns policy to boot. The breadth of their catalog is nothing to sneeze at.
I would love some links on where you're doing your research on laser cutters. My wife recently suggested I buy one which is like, oh god how did this happen, I must make this happen as fast as possible before this opportunity goes away!
I kind of just googled around for information; there isn't a whole lot of well-collated stuff, so I definitely could have missed a better option, but it looks like if you're not going to shell out for a very expensive commercial/industrial unit or wait <undefined> months for Glowforge, you're probably looking at a K40. There's a pretty good wiki for it on the lasercutting subreddit: https://www.reddit.com/r/lasercutting/wiki/k40
You'll quickly notice that it's not a terribly good laser cutter, although it does come with the 40W necessary to be one and can be upgraded further. There are a variety of upgrades you'll want, but if your budget is $1K, the laser cutter itself will cost you less than half of that; they run $400-450 on ebay.
So if this were a Top Gear challenge, you're sitting pretty to improve your cheap lemon with your remaining cash:
* The default controller only works with Windows and the software it comes with is likely pirated. If you're used to working with 3D printers, get a RAMPS board and put Marlin or something on it. There are a few guides for going from there to more open control software, or even running off of an SD card with no PC.
* Ventilation. Apparently the stock fan doesn't fit that well, and there's no system to blow debris off of the bed when a cut is in progress. That could be a fire hazard and/or bio hazard since the dust from stuff like acrylic is not good for you.
* Cooling. It's water-cooled, with a small aquarium pump that you stick in a bucket of water. It looks like that's probably fine if you aren't going to run the laser constantly, but you could always get something with more flow.
* Some users say that you should ground the metal housing manually with a thick strand of wire. That's a mildly worrying piece of advice.
So it sounds a little hair-raising, but all in all it seems like a manageable risk, and the price is right.
Buy on TMall or JD or some other reputed seller not Taobao. If you are in China you use alipay or WeChat you are better protected then with amazon in USA. China's ecommerce eco-system is decade ahead of amazon model. So they can't even compete there.
I really don't think it would be that hard to copy. There are plenty of fulfillment centers out there already that offer similar services, API and all. Walmart could simply buy them and integrate with their own warehousing network and have Amazon outmatched in terms of facilities in a rather short period of time.
Amazon didn't invent the 3rd party warehouse idea. They were just the first 3p marketplace to offer it as an added value service.
There are ~2 million FBA sellers and roughly 42 million Prime-eligible SKUs - hundreds of thousands of inbound shipments. You can't just buy a couple of fulfillment centers (with their homegrown WMS software) and be off to the races.
For comparison, your average Wal-Mart distribution center has ~100k SKUs and one 'user' (Wal-Mart).
WalMart's marketplace (3rd part sellers) is just getting off the ground. Give it time... FBA is not a complicated beast like you make it out to be. As the Parent correctly pointed out, there's a plethora of companies that do nothing except fulfillment for distributors. There's nothing "hard" about copying the FBA model.
> For comparison, your average Wal-Mart distribution center has ~100k SKUs and one 'user' (Wal-Mart)
You seem to be deliberately comparing apples and oranges here.
You claim Amazon has 42 million Prime-eligible SKU's, and them compare that to how many SKU's exist in an average Walmart warehouse... forgetting that Prime-eligible SKU's don't all reside in Amazon warehouses... a 3rd party seller can warehouse that inventory on their own.
You also don't state how many warehouses Amazon has, nor the average number of SKU's in their warehouses, nor how many warehouses Walmart has, nor account for Walmart stores that serve dual purpose as warehouses. That makes your comparison useless, really.
At a point, it becomes sub-optimal to store more SKU's in a single warehouse, so they open a new distribution center and shuffle products around based on expected demand in the region (closer warehouse to the customer means faster delivery at less expense).
> You claim Amazon has 42 million Prime-eligible SKU's, and them compare that to how many SKU's exist in an average Walmart warehouse... forgetting that Prime-eligible SKU's don't all reside in Amazon warehouses... a 3rd party seller can warehouse that inventory on their own.
I'm not trying to be rude, but I think you have a misunderstanding of how third-party Prime eligibility works.
Virtually all Prime-eligible SKUs reside in Amazon's warehouse. That's how the FBA program works. There is a very new initiative called Seller-Fulfilled Prime (where the inventory resides in the seller's warehouse), but this is an extremely small percentage of the 42m SKUs.
> I'm not trying to be rude, but I think you have a misunderstanding of how third-party Prime eligibility works.
I work for a distributor and e-commerce retailer... we've been involved heavily with Amazon (both AFN and MFN) for about 7 years... I'm intimately familiar with how Amazon, Prime, FBA, et al work. Of course it's impossible to know everything about what Amazon does... but I am in the trenches, so to speak.
> There is a very new initiative called Seller-Fulfilled Prime
That's not new... it's been around for years. Big retailers have been doing it for a long time, as they already have their own fulfillment network (see my original post regarding companies that do nothing except fulfillment). It was invite only for quite some time... perhaps that's why you thought it's new.
Another thing you're not accounting for, is of the claimed 42 million SKU's in the Prime program... the overwhelming majority do not sell. This became such a problem, Amazon had to start charging for "dead stock" to motivate sellers to remove dead inventory or not send "slow-movers" in the first place.
You also didn't account for Walmart's drop-ship vendor program. Walmart will take an order, and you drop-ship it on their behalf (Walmart being your customer, not the individual making the purchase). Walmart doesn't need to store all the items in their warehouses...
Amazon has a similar program, but instead of you drop-shipping the items, they buy them from you up front and you ship the inventory to Amazon.
All this doesn't say Amazon's warehouse logistics aren't impressive... because they are... but the FBA mechanism is not something special, and it certainly can be replicated fairly easy (and already has been for the most part). What is unique is the fanfare Amazon receives for every new warehouse that's opened... most companies just open new warehouses as business-as-usual sort of things... no articles are written about those things.
Many thoughts on this. But they all come down to: it sounds like you think Amazon's current moat is trivial for Wal-Mart to overcome. Should be a few more months now and then Wal-Mart will start to take the ecommerce lead, then ;)
This seems to be a sort of excluded-middle error... there is lots of space available in between "Wal-Mart will never threaten Amazon" and "Wal-Mart already drove Amazon out of business". I'd suggest you just shop on Wal-Mart's site; you'll discover they have almost as many shoddy knock-offs for sale as Amazon have...
That's not what Alupis's comments sound like to me. It sounds more like they're saying that if Amazon wins it won't be because they had unique, impossible to reproduce logistics and fulfillment programs. It will due to other factors. (And there are lots of other areas where Amazon has an advantage over Walmart, not the least of which is brand.)
I don't think they're suggesting that Walmart will inevitably overtake Amazon in e-commerce any day now.
> I really don't think it would be that hard to copy
If it were that easy Walmart would already have it. FBA has been around for a decade. Walmart still doesn't have anything that comes even close to it, despite having an incredible dev team (Walmart Labs) a ton of money AND the distribution network to make it very feasible.
Why would FBA be hard to copy for someone like Walmart that already has the warehouse infrastructure receiving products from different suppliers? It sounds like it's literally just having a corner of the warehouse for their stuff, and applying the same shipping mechanisms already in place in the warehouse. The hardest part would be the interface for the merchants, but even then, Walmart would have most of that in place for tracking their own inventories and interacting with suppliers.
I think setting up the infrastructure for 2-Day shipping is harder than the merchant backend for supplying you with items to ship. Of course, Walmart already has 2-Day shipping on selected partner reseller accounts via the marketplace, so I'm not sure why you think they don't already have an FBA equivalent -- they're just smarter than Amazon about brand protection.
Which is what Amazon has blundered on, badly: they've created a lot of "Day 2" features that are clearly anti-consumer and it's tarnishing their brand, even as many of their metrics look good. Further, they've taken on a lot of the same anti-employee and anti-small-merchant measures that people dislike Walmart for.
That behavior loses them their real moats: customer trust and behavior distinguishers. If Amazon is just a Walmart with the reputation of AliExpress, why wouldn't I just buy off WalMart's website?
> Which is what Amazon has blundered on, badly: they've created a lot of "Day 2" features that are clearly anti-consumer and it's tarnishing their brand, even as many of their metrics look good.
Can you clarify what this means / give some examples of what you're referring to? I'm not sure what would a consumer-facing day 2 feature would be other than returns or shipment tracking, which I think they handle well--but I also just learned the term after looking it up upon reading your comment. :-)
It's using the language from the Bezos shareholder letter [0]. I recommend reading it, because I think the vision for how to run a company is very good, even if Amazon isn't living up to it.
Returns and shipping aren't "Day 2" features necessarily -- they can be part of a "Day 1" company.
Rather, my complaint is that Amazon has created programs like Fulfilled-by-Amazon (FBA) and Featured-Merchant-Algorithm (FMA) that are poorly implemented and anti-consumer:
1. Co-mingled inventories are a fundamentally anti-consumer feature, because they violate consumer control and mean that bad actors can impact the experience of buying from good actors, which undermines consumer trust. The only purpose it serves is simplifying the logistical problem for Amazon. The reason Amazon thinks this is a good idea is because they have converted to data-as-proxy thinking, where they no longer holistically understand consumer needs, they only optimize proxy values like delivery speed. The whole feature reeks of abandonment of Amazon's leadership principles [1] in order to optimize performance metrics. That's "Day 2" thinking in a nutshell.
2. The FMA is similarly problematic because of the fact it essentially hides a vital decision about purchasing from the consumer, and forces buying on Amazon to feel adversarial -- I have to doublecheck that Amazon isn't sending my business to a fraudster and they make it hard for me to control that, except for a small box I have to check every time. Here, Amazon failed to advance the market with new and innovative consumer tools that would allow customers to help police the market (eg, by crowdsourcing an optional fraudster blacklist). That kind of "Well, the data tells the whole story, let's just optimize our metrics" with opaque algorithms is a very "Day 2" way of doing business -- a failure to innovate is stagnation.
I could go on about these for a while, but the entire design of the Amazon marketplace is a stagnant mess -- it's no longer innovative, and their reliance on optimization to metrics has allowed people to game them, turning it into a quagmire of people trying to cheat the system (counterfeit, bought reviews, etc).
Amazon is devolving into a mess of their own making, by operating in a "Day 2" paradigm, rather than innovating solutions to hard problems.
I'm old enough to have been in the logistics industry when Walmart was king, and they said exactly the same things about Walmart - the company had the market power to force you to label your shipment a certain way, with certain bar codes, so your pallet would go straight into their system with no effort.
In the end it didn't really help them when Amazon came along.
No it won't, Walmart already has distribution centers galore and the $ to buy more. They do lack an external seller platform, and maybe that's not such a bad idea with the amount of fake crap one could get through Amazon...
Walmart already has an external seller program. Search for specialty/niche items on their site, and most of the time it's fulfilled by their "marketplace" sellers.
@zkanter If you think Amazon cannot be beaten just see Alibaba and Chinese e-commerce eco-system almost a decade ahead of Amazon. I am sure once Alipay get listed currently private, will leave amazon far behind.
Same day delivery on TMall like buy in morning get in afternoon was available 6 years ago in China. Now you can fly oysters from New Zealand, cod from U.K. and delivered to your home in 24-48 hours in China also 5 years ago. Amazon still has miles to sprint before it reaches there.
The CCCP deserves most of the credit there. The reason those services exist is because China has lower wages and much higher density over wider areas. Home delivery has been available for 20 years in parts of the US, but service areas are isolated because there isn't enough demand. Prime Now is still loosing money because there aren't enough people to break even.
That's exactly the program that got me off amazon. Shoddy goods, inventory commingling, and private label items. You never know what you're getting into. Not even bought "Shipped and sold by Amazon.com" items are safe now.
I've cancelled my prime membership and use a variety of sites now, and I couldn't be happier.
