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Anecdote Illustrating What Amazon’s Competitors Are Up Against
I know there are negative views of Amazon out there (my wife calls them “the evil empire” because of how they treated some publishers and authors). But there’s a reason for Amazon’s dominance: they are often damn good at what they do.
Consider this story as one data point:
I had a Dell laptop at work with a failed battery, and I wanted to buy a new one. I have a corporate account at Dell so I went to their website and tried to find the right battery by myself, using the laptop model to narrow down the choices. After maybe 20 minutes I thought I had found one, although they didn’t offer the exact battery I was looking for, and it was a lower capacity than the original. I bought it, it came, it was wrong. It fit, but the connector was in the wrong place so I couldn’t use it.
At this point I talked to my Dell sales rep and asked him to help me find the right one – I know their view of the inventory is different from the public’s. He found one, sent me a quote, I ordered it, it came, it was also wrong. In fact, it was the exact same battery I had found, which we already knew didn’t work!
I sent my sales rep an email at 1:16 p.m. telling him I was going to look elsewhere. I logged into Amazon, typed in the model number of the battery and it came right up. There was a picture where I could see that the connector was in the right place. It was the exact one I was looking for. I clicked the order button and confirmed it, and it was on its way. (With free shipping!) I sent my rep another email telling him I had found what I needed. The time was 1:20 p.m.
I tried the old way and, after a week and a half, didn’t have what I needed. And I had two batteries I had to return, which is a pain.
The Amazon way took four minutes and it was exactly what I needed. The actual shopping and ordering probably took two minutes. I had it in two days. The next time I need a part like that, why should I even try Dell?
If I called Dell and told them I want to be able to complete a purchase in two minutes they’d think I was crazy. But that’s what the competition can do, at least for this kind of sale.
That’s one example of why Amazon is so successful.
Published in General
Less likely to happen if you are a Prime member. Typically, those orders are qued within minutes of your finalizing the order.
Even more so if you buy almost all of your books on Kindle.
Practically instant delivery, and I can carry literally hundreds of different books on me if I want to.
On the other hand, we order multiple items in a single session, and they arrive in different boxes on different days (from different warehouses – sometimes including a warehouse in England for our tea). I have no idea how they can make money making three separate deliveries on a $45 order.
Because that’s not the way the P&L is constructed. Think of it more like gross sales – total expenses = P (where the result is a positive number).
So they lose money on each sale but make it up in volume?
They lose money on some sales – but they certainly make it up on others.
They might not even be losing money on a lot of those “little” sales – a $5 widget that cost them less than a buck, shipped across country for another $1 to $2 with a whole bunch of other widgets, and delivered for an additional $1, could end up as a dollar or so of profit.