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  • Disruption – Amazon Basics and Amazon Essentials

    Posted by Carl from Chicago on January 2nd, 2018 (All posts by )

    “Amazon Basics” is a line of low cost products created especially by Amazon. “Amazon Essentials” is an apparel line created by Amazon. This picture has a “basics” speaker and a low cost “essentials” product (the notebook):

    – a portable wireless bluetooth speaker for $19.99

    Essentials dot matrix notebook for bullet journal for $9.92

    I was impressed by both of these items. When you go to Amazon and either the basics or essentials section there is a wide array of products to choose from at amazingly low prices.

    Amazon is choosing which markets and products that they want to compete in directly and they offer what appears to be reasonable quality products at low price points. If you cycle through the product list you can see a lot of everyday products or items that don’t normally have a strong branding component.

    When this is combined with Amazon Prime for free delivery it would seem that these items would be very competitive in the marketplace. Amazon doesn’t pay for marketing or branding since you are already in their web site when you are searching for items. It could also favor its own products in searches, partially because it is their own brand but also because they seem to offer prime and a low price as well which also factor into the search algorithm.

    As a consumer I recommend checking out some of these products for essentials and ease of delivery, but as someone interested in business, economics and technology I would view these lines of business as potentially very disruptive to other sectors of the economy where branding is not essential.

    Cross posted at LITGM

     

    21 Responses to “Disruption – Amazon Basics and Amazon Essentials”

    1. Jonathan Says:

      Part of the problem for consumers is that Amazon’s review system is corrupted by shill reviews, a difficult problem for Amazon to solve. Perhaps Amazon’s branding, as well as the “Amazon’s Choice” label that Amazon applies to some popular non-Amazon products, is in part an attempt by Amazon to provide guidance to consumers that bypasses the review system.

    2. Mike K Says:

      Amazon may be gearing up to compete with Walmart.com.

      Jeff Bezos may have damaged his brand a bit with the WaPoo political hysteria,.

    3. Grurray Says:

      Usually anything bigger than a breadbox we would prefer to purchase from walmart.com over Amazon because of the ease of returning items to the stores. Kohls just started processing Amazon returns at some of their locations, so we hope they come to the store in our town.

      Buying clothes is another thing that benefits from making returns easier because they frequently need to be returned. It’s more tolerable for kids clothes as long as they’re too big and not too small. The ridiculous variations in sizing make online purchases a trial and error process. It seems the apparel industry has just given up on maintaining standard sizes. Maybe Amazon needs to start an online tailor service.

    4. PenGun Says:

      I will not use Walmart. I figure it’s a form of treason. Treason against your local entrepreneurs. Nothing crushes the local economy like a Walmart appearing in your area.

    5. Grurray Says:

      I suppose it depends. There was a shop near my house that sold woodworking tools and accessories. Mostly niche items. It was there for a couple generations until they closed. Walmart wasn’t a problem because of the specialization of their products, but Amazon was. The tools and instruments were so much cheaper on Amazon. I remember at the going out of business sale, the owner cursing Amazon’s name to anyone within earshot.

    6. Jonathan Says:

      It depends. The world has changed. Some of the local shops that Amazon and Walmart put out of business were excellent, and some of the excellent ones are still around. In many others the customer paid more, waited longer, had less selection and got worse advice than that available online. Amazon and Walmart forced small retailers to compete and many of them weren’t up to it.

    7. JFM Says:

      Walmart does put any local stores out of business. Walmart’s customers put local stores out of business.

    8. jaed Says:

      Amazon is also a clearinghouse and shipping/payment processor. In this role, it’s kept a lot of independent bookstores in business. (Probably niche stores of other sorts too.)

    9. Jeff the Bobcat Says:

      A friend is an avid bird hunter and has a couple of highly trained bird dogs. He feeds them special dog food that he used to get through a small outdoor supply place. He paid $40 for a large bag and could pick it up at their store which, was close to his house. When he was grumbling about the small store closing and where would he get this dog food at his family’s Christmas get together, his very lovely 28 year old daughter extolled the virtues of Amazon Prime and its “Free Delivery!”. She is an early adopter of Amazon Prime, using it for anything and everything. She offered to let him use her account to buy the dog food and then he could just pick it up at her house, 45 minutes away. It would only cost $60 per bag but remember delivery is “Free!”. He pointed out the discrepancy but she wouldn’t hear anything bad said about Amazon Prime because, you know, the convenience of the setup.

      Yes, she’s blond.

      And, she’ll be most surprised when she is stuck between Walmart and Amazon and all of the other retailers have folded their tents and gone home.

    10. Carol Sterritt Says:

      The thing is, Jeff Bezos purchased the US Post Office back in the Spring of 2007. Circa that time period, Congress was flush with its first Dem majority in a while. And what did these Congress critters do with their majority?

      They allowed the many lobbyists employed by Bezos to convince them that it was in the very best and finest interests of the nation as a whole to allow Bezos to purchase the US Postal Service.

      Now some of you may cynically doubt that this purchase ever happened. After all, you can walk into any US Post Office and you do not see a bust of Bezos nor do you even see his visage on a postage stamp.

      But that is the beauty of the deal that Bezos worked out. Technically, he does not own the US Postal Service. He merely gets all the advantages of owning that Service, without any disadvantages. The US government continues to pay all expenses of the US Postal Service, while Bezos gets such a discount on the postage that these days, his company, Amazon, utilizes for its shipping, that Amazon can send its customers FREE shipping! And that shipping occurs on Sundays and on US holidays as well!

      In return, to make up for the fact that one of the most prolific shippers in the USA gets almost free shipping, smaller businesses saw a significant uptick in their costs to ship things through the USPS.

      But wait – that is not all! Many small time business people have contracts with Amazon. My family owned publishing company, for instance, utilizes Amazon as an ordering service for our books. And it used to be, before Bezos bought the US Postal Service, that many people followed our email newsletters and ordered our books through our website.

      But now, when they hear about a new book, they order it on Amazon’s website, as that way they get free shipping. So Amazon gets the free shipping plus a percentage of the profits of our books. And should we now say we will offer free shipping, we get zero profit on the book, as the shipping rate has increased so much!

      Our small business entered into this arrangement prior to Amazon having the free shipping advantage. We initially liked Amazon because in places like China, people who would not order the book would go ahead and order it. Prior to the Amazon arrangement, to order it from us, they need to go to a currency exchange, and then mail us a check. Now they can simply order through Amazon. But the deal made sense in the past as this was only for foreign customers, not for someone living one or two towns away. But although this is a classic case where Anti Trust laws should prevail, I doubt that would ever happen…

      Donald Trump tweeting out about how unfair Amazon is gave me hope the other day, but by now, I am sure someone is explaining to him that as Bezos also owns the Washington Post, it is better to let sleeping dogs lie. (Even sleeping dogs that are consuming the profits of many mom and pop businesses.)

    11. Mike K Says:

      I noticed the PO trucks delivering Amazon products but did not know it was so discounted.

    12. David Foster Says:

      Here’s a WSJ article on the Amazon/USPS deal and some of the cost allocation issues involved:

      https://www.wsj.com/articles/why-the-post-office-gives-amazon-special-delivery-1499987531

    13. Brian Says:

      I don’t understand why we aren’t seeing more “showroom” stores opening up. Stores that just stock 1 of a whole bunch of items, from the above sorts of items all the way to clothes, etc. You can see them, touch them, try them on, and if you like them you get them shipped to you in 1-2 days. Seems a no-brainer concept, to outsource your warehousing to amazon or someone else, but give people the advantage of actually checking out the items in person.

    14. MCS Says:

      None of this is new. My Grandfather owned and ran a hardware store in the Colorado mountains from 1924 til he liquidated and retired in 1965. My father who worked there until he was drafted into the army told a story about a farmer that came in for an ax. When he was told that the price was $15, he remarked that it was $2 cheaper in “Monkey Ward”. Grandpa then wrote up the receipt for $13 and put the ax behind the counter. The farmer asked for the ax and was told to come back the next week, when he would have gotten it from Ward.

      No one with sense believes that the cost of “Prime” delivery isn’t figured into the price. This is especially true of heavy or bulky items. At the same time, I find shipping from many non Prime merchants to be exorbitant. I also find that I can buy directly from a merchant’s web site instead of through Amazon and save money sometimes.

      Clothing is a problem, especially for women. The answer is, of course, standards. I live in the world of ASTM, SAE, MIL, DIN and ISO. They power commerce. No standard will probably be able to abstract whether something makes someone’s ass look too big or small, it should be able to insure that seams, buttons and zippers don’t pop.

      As far as Bezos buying the post office. I wish he hadn’t. If a package is late or lost, odds are it’s USPS.

    15. Overload in CO Says:

      Many local retailers claim they’ve become showroom stores for Amazon. A few years ago, Amazon even ran a promotion that a customer would receive a discount if they scanned the barcode of the item 1st.
      The main problem with someone setting up a showroom store and having the item shipped, is that it’s expensive to have a retail store. Yes, it would only have one of any item, but if it still takes a few days to arrive, why not just order it online in the first place, maybe even after seeing it in the store.
      But to Brian’s idea, it’s happening in a different way: eBay sellers list items they don’t own, but are in stock at other web sites like Amazon. As soon as an item sells, it’s automatically order from the other website and sent directly to the buyer. The seller makes a small profit by selling it for a bit more than it’s listed on that other site and does very little work. I’ve received eBay orders from these other websites. Makes me wish I had checked other sites before hitting Buy It Now so I could have saved some money.

    16. Christopher B Says:

      Don’t blame clothing size issues entirely on lack of standards. A close friend of mine ran a business selling patterns for historical recreation clothing, and often discussed how they needed to be fitted. All clothing is designed with various levels and types of ease, or how tightly it fits to your body. Wearing ease, for example, is needed in places to allow movement, and fashion ease is the designer’s choice of how the garment will drape on the wearer. The easing collides with body shape and personal preference to make sizing difficult. My wife is shorter than average but often buys dresses and skirts without altering the length. She prefers longer skirts, and designs intended to be at the knee or midcalf on a woman of the same body size with longer legs are fine with her at her ankles. The same concept could work in reverse for a taller woman with a preference for short skirts or a tighter fit. And ‘vanity sizing’ is a thing as one can tell by the creation of 1-2-3 sizes at certain women’s clothing stores.

    17. Alka Says:

      I assume it depends. There was a shop close to my home that sold carpentry apparatuses and embellishments. For the most part specialty things. It was there for two or three ages until the point when they shut. Walmart wasn’t an issue in view of the specialization of their items, however Amazon was. The apparatuses and instruments were such a great amount of less expensive on Amazon. I recollect at the leaving business deal, the proprietor reviling Amazon’s name to anybody inside earshot.

    18. Brian Says:

      Standard retailers are susceptible to showrooming because they stock the same goods that online retailers do, and they haven’t taken steps to shed the costs that make them non-competitive. People won’t pay a 100% premium to buy something in person. But what premium will they pay? 20%? I dunno, but I’m surprised there’s not more effort to figure that out. I mostly blame whatever it is that is causing the death of entrepreneurship recently (much of which I think can be attributed to factors, including government policy in things like health insurance, that strongly incentive being an employee).

      Look at businesses like zappo’s and some similar services for clothes, that make it easy/”free” to return items that don’t fit or you don’t like for any reason. I guarantee that they know that the hassle of doing does prevent people from returning things that they’re not completely happy with. So it seems you could have a store with a number of items where you have one of them in any reasonable size, and you find what you like and order it. A purely online store won’t guarantee the fit/feel, and a traditional store won’t be able to guarantee they have the right size for you to try, won’t have as big of a range of items, and won’t be competitive on price because of their need to stock excess inventory, etc. So a showroom store sort of sits in the middle, with the best parts of both worlds.

    19. Mrs. Davis Says:

      I guarantee that they know that the hassle of doing does prevent people from returning things that they’re not completely happy with.

      I couldn’t disagree more for websites that want to stay in business. They make money off repeat customers. Returns or unwanted non-returns do not generate repeat business. Retailers are going to become more sophisticated in the reverse supply chain. Adherence to sizes will increase as vendors who have excessive “does not fit” returns will see fewer orders. etc.

    20. Brian Says:

      You don’t think people who use zappo’s and similar sites have a category of items that is “not quite perfect but not bad enough to return”? Of course they do.

    21. MCS Says:

      It used to be common for manufacturers to produce essentially identical items with different SKU’s sold to different chains to make exact comparisons impossible. As to showrooming, I am at the point that I’ll pay at least a little to avoid the store. Especially if there’s a technical issue, store employees are usually ignorant and displays usually lack pertinent information. The Amazon listing usually does too, but it’s easy enough to look up the information.

      I suspect that returns are a bigger sticking point for some than others. I rarely return anything, others are probably more picky. I bought a mattress from Amazon. Once freed from its packaging, it would have been impossible to put it back. Thankfully, that wasn’t a problem, but I do wonder what would have happened if I decided I couldn’t live with it. The few things I have returned have simply been a case of putting a return label on and setting it out for pickup.

      Woman’s clothes will probably always be a problem. Details like line, drape and contour when placed on a particular body will probably require some sort of 3D scan combined with computer modeling and fabrication and still come up short. I once read an explanation of how woman’s sizes are determined, I find rocket science much more understandable.