The reason why Amazon was successful early on was selection and pricing. They had _everything_ rather than the generally limited selection most people had from local stores and the pricing, especially for things like technical books or genre publications, was often very favorable. Yes, some people lived in major cities with awesome bookstores but for most of us in suburbia the selection was what the local supermarket / drugstore carried or a non-trivial drive.
Amazon was 40% less than list for books -- which was a massive amount, even if you lived in Barnes & Noble markets (and B&N wasn't as pervasive in 1996/1997 as your average mall bookstore was), where there were similar markdowns.
And of course, you could get any book you wanted from Amazon.
And then Amazon very quickly moved into media like CDs and DVDs. I used to order DVDs from various online retailers in the late 1990s and although Amazon wasn't my go-to in 1999/2000 (there were plenty of startups that sold at ridiculous losses and coupons that 16 year old me took advantage of), I appreciated their selection -- not to mention the gift certificates.
I think a lot of us forget that Amazon wasn't the only big e-tailer in the late 90s, it's just the one that survived. There were lots and lots of bigger and smaller places that straight up went out of business after the .com crash, but Amazon, despite taking a massive beating, survived.
Price was a huge reason for its success -- but I agree with others who point out that Sears and other incumbents had a chance to take them on, if not on price, than on selection and speed, way earlier than they did.
Instead, many businesses chose to partner with Amazon (Borders, Toys R Us) for a time, to their ultimate detriment.
In 1996, Mom had been screwed over by phone reps for CompuServe's attempt at a true ISP stealing her credit card to order shit from Tiger Direct (told you this was a 1990s story) and was leery about anything online for years after that (and Tiger Direct was technically a mail-order catalog but it had a website).
But you're right that eBay and Amazon were two of the earliest trusted, in part because they were the two biggest/first to market. (And also, both proved themselves to be trustworthy, which was important in the age of fly-by-night e-tailers).
The same is true for PayPal.
By contrast I refuse to send my credit card number in an email or post it on a non-SSL site.
Guess which way I’ve only ever had my credit card number stolen?
This so much. I remember people's fear of filling in their Credit Card info online. And people who thought sharing Uber with a Stranger would be a no no.....
How time changes.
Furthermore, it's easy to forget just how hard it could be to track down even an in-print book and how long it could take to actually get your hands on it. Some big city bookstores were better but, in many cases, (assuming the bookstore would special order books at all), it would basically be put into the next batch order from a publisher which might be a month or two.
The crazy thing was, once the semester was nearing the end, we'd pack up all the unsold books (some classes had many unsold books) and ship them back to the publisher, at a significant loss from what I remember.
The student union was run independently from the university as a non-profit and was running a big deficit. However, the office people upstairs had humongous 24 inch CRT monitors, ones that surely cost a pretty penny. In 1998, 17 inch CRT sold for nearly a thousand dollars. I just looked it up. But I digress.
Huh?
Above reasons contributed to quite a bit of the books not getting sold.
But yeah, I had to uncrate the dang books, and a few weeks later, crate the same books to ship back to publishers.
I bet I'm one of the very few of the student body who learned how to work with Pallet trucks.
This.
But even for pure list, Amazon didn't pay sales tax so had a 5-8% advantage.
Amazon killed all the technical bookstores in short order because of that pricing advantage that they didn't deserve.
To a certain extent the price didn't matter much because it was the only way to buy a lot of books.
Perhaps on certain things like accessories- IE cables that stores normally had huge margins on- you could find generic equivalents for cheaper prices, but not in a general case.
Until maybe 2009 or so, it was always about selection. I spent a good portion of the 2000s using their recommended book list to figure out what I was going to read next, and when I was almost done with my current book, giving my self a ~5 day lead time to order the next, because that's about how long it generally took. It was an easy tradeoff to make, since a few clicks was a lot less effort than going to a store. I was also reading a lot of somewhat specific programming books in those days that weren't carried by most stores.
One other neat thing was international availability — Amazon.co.uk had Terry Pratchett books months ahead of the US release, so I could read them at the same time when people on Usenet were.
Eventually book stores started to create their own websites but by then it was too little too late.
Toys R Us did this too and as a result, never built a really solid e-commerce strategy. In fact, when Toys R Us left Amazon in 2006 (after years of litigation to get out of the contract) [2], it had the unenviable position of being behind from a tech perspective in a massive way. Not only that, the experience was considerably worse than it had been under Amazon.
[1]: http://www.internetnews.com/ec-news/article.php/3749336/Bord... [2]: https://www.wsj.com/articles/SB113798030922653260
Knew a couple other folks at Borders, and visited them at work a couple of times. Borders was just clueless at tech, and BN was starting to take a lead in tech, which helped them with sales a lot more.
It's my opinion that The Dot Com Crash is what created Amazon.
Here's how:
I worked in Redmond Washington during the crash, and there were thousands of people who lost their jobs due to that. I knew so many people who were struggling to find work.
This was Y2K, when Seattle wasn't the tech powerhouse it is today. T-Mobile didn't exist, Google hadn't opened any offices in Washington, and tech companies were failing left and right.
I think that the crash gave Amazon an opportunity to hire people. There was a lot of talented people out of work.
Arguably, this may also explain why T-Mobile has become so huge. I worked there before they were T-Mobile, and I can remember how tiny we were. You could fit our entire operations team into a conference room.
Nowadays, T-Mobile is HUGE and I think a lot of that may be a combination of geography and timing. In 2003, Sprint was bigger than T-Mobile, but they're based in Kansas and the Seattle area just has a much larger pool of engineers to support a company like that.
I suppose the lesson is that there is a lot of value in being a distributor as I also know someone who is a part owner of a brewery and he says the same thing.
The two main mall bookstore chains (Waldenbooks and B. Dalton) were, despite keeping their names, owned by and integrated with Borders and B&N respectively by the time Amazon existed.
Amazon itself seems to have forgotten this; reviews used to be very useful, but either they're not trying very hard to combat fake reviews or they're not up to the challenge, because they're almost useless now for big-ticket items.
Yeah, 'big ticket' wasn't the right word; probably I meant 'commodity'. I meant to exclude things like reviews of obscure books, which sellers apparently usually don't bother trying to game, since they seem to be reasonably reliable (at least, last time I checked, which was a while ago …).
That's not to say that Amazon didn't execute well. And their selection was excellent. It's just really easy to compete on price when your checkout total is 5+% cheaper than an in-state competitor even when the items were priced the same. Of course, this only applies to states that levy a sales tax, but that's still a large portion of the US.
Setting that aside, my point was Amazon had a built-in price advantage that brick & mortar retailers did not. Use tax really should have been the normalizing force there, but no one declares it and it's hard to enforce. So, all things being equal, consumers would shop where they could realize a price savings. The story of brick & mortar retailers transitioning to e-commerce is more nuanced than some titan resistant to change being taken out at the knees by some peppy up and comer. Amazon was quite aware of this and fought very hard against any change in rules regarding collection of sales tax.
There were several popular books written on the subject of Amazon's customer service model (or ones that used them as a key example to their thesis) that were written long before Amazon ever offered prime and even before they really started taking off. The Amazon of the mid-00's was a major player, but still small enough that they had to differentiate themselves from competitors (at the time) like Ebay and Newegg. Outside of selling media (books, CDs, DVDs, games etc), Amazon's inventory was still mostly limited to the kinds of goods one could also find on those sites (clothing, accessories, electronics) which had them stuck competing on price. What eventually began separating Amazon from the pack was the fact that they would go to extraordinary lengths to take care of the customer. Their return policies were why I stopped shopping exclusively on price well before Prime became a thing as the confidence that I could teturn an item in reasonable condition (as in I could still return something after discovering a flaw after opening it) for free (in almost all reasonable circumstances) and without having to do anything more than print a label and drop the box back by a UPS pickup location was a gamechanger in building my confidence in online retail. It was to the point that making s return with Amazon was easier than making a return to a store and thar was the edge they needed to convince consumers fo choose Amazon over not only other online retailers, but ohysical stores as well.
The rise of 2 day Prime shipping undoubtedly fueled their exponential growth and made Amazon what it is today. However, I doubt they would have ever had the ability to build the infrastructure needed to make Prime work if it wasn't for the initial wave of consumers becoming loyal customers due to their reputation for customer service.
Keep in mind, his long term goal is to put people on other planets. So he's definitely playing the long game. Blue Origin is a huge factor here.
In this case, the thing that made Amazon so great, before Prime existed, was that it had the "Things you might also like" section.
AFAIK it was one of the first online stores that used machine learning to recommend new and related items you didn't realize you wanted and to have user ratings for each item.
It was especially powerful for books/movies/music just due to the sheer volume of different titles that makes it hard to find new content you might like.
There are a lot of retailers that had the logistics and infrastructure for online sales, but the kind of marketing that Amazon did for up-selling was wholly new and something that could only be done online. So even if Sears could do it, it wasn't obvious back then to anyone that they should do it or how to do it.
Even now, the Walmart and Target web stores recommendations are just ok compared to Amazon. Even eBay seems less comprehensive in its recommendations.
I know why they got rid of it - and Amazon has this problem all over the place, but some products just sit, while others, with really no difference just fly off the shelves.
But if you just bought 1984 for example, there's a good chance you'd also want to buy WE, Brave New World, Erewhon, etc. The algorithm made sense for the book store, but it makes less sense for the "Everything Store".
My recommendations right now have seven separate ten-dollar tire valve extenders, two screen protectors from the same brand (only one of which is for my phone- and that one I already bought!), a $1,000 drone i accidentally clicked an ad for last week, two more screen protectors from other brands, four Qi chargers, and five cases for my phone (I already purchased a case for my phone through Amazon).
Very persuasive!
i have!
Instead, the thing that got me to use Amazon was that it provided you with access to a long tail of books—and later, other stuff.
Bookstores and record stores did do "special orders", but there was a lot of friction in the process. You'd have to find out about the book, visit the store (twice!), and if what you wanted was even available, you would wait a few weeks for your order to be bundled in with the next shipment from the publisher.
Amazon removed all of that—and the reviews even made it less risky. Want to read the next book in a series? Check out the reviews and if you want it, done deal! Need some obscure technical title? It'll be AT YOUR HOUSE next week.
When I was much younger (pre-teens and teens), I was a voracious reader and would spend a lot of time at the library. But even there, I would mostly stick to the long-running series that I knew well, or prolific authors that I knew I liked.
Some places feel "well-curated": they may not have a ton of books, but it seems like the books they do have were carefully chosen. Maybe there are "theme" collections (local authors, ghost stories for grownups, Russian authors", etc) or well-read staff members making recommendations. I love browsing these places.
Other places seem to go with the "pile of books" approach. There's a lot of them, roughly organised ('fiction') and many of them are obvious tat ('Lose Weight the Dr. Oz Way' or something. I find it easy to leave these places without buying anything.
I'd really be interested in a graph that showed some growth metric like revenue or number of orders plotted against a timeline of when Amazon introduced certain features. I remember seeing one for Facebook that was really illuminating.
These days I find the recommendations pretty useless and have a slightly different opinion of buying products there just to help out the company.
That's generally not a useful bias to base beliefs off of :)
Before shopping at Amazon ramping up, right around 2000, I remember Sears logistics starting to break down with kafkaesque calls into Sears service and parts departments. I guess the point is, I think the decline of Sears mostly had to do with internal complexity and breakdown of effective management than anything directly to do with Amazon.
Personal anecdote:
My mother, back in the late-nineties came to me one day and told me how she had figured out how to get stuff from the jcpenny and sears "even faster". Because she could just search Amazon, "and they actually deliver it to me by the end of the week!"
"I bet you thought they only sold books right? It's something new they have!" yada yada yada blah blah blah. She was pretty proud of herself to be telling me about the new stuff on the web, but I digress. Point is, she was like a kid in a brand new candy store. Only a candy store that sold toys and video games too, and opened up across the street from the kid's house.
My own conclusion reading this is that Amazon was just highly competent across the board. They were online in the mid-90s. They were quick with shipping (eventually, if not right at launch). They were competitive on pricing. They quickly had a huge inventory. They had the "you might also like..." algorithm that's impossible to get from a print magazine. They had online reviews. They offered Prime in 2005.
Their stores were also a hodgepodge of junk all randomly mixed, and they never made their store a desirable place to stroll.
I think it requires something very special for an organization to accept to canibalize itself. Apple is the only exemple that I would see at a behemoth scale.
But most of these issues are plaguing every other major site. Ads that stick with you for days and days whatever site you look at are becoming the norm.
No ec site review system can be trusted in my opinion, they are usually way to easy to game. For anything that actually matters reputable and dedicated review sites end up to be the most useful.
Different sellers and different price are fine to me, it actually helps to mitigate the knock off issues in my experience.
All in all amazon has degraded a lot in these aspects, but I feel the whole industry took the dive and don’t see competing retailers coming up with fresh ideas.
How are they doing?
Other things I've stopped buying from Amazon are the frequently-counterfeited categories of items (USB chargers, etc etc). I'll just go to Microcenter or Walmart or wherever local whose supply chain I have more faith in.
Agreed that Sears never moved much beyond the 1970s in store layouts and merchandise display/organization.
Sears died because Eddie Lampert spent years systematically looting the company. If not for Lampert's dismanagement [0], Sears would be in roughly the same position as other department stores like Macy's or JCPenney. Yeah, sure, they're not doing super great, and Amazon is kicking their asses, but they're still keeping their heads above water.
[0] Sic. I'm trying to coin a neologism here. Dismanagement is to mismanagement as disinformation is to misinformation. Mismanagement and misinformation come from incompetence; dismanagement and disinformation come from malice.
I've seen “malmanagement” used the way you seem to be trying to set up “dismanagement”, by analogy to the distinction between misfeasance and malfeasance. (Dictionaries seem to view it as a simple synonym of “mismanagement”, though.)
Pretty much. Jurvetson calls it the luxury of being a new entrant. It's very hard to steer the Titanic away from an iceberg.
Admittedly, that was only part of it: there was some mismanagement behind Sega's decline too. Actually, you could say the same thing about Sears: the final nail in their coffin wasn't Amazon learning from Sears's lessons but rather Eddie Lampert's deliberately and systematically looting the company over a period of several years. If not for Lampert, Sears would just be another Macy's.
This is 50% of the thesis of The Innovator's Dilemma, the book that introduced MBAs to the the word "disruption".
The other half if why this happens to behemoth companies, which is that they are listening to their customers. In this case, the customers are those who are OK with waiting 3 weeks and would just like a wider selection or lower prices. People who would but if delivery were faster by definition aren't customers.
Startups have to address the non-customers because otherwise they'd have to pry them away from their existing supplier -- generally a much tougher task.
When I lived in the UK, I discovered retail shop hours at 9 to 5, except Thursday and Saturday when you have to fight crowds. Also, things were more expensive. So Amazon won again.
All the monopoly complaints aside, the rest of the retail world doesn't compete very well.
I bet when Amazon's fulfillment speed was brought up as a competitive advantage, the Sears execs looked at some spreadsheets, did some calculations, and said, "This is stupid. They're losing a ton of money shipping stuff so fast. They won't get far before some adults take over and force them to smarten up."
Amazon started as purely a book store in 1994 and stayed that way for a good while; it was not immediately obvious to sell every damn thing imaginable. Bezos was cautious about what to try selling online. In 1998 they announced they would move beyond books, but without specific.
Amazon did not turn a profit until 2001; they really took it on the nose in the beginning, and had to weather the dot com bust.
Before Amazon expanded into things other than books, the site most known for that was eBay. In popular culture, every meme and joke about anyone buying or selling anything online was about eBay for the longest time.
It used to be the place where you could get anything for a good price in 2 days and trust the quality.
Now the selection is getting iffy in favor of house brands, Prime has a ton of strings attached (add-on, pantry, now) if it's offered at all, Amazon delivery is awful, the prices aren't nearly as good as they used to be, reviews are mostly fake, and you have to work to avoid knockoffs.
Most people I know have dropped Prime and significantly reduced their orders. They haven't stopped entirely, but it seems to be more of a "Wal-Mart" in their minds - a quick and easy necessary evil, not something they particularly enjoy.
It probably doesn't signify their decline yet, but it certainly seems to be a new stage in their lifecycle.
Whoever thought the operational cost reductions of "commingling" was worth the loss of trust in the Amazon.com was wrong in my opinion. I think people with disposable income would rather pay a little extra to guarantee they get a legitimate product, and it's not hard to google the model number or product name and select from Target or Lowes or Best Buy.
> "Amazon is not too big to fail ... In fact, I predict one day Amazon will fail," Bezos reportedly said when addressing a question about Sears recently going bankrupt. "Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years."
> "If we start to focus on ourselves, instead of focusing on our customers, that will be the beginning of the end ... We have to try and delay that day for as long as possible."
https://www.businessinsider.com/jeff-bezos-says-amazon-will-...
I spent about $9,000 on Amazon across 139 orders in 2018. I buy a lot on Amazon. I've never had a problem with receiving knockoff products. I don't understand how this can be such a prevalent issue when I've not run into it, given how much I use Amazon.
The only thing I can think is that, if I'm buying something expensive, I'll strictly only purchase items "Sold by: Amazon.com Services, Inc" or alternatively, I'll use a marketplace seller if the seller is the manufacturer of the item I'm buying.
If you are trying to avoid counterfeits, that's not really helpful, since the problem with counterfeits is magnified by commingling, by which items sold by Amazon itself, and FBA sellers that do not opt-out of it are mixed and orders fulfilled with goods that may have been sourced by any of the sellers.
Most users don't think to check for that, though. I know my mother-in-law doesn't...
But I still buy laptops and other electronics from Amazon.
But, if i order from an account without prime, they wait 11 days to ship, thus giving me 12 day delivery (just within their promised 2 weeks). If i order from an account with prime, it alternates between next day and two days.
Editing to add:
Last order without prime, Dec 28. “Shipped” yesterday (usps shows it arriving to them at 4:35 this morning from amazon, out for delivery today).
There was an article [1] from 2017 about USPS couriers lying about packages being delivered to keep up their Amazon delivery statistics. This routinely happened to me.
[1] https://www.aol.com/article/finance/2017/12/05/postal-worker...
UPS/USPS do great in my area, while if it's Amazon or FedEx I'll get it a week from never.
After 3-4 packages arrived a week or so late because of the same issues, they finally blacklisted amazon delivery. Since then, it’s been usps.
Google may have a strong position driven by search, but disruption will come for them, too.
that's quite a leap. and i don't see how that follows from what you've said.
Cannot succeed without both.
The reason Amazon is successful is not because you can shop online (from a catalog) and receive items in the mail. The reason Amazon is successful is because you can do those things and receive your items within two days. Before Prime existed, Amazon had very quick fulfillment, and after Prime two-day it became even better.
The Sears catalog ended in 1993 but the Sears Wish Book continued to exist after that. In 1999 I remember ordering something from the Wish Book required 3 weeks to receive the item. If they didn't have the desire to improve that, then they would never have become Amazon.
> If anything, Sears was the worst positioned to become Amazon. What they had was just completely wrong and more of a burden than a benefit. Had they tried to retool with their massive catalog it likely would have been a disaster. Amazon had a real benefit starting small with just books which let them learn the ropes on the cheap. [0]
I think this is especially relevant here on HN because it shows how startups are required to solve problems. For many problems, a behemoth company has no reason to improve, and a lean startup can rush to a solution faster in many cases.
[0] https://np.reddit.com/r/news/comments/a6nwj7/sears_bankruptc...