The Laws of Business Don't Seem to Aplply to Amazon

Discussion in 'UPS Discussions' started by Dracula, Oct 27, 2013.

  1. Dracula

    Dracula Package Car is cake compared to this...

  2. 104Feeder

    104Feeder Phoenix Feeder

    I think it's changing to more dynamic pricing. I just bought halloween candy to hand out there, and 100 pieces of a variety of Hershey chocolates was $11.73 while the next size up, 300 pieces, was $49.95. I bought some other candy that was cheaper but decided I didn't have enough today after it had arrived, and now the 100 piece pack is $23.53. There are lots of tricks to how they do their pricing, such as if you leave something in your cart and don't follow through they will usually lower the price after a few days. As long as they are a good value, not necessarily the cheapest, I think they will do fine. Amazon is usually my first choice for buying anything that isn't fresh produce, then Costco or the web, then the local retailers. We'll see what changes happen to the Prime membership come January.

    Amazon always makes me laugh and think of "Confederated Products", the Amway clone if you're a movie fan. Same idea really except they aren't trying to recruit you to sell.
  3. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    My son needed a HDMI cable for his video game system. We found a 6' cable for $2.98. Shipping was free and we were not charged sales tax. How can they possibly make any money off of that purchase?

    BSWALKS I Wanna Be Sedated

    I really need to change my shopping habits, & use Amazon more. We use it about once a month. We paid $25-30 for an hdmi cable not too long ago.
    ​Honestly never thought of using it as much as some here do, but the savings sounds incredible
  5. Indecisi0n

    Indecisi0n Well-Known Member

  6. Dracula

    Dracula Package Car is cake compared to this...

    That's the whole point of the article, I think. All of that income, and yet, they still can't make a profit. And I don't think they ever have. I'm no expert on business, but I don't see how this can go on forever. Then what happens?
  7. Dracula

    Dracula Package Car is cake compared to this...

  8. Returntosender

    Returntosender Well-Known Member

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    Most retail business match Amazon prices just have to show the employee the price on Amazon via your phone.
  9. scratch

    scratch Least Best Moderator Staff Member

    Last edited: Oct 29, 2013
  10. East coast navy

    East coast navy Veteran

    Here is the reason why Amazon does so well. All the product is the same as what all their competitors sell. They pay more for it then their competitors pay. Also they can sell it cheaper.

    They can do this for two reasons.

    First, if it cost $3 to make a product and a store buys it for $5 then it's sold in the store for $20 dollars. You just made a 300% profit. That's why you see sales all the time because they still will make a 120% to 200% profit. Then customers say how can they stay in business.

    Amazon does it better then this. They will buy the product for $7 and sell it for $18. Which brings in more customers. Then offer free shipping because it cost them almost nothing because they are one of UPSes biggest customers and get a good rate.

    Second, Amazon does what most of what their competitors do not. They sell online with out having a store front. You look at all their competitors and they have 200,000 to 500,000 employees where Amazon has 97,000.

    This is is why the can stay competitive while having a low margin.
  11. Gumby

    Gumby *

    But yet..they still cant make a profit!...they are spending all their money to, squeeze everybody else out.........Sooner or later they will run out of M.O.N.E.Y.!
  12. UPSmeoff

    UPSmeoff Say my name.

    Sometimes i am actually dumbfounded by the amount of Amazon packages in my package car. I actually took a picture the other day of my next 12 stops....all amazon prime.
  13. jumpman23

    jumpman23 Oh Yeah

    Alwayz use monoprice. Always have and always do. If I do any installs at any friends house its the only place I get all the supplies from whether it be for audio video or computers. Cheap stuff.
  14. ladmeih

    ladmeih Member

    They are trying to squeeze everyone else out... they're creating a monopoly. They even undercut fairly big online stores like Newegg and Crutchfield now. Heck, they even sell flowers with prime shipping. Kill the competition, raise prices, profit.
  15. Bagels

    Bagels Family Leave Fridays!!!

    Not quite.

    Amazon pays the same or less for product as their consumers, since economies of scale will work in their favor. Low overhead is the key to their business. When Best Buy purchases a shipment of televisions, it needs to move them to regional distribution centers, then to local distribution centers, then to stores. It needs to pay for the construction (which is a hectic, costly process itself) & continuing refurbishment of stores, real estate taxes, utilities, employees, TV commercials, sales circulars, "display" merchandise, etc. At the end of the model's life, Best Buy needs to invest in a reverse logistics system to return product to the manufacturer or designated clearance centers. Meanwhile, Amazon exclusively maintains a virtual sales front and its not uncommon for the televisions to sit in the manufacturer's' warehouse until they're sold, eliminating all the costly overhead Best Buy incurs. Thus, Amazon can get away with selling merchandise at a much cheaper price.

    Shipping costs are a HUGE expense to Amazon. Amazon has pushed product manufacturers into using least amount of packaging as possible and has invested hundreds of millions into developing light-weight, sturdy boxes & packing material (often giving it away to product manufacturers as well). Additionally, Amazon has pushed for low-cost services like SurePost and loaned millions to local start-up companies competing with UPS ( using LTL from Amazon to their area).

    A huge, valid concern is that Amazon has been flirting with unsustainable ultra-thin margins as a medium to chase competition out of business. Few people purchase things such as televisions without seeing them first. But given Amazon's virtual storefront, how is that achieved? Consumers flock to Best Buy to test products, which is effectively paying for Amazon's cost. Best Buy, Macy's, etc. have all seen record foot traffic through their stores in recent years, but stagnant/declining revenues. That's a valid concern within the industry today.

    Newegg's just as bad as Amazon is selling products below-cost to force out competition. At least Amazon has decent consumer service; my last two Newegg purchases were refurbished products that were DOA. Newegg refused RMA, and the limited warranty did not cover DOA. Newegg refutes all resolutions as "consumer was satisfied with our outcome." Thank God for American Express. Never purchase anything off the Internet without it!!
  16. Brownslave688

    Brownslave688 You want a toe? I can get you a toe.

    They aren't that's the point if this thread. I may be way off but amazon is a stock I wouldn't touch with a 10 ft pole.
  17. Brownslave688

    Brownslave688 You want a toe? I can get you a toe.

    don't have a low margin they have a non existent one. As long as they have backers with cash flo and pay their debts it will be fine. As Dracula said though. This can't go on forever. Amazon has to turn or a profit or they will be no more.
  18. Baba gounj

    Baba gounj pensioner

    Starting Nov. 1, 2013 Amazon will be collecting sales taxes in CT & Mass. per agreements that they have with both states .
    That would mean that they plan on having a physical presents in both states.
    Does anyone know where they will be in Mass ?
    My building has been collecting their lasership rejects & needs to have them pick them up .
  19. kingOFchester

    kingOFchester Well-Known Member

    When I was 17 I started a landscaping business. My best friend did the same. First year, my friend was spending his profits. Bought himself a nice used z28. Taking chicks out to dinner and going on ski trips. I bought more mowers. I was charging around $20 a half acre. My friend was charging $30 or more. I was showing a loss at year 1

    Year 2, I bought a second truck and more mowers. My friend was spending profits like he had a nice stable business. I kept my prices the same, while he raised prices. Year 2 was chalked up as a loss.

    Year 3, bought plows for the two beater trucks, put logos on the trucks and had company T-shirts made for my employees. Friend was still rocking his first truck, still spending money on personal enjoyment and raising prices. Gave me a hard time that I wasn't raising my prices. Year 3, yet another loss.

    By the end of year 4, I had both trucks running running 6 days a week. Spare mowers, blowers and wackers in a public storage unit. And who was running one of the trucks? My friend. He went out of business. He was making more money working for me then he was during his last year of being in business. I lived off of delivering pizzas at night. Also used that for marketing, not that my employer knew. ;). Year 4, you guessed it....another loss.

    I was on my way to getting a third truck and growing the business to the point where I was going to be able to raise prices 5%-10%, and still be cheaper then most lawn care businesses. Had an opportunity to start a new business and so I sold my lawn care business for a nice chunk of change. Who bought it? My friend. Borrowed the money from his well off parents. By year 6 he had a lot of toys including a jet ski but lost the business do to poor decisions.

    That is my teenage story about a kid and a mower. Amazon is doing what I was doing but on a much grander scale.

    They will do fine.
  20. bbsam

    bbsam Moderator Staff Member

    Who's going to buy Amazon?