Amazon’s Jeff Bezos Doesn’t Care About Profit Margins

9. January 2013

Date: 09-01-2013
Source: Businessweek

amazon fullfilment centerAn Amazon.com fulfillment center in Ridgmont, U.K.

January in retail is a little bit like the off-season of a professional sports league. Teams dust themselves off from the grueling holiday season playoffs, evaluate their coaching staffs, and assess the balance of power in their divisions. In this month’s period of exhausted self-reflection, one of the industry’s broad conclusions is clear: Amazon.com is on its way to establishing a dangerous dynasty.

Amazon recently said it had its best holiday season ever in 2012, selling 26.5 million products around the world at a record-breaking pace of 306 items per second. Earlier this week, Amazon stock hit an all-time high, buoyed by a Morgan Stanley report that predicted the global e-commerce market will hit $1 trillion by 2016, with Amazon poised to capture nearly a quarter of that. The company is madly adding such customer freebies as new movies and television shows to its Netflix -slaying Prime Instant Video program, and its commitment to having the lowest price anywhere is increasingly exerting a gravitational effect on the strategies of rivals.

On Tuesday, Target announced a new policy of matching competitors’ prices year-round—a tactic geared toward slowing the emergence of “showrooming,” the practice by which shoppers browse in a store and then buy online, often from Amazon. Target, whose stock is also near an all-time high, is the second-largest retailer in the country, behind Wal-Mart. But if current growth rates continue, it will soon lose that title to the upstart from Seattle. Read the rest of this entry »


Just because something has value doesn’t mean it has a price

9. January 2013

Date: 09-01-2013
Source: The Guardian by Cory Doctorow

If every last shred of incidental online value is given a price tag, we’ll never harvest the full fruits of our ingenuity
googleGoogle is a case-study in harvesting positive externalities.

When future economists look back on the dawn of the internet era, they will marvel that an age of such technological marvel was attended by a widespread, infantile mania for preventing positive externalities.

“Externalities” are the economist’s catchall term for the spillover effects experienced by the people who are affected by others’ activities. Most of the 20th century was spent locked in battle with the corporate vice of externalising negative costs. Companies are beholden to their shareholders, and so they are meant to save every penny they can, even when saving that penny might cost the rest of society several pounds. The classic example is toxic waste: processing industrial waste before it leaves the factory is a costly proposition, and so, whenever it is possible to do so, companies have defaulted to dumping their waste into the wider world. This is a much cheaper option — for the company.

For the world, it’s vastly more costly. After all, when the offensive sludge is all neatly gathered at the effluent pipe’s head-end, it is concentrated and handy, and can be gathered and fed into whatever decontamination or sequestration system is appropriate. Read the rest of this entry »