Ever Wonder Why Amazon Thrives?

[arakboss]

I tired to order a date from there once. They sent me an Amazon.

Me too, I ordered the top one but received the bottom one.

 

[joken]

I'd like to know how I can order a 99 cent part on Ebay, and it is shipped to my home from China for free? How much is that costing the USPS?

 

[Helocat]

I'm still trying to figure out how they can spend so much money on trucks and free delivery and still turn such a huge profit.

First understand Amazon processes now over 38% of ALL US online sales.

My business sells some via Amazon (Less than 5% of our Gross Rev.) I can share how they have the $. To make $ you need $, the more $ you have the more $ you can make. There is an old acromion in business: OPM (Other People's Money). And this is how Jeff Bezos is doing it.

Things really blew up for Amz when they figured out the #1 issue for most online sellers was: Fulfillment. Basically getting the item ordered into a box and shipping it quickly. They invested into the FBA or Fulfillment by Amazon system, then opened it up to sellers to send their products INTO the AMZ FBA centers for AMZ to do the fulfillment post-sale. Simple right? Key thing here is $. AMZ leverages products in stock that they have ZERO capital in, prob over a Billon Dollars worth. They have no risk in the vast majority of the products in stock ready to sell. They then turn to the sellers and SELL THEM advertising to allow their products to be offered first, making $ before they even sell anything.

Example.
An item listed as Prime and sold by someone other than AMZ. Brown HD 6' 36lbs sleeping bag. Listed as Sporting goods for $110.

Step 1. You the Seller of a product has shipped in a product to FBA at a cost of $20 each in shipping. You then pay AMZ $6 per day to Advertize this product for a better ranking. $180 per month cost. Also IF the product does not sell in 30 days AMZ will bill you Storage fees, which can be $3-10 per month so your carful to only send in what you think will sell in one month.

Step 2. Item sells as Amz prime! You the Seller are billed:
$16.50 Sales fee. Depending on the class of product Amz will take a sale commission as a fixed %, sporting goods is currently 15% + $0.99.
$25.03 Fulfillment fee by Amazon (this is that free shipping, its paid by the SELLER, not Amz)
$20.00 (Already paid by the seller to ship product to AMZ, but its a cost already paid)
The SELLER NOT AMZ has paid $61.53 in expenses just to sell that $110 product. If that product costs $30 you end up w/ $18.47 profit. (lets hope that product has that much margin)

Step 3. Say this product is doing great and you have other sleeping bags too you have invested $40k + in but this one brown bag is just the one AMZ customers keep buying. It becomes "Amazon Prefered" you as the seller are now killing it as AMZ is pushing it hard. You're doing great and all that risk you took coming up with the products, listing it etc. is paying off. Hell you sold half your gun collection just to fund your AMZ sales biz.

Step 4. The seller never owns the customer, AMZ does. Also, AMZ owns all the sales data. AMZ sees that a Brown HD 6' 36lbs sleeping bag is selling really well and making lots of $$. AMZ likes making $$ too........ this is where Amazon basics come from. Amz finally puts their own $$ into products, but ONLY the products they know are the HOMERUNs, others scurry around with trial and error with their own $ AMZ sits back still making $ selling them, but is looking for what is the ideal products that they will sell direct.

Step 5. With no warning to your listing, one day a Brown HD 6' 36lbs sleeping bag pops up as an Amazon Basics. It suddenly gets "Amazon Preferred" and is the #1 bag they show. THEY OWN the sales platform, it's theirs and they can do this. Your listing is pushed down and AMZ is selling their bag for $70. You cant compete and have to off what you can for whatever you can (AMZ still makes their $$ as you do this) and get out of that product.

Step 6. Repeat.

AZM is a $ making machine that until it finally gets identified as a monopoly due to their manipulation of sales, will keep growing.

 

[Helocat]

I'd like to know how I can order a 99 cent part on Ebay, and it is shipped to my home from China for free? How much is that costing the USPS?

China as a government subsidizes the shipping for the seller.

 

[CLT65]

First understand Amazon processes now over 38% of ALL US online sales.

My business sells some via Amazon (Less than 5% of our Gross Rev.) I can share how they have the $. To make $ you need $, the more $ you have the more $ you can make. There is an old acromion in business: OPM (Other People's Money). And this is how Jeff Bezos is doing it.

Things really blew up for Amz when they figured out the #1 issue for most online sellers was: Fulfillment. Basically getting the item ordered into a box and shipping it quickly. They invested into the FBA or Fulfillment by Amazon system, then opened it up to sellers to send their products INTO the AMZ FBA centers for AMZ to do the fulfillment post-sale. Simple right? Key thing here is $. AMZ leverages products in stock that they have ZERO capital in, prob over a Billon Dollars worth. They have no risk in the vast majority of the products in stock ready to sell. They then turn to the sellers and SELL THEM advertising to allow their products to be offered first, making $ before they even sell anything.

Example.
An item listed as Prime and sold by someone other than AMZ. Brown HD 6' 36lbs sleeping bag. Listed as Sporting goods for $110.

Step 1. You the Seller of a product has shipped in a product to FBA at a cost of $20 each in shipping. You then pay AMZ $6 per day to Advertize this product for a better ranking. $180 per month cost. Also IF the product does not sell in 30 days AMZ will bill you Storage fees, which can be $3-10 per month so your carful to only send in what you think will sell in one month.

Step 2. Item sells as Amz prime! You the Seller are billed:
$16.50 Sales fee. Depending on the class of product Amz will take a sale commission as a fixed %, sporting goods is currently 15% + $0.99.
$25.03 Fulfillment fee by Amazon (this is that free shipping, its paid by the SELLER, not Amz)
$20.00 (Already paid by the seller to ship product to AMZ, but its a cost already paid)
The SELLER NOT AMZ has paid $61.53 in expenses just to sell that $110 product. If that product costs $30 you end up w/ $18.47 profit. (lets hope that product has that much margin)

Step 3. Say this product is doing great and you have other sleeping bags too you have invested $40k + in but this one brown bag is just the one AMZ customers keep buying. It becomes "Amazon Prefered" you as the seller are now killing it as AMZ is pushing it hard. You're doing great and all that risk you took coming up with the products, listing it etc. is paying off. Hell you sold half your gun collection just to fund your AMZ sales biz.

Step 4. The seller never owns the customer, AMZ does. Also, AMZ owns all the sales data. AMZ sees that a Brown HD 6' 36lbs sleeping bag is selling really well and making lots of $$. AMZ likes making $$ too........ this is where Amazon basics come from. Amz finally puts their own $$ into products, but ONLY the products they know are the HOMERUNs, others scurry around with trial and error with their own $ AMZ sits back still making $ selling them, but is looking for what is the ideal products that they will sell direct.

Step 5. With no warning to your listing, one day a Brown HD 6' 36lbs sleeping bag pops up as an Amazon Basics. It suddenly gets "Amazon Preferred" and is the #1 bag they show. THEY OWN the sales platform, it's theirs and they can do this. Your listing is pushed down and AMZ is selling their bag for $70. You cant compete and have to off what you can for whatever you can (AMZ still makes their $$ as you do this) and get out of that product.

Step 6. Repeat.

AZM is a $ making machine that until it finally gets identified as a monopoly due to their manipulation of sales, will keep growing.

A lot of people defend huge companies like Amazon and Walmart, like they're defending capitalism as a whole. The problem is that capitalism thrives on competition, requires it actually. Capitalism breaks down when companies become so huge that it's effectively impossible to compete with them.

 

[MannyGlocks]

CLT65,

That is a rather sticky wicket, eh?

So, what to do...?

Ya got an answer?

Bust em up using anti-monopoly law and let the public go back to schlepping all over town for their goods or ...?

While attempting a bit of levity with my lame azz post, I'm actually interested...

Amazon, to some extent saves lives because I'm not on the road...

 

[CLT65]

No, I really don't have much of an answer. I don't think there are any easy answers.

 

[MannyGlocks]

CLT65,

Me either.

 

[Helocat]

CLT65,

That is a rather sticky wicket, eh?

So, what to do...?

Ya got an answer?

Bust em up using anti-monopoly law and let the public go back to schlepping all over town for their goods or ...?

While attempting a bit of levity with my lame azz post, I'm actually interested...

Amazon, to some extent saves lives because I'm not on the road...

Bust them up by requiring them to NOT use the insider information gained by monitoring sales by those selling on their platform to then sell the exact product. Mind you I did not list the know Step 7. where once the competitor is gone, they then raise the price up and past the original amount since they knew the market paid it.

If you knew with 100% certainty a $500k investment would have a 400% ROI would you take it? Amazon does.

No one is shlepping around town, other online sales platforms are there.

 

[Member 34319]

TV used to be fairly monopolized. Now look at it. Every one is fighting for their piece.

Tech changes things as we continue onward.

 

[CLT65]

CLT65,

Me either.

To me, it's a bit like health care. I'm not comfortable with full blown socialist health care, and what we have now isn't so good either. What's the fix? I haven't a clue.

It's a different world. 20 years ago, the company I work for took care of its people very well. Nowadays not so much. This year is shaping up to be a very bad one. We're facing probably $10k+ in medical costs, and that's AFTER the nearly $10k in annual premiums. When you factor in inflation and the reduction in the value of medical and retirement benefits, I'm probably not making any more than I was then.

 

[CountryGent]

TV used to be fairly monopolized. Now look at it. Every one is fighting for their piece.

Tech changes things as we continue onward.

Exactly. Remember years ago (early 90s through the mid-2010s) there was debate about congress passing à la carte cable television requirements? I forget if it ever say the light of day, but the point is private industry and technological advancement solved the issue and I doubt few give a rip anymore.

 

[CountryGent]

Amazon is my only streaming service right now, no Hulu or Netflix, I'm thoro happy with the limited offerings they bring to the table.

We use Amazon Prime and Netflix, thought he latter less and less. The wife asked if she could do Disney+ for the kiddos (cartoons) and her (Star Wars), I green-lighted it, but don't think she subscribed.

 

[Alexx1401]

We use Amazon Prime and Netflix, thought he latter less and less. The wife asked if she could do Disney+ for the kiddos (cartoons) and her (Star Wars), I green-lighted it, but don't think she subscribed.

We cut the cable while back. Still have to pay Comcast out the butt for the net to do it sadly
Have had Prime for a long time. Did not even pay attention to the streaming they offer till a year or so back. Was impressed since it's there for the package I pay for anyway. Have had Netflix LONG time. Now several places are trying to get in on this. It should actually shake out good if, and that is the BIG IF, the Government does not step in and make a huge mess. Cable was forced to carry a bunch of "crap" no one wanted and we all paid for it. This was done by rules. People long wanted an alacart where they could pay for what they wanted and were told no. Now the steaming is starting to make that possible. Should be fun to see how this all shakes out.

 

[CountryGent]

I hear you. We cut cable out in 2004 because most of it was garbage. Went with Netflix on 2009 and Prime, eh, I forget. Maybe 2016-17. True on the à la carte; assuming it wasn't royally messed by .gov, it would be better for the consumer.

 

[Member 34319]

We cut the cable while back. Still have to pay Comcast out the butt for the net to do it sadly
Have had Prime for a long time. Did not even pay attention to the streaming they offer till a year or so back. Was impressed since it's there for the package I pay for anyway. Have had Netflix LONG time. Now several places are trying to get in on this. It should actually shake out good if, and that is the BIG IF, the Government does not step in and make a huge mess. Cable was forced to carry a bunch of "crap" no one wanted and we all paid for it. This was done by rules. People long wanted an alacart where they could pay for what they wanted and were told no. Now the steaming is starting to make that possible. Should be fun to see how this all shakes out.

Ya, I'm in the same boat for Comcast. They are the only internet option for my area. Sadly I pay what normal cable used to back 10-15 years ago for internet service now. So I refuse to pay even more for streaming services on top of the 60 or so dollars a month to simply be connected to the web.

 

[E4mafia]

When Amazon becomes Brawndo and we all live like the movie Idiocracy it'll be great!

Idiocracy - Wikipedia

Don't hate the player hate the game.


As for cable. I dropped Comcast in favor of frontier (which has been a nightmare of itself). Comcast was charging $90+ for 100/15 where as Frontier gives me 500/500 on a $54 a month 2 year contract - can't wait to see the bill after.... For cable we just use Netflix/dvds and just recently got a HDTV antenna which gets us about 30 some odd channels for the Ms.

I mostly watch twitch or things on YouTube anyways so I see no need in paying for cable/net when I just need one function. Phones serve me better for media consumption half the time anyway.

 

[awshoot]

First understand Amazon processes now over 38% of ALL US online sales.

My business sells some via Amazon (Less than 5% of our Gross Rev.) I can share how they have the $. To make $ you need $, the more $ you have the more $ you can make. There is an old acromion in business: OPM (Other People's Money). And this is how Jeff Bezos is doing it.

Things really blew up for Amz when they figured out the #1 issue for most online sellers was: Fulfillment. Basically getting the item ordered into a box and shipping it quickly. They invested into the FBA or Fulfillment by Amazon system, then opened it up to sellers to send their products INTO the AMZ FBA centers for AMZ to do the fulfillment post-sale. Simple right? Key thing here is $. AMZ leverages products in stock that they have ZERO capital in, prob over a Billon Dollars worth. They have no risk in the vast majority of the products in stock ready to sell. They then turn to the sellers and SELL THEM advertising to allow their products to be offered first, making $ before they even sell anything.

Example.
An item listed as Prime and sold by someone other than AMZ. Brown HD 6' 36lbs sleeping bag. Listed as Sporting goods for $110.

Step 1. You the Seller of a product has shipped in a product to FBA at a cost of $20 each in shipping. You then pay AMZ $6 per day to Advertize this product for a better ranking. $180 per month cost. Also IF the product does not sell in 30 days AMZ will bill you Storage fees, which can be $3-10 per month so your carful to only send in what you think will sell in one month.

Step 2. Item sells as Amz prime! You the Seller are billed:
$16.50 Sales fee. Depending on the class of product Amz will take a sale commission as a fixed %, sporting goods is currently 15% + $0.99.
$25.03 Fulfillment fee by Amazon (this is that free shipping, its paid by the SELLER, not Amz)
$20.00 (Already paid by the seller to ship product to AMZ, but its a cost already paid)
The SELLER NOT AMZ has paid $61.53 in expenses just to sell that $110 product. If that product costs $30 you end up w/ $18.47 profit. (lets hope that product has that much margin)

Step 3. Say this product is doing great and you have other sleeping bags too you have invested $40k + in but this one brown bag is just the one AMZ customers keep buying. It becomes "Amazon Prefered" you as the seller are now killing it as AMZ is pushing it hard. You're doing great and all that risk you took coming up with the products, listing it etc. is paying off. Hell you sold half your gun collection just to fund your AMZ sales biz.

Step 4. The seller never owns the customer, AMZ does. Also, AMZ owns all the sales data. AMZ sees that a Brown HD 6' 36lbs sleeping bag is selling really well and making lots of $$. AMZ likes making $$ too........ this is where Amazon basics come from. Amz finally puts their own $$ into products, but ONLY the products they know are the HOMERUNs, others scurry around with trial and error with their own $ AMZ sits back still making $ selling them, but is looking for what is the ideal products that they will sell direct.

Step 5. With no warning to your listing, one day a Brown HD 6' 36lbs sleeping bag pops up as an Amazon Basics. It suddenly gets "Amazon Preferred" and is the #1 bag they show. THEY OWN the sales platform, it's theirs and they can do this. Your listing is pushed down and AMZ is selling their bag for $70. You cant compete and have to off what you can for whatever you can (AMZ still makes their $$ as you do this) and get out of that product.

Step 6. Repeat.

AZM is a $ making machine that until it finally gets identified as a monopoly due to their manipulation of sales, will keep growing.

Thanks -- that was amazingly informative.

I have been using Amazon a lot in the last several years because it is almost too easy, but I do want to help keep local businesses alive. I have a local business, though not in retail thankfully. I want to survive. That means I need my sort of customers which I won't have if there aren't any local jobs. I'm going to make an effort to back away from Amazon.

 

[Alexx1401]

Ya, I'm in the same boat for Comcast. They are the only internet option for my area. Sadly I pay what normal cable used to back 10-15 years ago for internet service now. So I refuse to pay even more for streaming services on top of the 60 or so dollars a month to simply be connected to the web.

Sadly the cable is one of the big things I miss about moving out of the city. Tacoma long ago started their own Cable system and it was amazingly great. When it started I was skeptical as so often the Gov will set something up and make a mess. They were always great and were cheaper than Comcast. Now We have no choice here until some competition moves in. One thing I LOVE about steaming is ease of use. We have tried a couple different versions since cutting the cord. When we try one and want to change there is no calling some place and when you push the # to end service get transferred to the line no one answers. Just start stop, change, all on line. Then the no more damn coaxial to run. Want to move the TV or add TV's it's so damn simple now. No more drilling holes and running that damn cable or paying the cable provider to come do it.

 

[Mathias]

OK, here's why Amazon is putting brick and mortar stores out of business. I put a new alternator on the boat engine the other day. Of course, getting an identical replacement for the 25 year old alternator was not an option, so I had to rework the mounting brackets a bit. This meant that I needed an alternator drive belt that was about an inch shorter than the original one.

Since car parts guys don't seem to be very net savvy there is really no way to look up the dimensions of the belts available on the NAPA site using the NAPA part number on the original belt, so I went to Amazon and looked up the part numbers for belts an inch shorter and an inch and a half shorter. Just to be on the safe side I thought I'd buy both sizes and use the one that fitted best, and return the other one.

Since returning one of the belts would be a whole lot easier if I purchased from the local NAPA store, I went there and asked for both part numbers. The clerk produced the belts and said, "That'll be $49.90."

"What?!!! Those belts are $8.50 each at Amazon", I replied. "I'll just order them on line. Thanks anyway."

$24.95 each at Napa. $8.50 each at Amazon with free shipping. I ordered both sizes. I'll keep the one I don't use and hope it works as a spare for 1/3 the price.
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Amazon owns the Washington Post......