Ever Wonder Why Amazon Thrives?

[Provincial]

I am at least third generation in our family to use NAPA as a commercial account. This is an important distinction, as commercial account get greater support (pricing, technical information, and now, online ordering) than the general public.

For instance, catalog support (meaning online access to full catalogs - virtual paper catalogs) lets you look at the real NAPA Belt & Hose catalog, which has the actual belt lengths and other dimensions.

In general, I buy what I can from the local store, because I know that if I don't, they won't stock what I need anywhere close (one day service from Portland or Seattle Distribution Centers) much less in stock in the store.

I look at this as the price I pay to help the local business survive and be there when I need them.

I find more and more that things listed in the online Prolink catalog are not in stock anywhere but the supplier, which means "unavailable" without saying so. At least I can use it to identify what I need to look for online .

 

[ZigZagZeke]

I shop at Amazon because I got tired of driving all over looking for an item
no one has in stock, being waited on by someone with pink hair, couldn't count
to 20 without taking off their shoes and more hardware in their face than my toolbox has didn't help either.
I order from Amazon and it's on my front step in 2 days.

Especially when you go to several sources and find that they are all serviced by the same jobber with his own racks. I recently tried to buy 9 identical switches for the instrument panel in my boat. Every automotive parts place I went to had exactly the same rack and the same inventory. If they had the switch I wanted they only had one or two of them. I finally gave up trying to find 9 identical switches at 4 different stores. I bought all 9 switches at Amazon for less than the local price.

 

[BrandonQuixote]

Amazon Anecdote; wife needed to fly out of PDX to LAX so I took the day off to shoot in the morning and drop her off in the evening. After which I would proceed to go on a "sick one" with the house to myself. 20 feet out of my drive way at 430 am and the throw out bearing in my 2001 TJ shiits the bed. Figured if im gonna drop the trans to get to it, might as well do the 20 year old clutch, flywheel, pressure plate, Master/slave clutch cylinders. Ordered EVERYTHING friday at 8am, got it Saturday before noon. Everything. Significantly cheaper. The M/S Clutch cylinder pre-bleed combo alone was over $50 cheaper. They simply provide better services at a better price, this is free market enriching our lives and I love it.

 

[Mikej]

Especially when you go to several sources and find that they are all serviced by the same jobber with his own racks. I recently tried to buy 9 identical switches for the instrument panel in my boat. Every automotive parts place I went to had exactly the same rack and the same inventory. If they had the switch I wanted they only had one or two of them. I finally gave up trying to find 9 identical switches at 4 different stores. I bought all 9 switches at Amazon for less than the local price.

I've come to not bother looking for certain things. Kitchen stuff for one. One thing, very simple...A proper silicon spatula that would be appropriate for getting the last from a mayonnaise jar. Not too soft, not too hard. I found one in a shop in Florence old town. I had been looking at Fred's, Wally's, even Kitchen Kaboodle. So now I don't bother with local stores. I went on Amazon and searched a hundred styles to find exactly the same thing. When the two I have get trashed, Amozon it will be.

 

[Member 34319]

Long but worth the watch.

 

[cigars]

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.

I started up an amazon pro account a while back. I was FBA. After a while I wasn't selling enough for it to make sense. Then I get an email from amazon suggesting that I downgrade to a private seller account. The fees went away and I sold through the rest of my inventory within a week. I really hate their inventory management system.