Mighty Amazon

theodp writes "Fortune reports that the patent-pending practice of selling partners' used and new goods next to Amazon's own was CEO Jeff Bezos' response to the emerging threat of eBay. Seeing an opportunity to overtake the online auctioneer as well as a way to slow the need to add warehouse capacity, Bezos 'bet big and put hundreds of his best people on it.' While Bezos' decision caused a lot of discomfort at the time, including the Authors Guild protest and the subsequent e-mail campaign in Amazon's defense, today almost 20% of the e-tailer's unit volume is sold through others, yielding revenue that is almost pure profit."

Comments

profit.

[rumpledstiltskin]

and it's probably a strong contributing factor to Amazon's finally being profitable. I don't know how much I like there being a patent on this, but it isn't a bad idea, even if the author's guild is up in arms over it. Personally, one of my favorite stores is half price books.

Re:profit.

[SN74S181]

Problem is, you can only find a book at Half-Price Books if someone else decided it's not worth keeping.

Re:profit.

[Anonymous Coward]

I found a copy of "managing a windows 2000 network environment" there for $5.00 ($5.41 after tax). maybe no one wanted it, but it came with a 120 day trial edition of win2k advanced server I can play with.

Re:profit.

[MsWillow]

Amazon could be profitable any time Jeff wanted it to be. The rules say that a company must show a profit at least once every "n" years, and when they show a profit, they end up paying taxes on it.

What Jeff did was to play that game, pouring any excess money back into making Amazon grow, until they finally had to show a profit. He's still doing that, and when people realize that Jeff knows the rules, and how to work around them, they'll better understand what he's doing.

I used to work with Jeff, years ago, at a place called Fitel, in New York City and London. Got to know him fairly well - he's actually a fairly accomplished hacker (in the old, good sense of the word) - as a child, overseas, he calibrated everybody's VCR digital counters, and had a BASIC program that converted between the different units, so that when the other ex-pats exchanged VCR tapes with indicators of where each show started, they'd be able to fast-forward to that spot on their VCR. Clever :)

So, please, folks. Realize that Jeff Bezos is one darned-clever dude, and react accordingly. He's not lost a bet that I know of in the nearly-twenty years that I've known him.

Re:profit.

[captain_craptacular]

The rules say that a company must show a profit at least once every "n" years, and when they show a profit, they end up paying taxes on it..

So by your logic it would be better for me to make $0 and not pay taxes on it than to make $100,000 a year and pay $20,000 of it in taxes?

I can understand funnelling profits (ie. any excess money) back into the business. But basically that just means making a profit and writing some of it off, all businesses do that.

Basicaly what I'm saying is its always better to make a profit, because even if you lose 20% of it to taxes, you still keep 80%. Any businessman who plays a game which involves never making a profit isn't going to be in business long.

Re:profit.

[gte910h]

Naw, that isn't how corporations work.

You see as a C-Corporation, profit is pretty much the money you haven't spent on something. When you make profit, you have to give a portion of it, say 20% of it, to the government, which you never get back.

Instead, you can re-invest it into the company, and you have a bigger company that can do bigger things in the future. If you "invest" it into a company jet, you do so with company money and viola, it can be purchased at effectively 25% less (as you didn't have to pay income tax on that profit). And salaries of employeess of the company, such as that of bezos himself, are an expense and do not come out of the profits of a corperation.

Sure the company owns the plane, but you CONTROL the plane, and get all the benefits out of it.

Imagine monopoly, the board game, with the same rules as usual, but every time you hit go you write down how much money you have. If you have more money this time than the last time, you give %20 of the difference to the bank.

See how in that situation, you'd do well to spend that money on things such as improvements on your properties, and buying new properties, rather than to turn a profit?

I recommend the book, Inc and Grow Rich, to learn more about the workings of C-Corperations from a working man's perspective.

Re:profit.

[shreak]

It's not always better to make a profit. It depends on the organization. It's not in an NPO's best interest to show a profit (and if you think all NPOs are set up as goody-goody orgs, think again).

Practically every movie ever made in modern times does not show a profit.

For a corporation the goal not to make a profit, it's to "increase shareholder value". Turning a profit is one way to do this. Growth is another. Growth is usually achieved by taking revenue and pouring it back into expansion or R&D. Of course everyone involved is getting a salary so everyone is making money, even if the corp. isn't. The share value is going up because the company holdings are increasing. More factories, more IP, more product value...

Even for corps that show a profit, what's the point? Cash doesn't do you any good as a company. You get taxed on it and having too much laying around makes you a big target for a takeover. If you're going to keep a lot of cash your market valuation becomes even more important. Lose too much market confidence and someone will swoop in, buy you up, drain the coffers and throw you in the gutter.

Even outside of a big corp., profit is overrated. Let's say you set up your own mom-n-pop and incorporate. It's probably in your best interest to take everything your corp. takes in as revenue and pay it out to you as a salary. The Corp shows no profit and is not taxed. You show a salary and are taxed accordingly.

=Shreak

Re:profit.

[Doomdark]

Even outside of a big corp., profit is overrated.

I'm not sure it is all that overrated. At least up until stock market bubble, many investors thought profits to be irrelevant, and growth to be "the thing". Back then profit was severely underrated, IMO.

Profits do matter for some things, anyways; dividends can only be paid on profit, and cash companies need for high liquidity usually comes from profits. Alternative is to accumulate debt, but really, nothing beats cash without debt, no matter what size the company is.

Most investors actually put much more emphasis on cash situation of companies (including cash flow) than most people understand. Thing is, when problems occur, there's nothing as useful to have around than liquid cold cash. Nothing. No amount of revolving credit beats cash. Cash is what you can buy companies with; equity isn't always accepted. And as to takeovers; well, companies with lotsa cash are accordingly priced higher. Without that cash, they'd be much cheaper, and potentially even easier as targets.

Re:profit.

[Anonymous Coward]

There doesn't seem to be much doubt that Bezos is clever and knows how to play the game. The problem has been that when you align yourself with the game and the game itself turns out to be an illusion, and in many cases a fraud, then you get tarrred with the same brush. Companies that touted themselves as "The Next New Thing" are rightly being forced to show more than "pro forma" how they really are different. Part of being the real deal is being profitable, for a very long time Amazon had nothing more to show than "we've got many eyeballs" and "sometime down the road we'll sell enough things at a loss that we'll be profitable".

Without debating the sensibility of the stock price, things are looking up for Amazon. But it absolutely makes sense for people to question Amazon/Bezos; they made their own bed, very, very carefully....

Re:profit.

[Anonymous Coward]

Free crap is still crap. If they really wanted to screw you they'd give you two trial editions.

-- adapted from Dennis Miller

Re:profit.

[/dev/trash]

Great way of apologizing for Amazon's lack of profits. I'd say it's more due to the fact that expeneses were greater than revenue, not that he was trying to avoid taxes.

One day the cash will run out and so will Amazon's luck.

Re:profit.

[Rasta Prefect]

Amazon could be profitable any time Jeff wanted it to be. The rules say that a company must show a profit at least once every "n" years, and when they show a profit, they end up paying taxes on it.

Please provide a citation. Theres no such rule in the United States.

Re:profit.

[Uber Banker]

Unless, huh, I got a loan and bought cash.

I believe you're misunderstanding a 'cash-rich' industry, inplicit in this article. A 'cash-rich' company would only [choose to] be so because growth had stalled so cash becomes preferable to reinvestment (which shows little return). I may be in a successful industry but have little cash, because its better spent (and results in increased growth).

Then the tax treatment of dividends vs balance hseet growth or reinvestment, whether funds are better raised by what capital issue becomes the home of corporate finance theory - a fascinating area, buy a book on Amazon!

Re:profit.

[rleibman]

I could be wrong, but back when I bought my 5 Amazon stocks (about 2.5 years ago) Amazon's book business was already profitable, the company as a whole wasn't because Jeff was looking down the road, spending the money made in the profitable parts to establish Amazon in other areas.
It seems like that strategy is working, and my stock is finally worth what I paid for it, more than I can say for every other stock I own.

Re:profit.

[daoist]

Amazon could be profitable any time Jeff wanted it to be. The rules say that a company must show a profit at least once every "n" years, and when they show a profit, they end up paying taxes on it.

Please provide a citation. Theres no such rule in the United States.

Try the following paragraph from IRS Publication 535 Business Expenses.

Presumption of profit. An activity is presumed carried on for profit if it produced a profit in at least 3 of the last 5 tax years, including the current year. Activities that consist primarily of breeding, training, showing, or racing horses are presumed carried on for profit if they produced a profit in at least 2 of the last 7 tax years, including the current year. The activity must be substantially the same for each year within this period. You have a profit when the gross income from an activity is more than the deductions for it.

Wind under Thy Wings

Re:profit.

[Rasta Prefect]

Try the following paragraph from IRS Publication 535 Business Expenses. [irs.gov]

Try reading the paragraph immediately preceding the one you quote:

In determining whether you are carrying on an activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether:

1. You carry on the activity in a businesslike manner,
2. The time and effort you put into the activity indicate you intend to make it profitable,
3. You depend on income from the activity for your livelihood,
4. Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business),
5. You change your methods of operation in an attempt to improve profitability,
6. You, or your advisors, have the knowledge needed to carry on the activity as a successful business,
7. You were successful in making a profit in similar activities in the past,
8. The activity makes a profit in some years, and how much profit it makes, and
9. You can expect to make a future profit from the appreciation of the assets used in the activity.

The Presumption of profit is more to keep people from claiming to be a non-profit when they aren't. Quite a lot of businesses have lost money more than 3 years out of 5. Also, the regulations cite are largely for the deduction of business expenses relating to personal tax returns.

Re:profit.

[Anonymous Coward]

Liquidity is worth much more than you believe.

Re:profit.

[photo storm]

Ah, yes, discussions of profits.

Before everyone starts jumping up and down at how profitabl Amazon really is, lets actually look at some facts.

I direct you to their latest quarterly results. Some highlights that are discernable pretty much at a glance:

• Amazon has never actually posted a profit.
• To date, Amazon has amassed losses of nearly $3 billion US dollars. That's impressive. It also means the company would have to post some pretty impressive profits before you can expect a dividend. Very importantly, it's unsustainable.
• Amazon currently has a stockholder deficit. That means that they have more debts than assets. Specifically, what this means is that if the company were to liquidate, the stockholders would get nothing. Nothing at all. There aren't enough assets in the firm to cover contractual debts!

  This, of course, means the stock is worthless.

Now, to their credit, Amazon has actually been successful at cutting their losses. The losses are no longer absurd, they are merely irritating. This shows progress.

To all of you saying "this is merely reinvestment, and the losses are intentional!", I say pish-posh! The company is public. Moreover, the company is a for-profit organization. That means that stockholders have an expectation of profits, which manifest as either devidends (paid out of a company's retained earnings) or growth (which is really the expectation that dividends will be received at some point, or a dramatic improvement in the company's balance sheet).

Remember: when you pay taxes, you don't give up your entire profit. You give up a part. Spending money frivolously on bogus, unnecessary expenditures merely to avoid paying taxes is:

• Irresponsible, because that money could be profit that is retained.
• Outright theft. The money is not the management's. The money belongs to shareholders. You would not want Amazon to build an extra warehouse any more than you want the former CEO of Tyco to buy his $7000 shower curtains.

So please, next time, actually look at the facts before declaring that Amazon posted a profit. It simply isn't true. This quarter, they aren't even cash-positive.

Re:profit.

[Hognoxious]

The citation quoted defines a profit making activity, but it does not obligate the enterprise to make a profit by that activity. Thus it does not say that -

a company must show a profit at least once every "n" years

- it merely says that if it does, it's considered to be with the aim of making profits.

Want to try again?

Re:profit.

[Uber Banker]

No it's not.

Liquidity is an opportunity cost (more liquid assets typically have less return). Yet they are useful when it comes to a cash push.

So a small amount of liquidity is always prefereble, with access to increased liquidity (so no high debt burden which will act against this) when is necessary.

Re:profit.

[Doomdark]

Unless, huh, I got a loan and bought cash.

Hmmh? Yes, companies loan to get cash, even often to just avoid using their "own" cash (raising their liquidity). But that doesn't really contradict "cash is good" statement. :-)

But I believe I was only replying to specific "profits are overrated" comment. I do understand that sometimes (often) it makes more sense to just reinvest money straight off (writing off investments), that's obvious, especially on companies in fast-growth industry sectors. This does not mean there are no cases where reporting straight profit is a very valid option. And like you point out, this is much more common in mature sectors, where growth opportunities are more limited.

And yes... economics (of financing) are sort of fasciniating. I guess that's why they even have degrees for people that work on those thingies! :-)
But for me, only thing close to that is just watching manager pull fakey ROI calculations out of their hineys, to prove that "their" project is the most wonderful thing since the sliced bread. And that's not very interesting, except from (socio|pshyco)logic point-of-view!

Article Text

[Anonymous Coward]

Mighty Amazon
Jeff Bezos has been hailed as a visionary and put down as a goofball. He's proved critics wrong by forging a winning management strategy built on brains, guts, and above all, numbers.
FORTUNE
Monday, May 12, 2003
By Fred Vogelstein

"Mr. Bezos, can you hold that bottle of water on your head so I can make sure I'm in focus?" "Mr. Bezos, when you jump, can you spread your arms and legs in the air?" "Mr. Bezos, while you're in the air can you turn your body 90 degrees and land in a sitting position?"

Jeff Bezos is having his picture taken jumping on a giant trampoline, and, remarkably, he looks like a man in his element. Most CEOs wouldn't pose for a photo like this in a million years. Risk life and limb to look undignified? Not a chance. But Bezos, who is 39, embraces the experience with the enthusiasm of a 10-year-old in an arcade. He cracks jokes about his receding hairline, he chats up the photographer about his equipment, he even helps the photo assistants rearrange the shot. "We ought to try this on the vomit comet," he says mid-jump, referring to the plane astronauts use to simulate weightlessness. "That would be really cool." He protests only once, after 30 minutes of jumping, when the water bottle he keeps placing on his head for the photographer springs a leak. "Next time we do this I think I'm going to need a stunt double," he says. When it's all over, he pulls out his own camera and orders everyone onto the trampoline for a group shot.

Anyone who knows Bezos understands that it doesn't take much to get the founder and CEO of Amazon.com to start acting up. In good times and bad, Bezos has always been a man of exaggerated gestures, whether he is dressing up like a four-star chef to promote Amazon's kitchen store, climbing atop a conference table on all fours to signal his interest in a business presentation, or just unleashing his famous braying honk of a laugh. During the Internet bubble his oversized personality made him seem fun and inspiring, and he shrewdly used that to make himself and his company one of the most talked about business stories in a generation. When Amazon's stock price fell and its losses continued to mount, he endured whispers that his behavior made him look clueless.

Today only three questions about Bezos's behavior are relevant: Is he as goofy as Bill Gates? Is he as goofy as Michael Dell? And is he as goofy as the late Sam Walton? Such comparisons would have been laughable when conventional wisdom had Amazon joining the dot-com trash heap. Not anymore. Amazon has started to thrive. While most of American business is still sputtering, Amazon's revenues, at $4 billion, are growing by more than 20% a year. Marketing, inventory, and warehouse operating costs, once so high they made old-fashioned retailers look efficient, are now so low that only Dell's and very few others' are better. Amazon's operating profit margin, at 5% in the all-important fourth quarter, beat that of most retailers, and approached Wal-Mart's 6%. And Amazon is generating so much cash--$135 million last year, rising to an estimated $300 million this year--that it just paid off 12% of its $2.3 billion debt. At a recent $30, Amazon's share price is at a two-and-a-half-year high, making it one of the top stocks over the last five years, even taking into account its rise and fall during the bubble. It has outperformed Dell, Cisco, Microsoft, Wal-Mart, and GE, to name a few.

And while Amazon still hasn't turned a profit yet, it's headed toward profitability so fast that investors have stopped worrying about whether it will ever make money. Now they simply debate how much. Profitability has taken awhile because the company borrowed heavily during the bubble to finance its growth, and interest-related expenses still suck away a lot of what flows to the bottom line. Its relatively new electronics, tools, and kitchen business is losing money too, though at a rapidly shrinking rate. But with costs falling and revenues and operating profit rising each quarter, it's exp

Re:Article Text

[frank_adrian314159]

And the last paragraph sums it up so nicely! I'm glad Warren Buffett is finally recognizing people who so desperately want to be noticed!

Patents again?

[Blaine Hilton]

I for one think it's a great idea, however I don't think they should be able to patient something like that. Much like one click ordering, it's just crazy. When are they going to start patenting basic life processes like exhaling, and then expect everyone to pay fees? Much like that one drug, "the purple pill", that they patented t he substance the body makes when you ingest the pill, thereby locking out all competition.

--
Need a calculator?

Re:Patents again?

[Elwood P Dowd]

They aren't patenting basic life processes. They're patenting basic live processes online. That's completely different.

Jon Stewart should start patenting doing things on weed. He'd make a fortune.

"But dude, we're patenting one click ordering on weed! "

"Dude, have you ever sold books? Well, what about selling books online? Oh. Well, what about selling books online on weed?! Let's patent that, dude."

Re:Patents again?

[Anonymous Coward]

What about basic live processes through mail, or how about basic live processes in person? Is that completely different also?

Re:Patents again?

[f97tosc]

In order for something to be patentable, it must (at least) be

New. Exhaling is not new, so it does not pass.

Unobvious. Whether somthing is unobvious or not is frequently a matter of great debate and difficult to judge. The most controversial cases like "one click shopping" are the ones that hit mainstream media.

Tor

Re:Patents again?

[Cruciform]

Hold it right there! I've got prior art!

Re:Patents again?

[Cyno]

Dooooood!

Re:Patents again?

[Anonymous Coward]

make your lame signature actually a signature please.

My first reaction

[Monkelectric]

It's good to see the small guy win one.

Re:My first reaction

[NineNine]

It's good to see the small guy win one.


Small guy? Are we talking about the same article? I'm reading one about Amazon.

Re:My first reaction

[Monkelectric]

That was a Humor Joke, which the moderators seem to have missed as well.

Re:My first reaction

[NineNine]

That was a Humor Joke, which the moderators seem to have missed as well.

Ah, a "joke". Yes, I've heard of such things. That makes sense now.

Ha!

Re:My first reaction

[devilspgd]

That's your problem... Humor Jokes aren't normally recognized here, "non-humorous jokes" (See: ??? profit, all your base, etc) are preferred.

Re:My first reaction

[Anonymous Coward]

Actually the moderaters did just fine. You got "Funny" and "Overrated" both of which are true. If someone had modded it "Interesting" or "Informative" that would have been a mistake.

Re:My first reaction

[Doomdark]

Sure, but Jeff isn't that tall or muscular... I'm sure he can be considered "small guy" for some definition of "small"!

Re:My first reaction

[squiggleslash]

Of course, one could observe that if someone "wins" they're never the small guy any more. Amazon started off as the underdog against a group of fairly arrogant competitors such as Barnes And Nobel.

Re:In case of slashdotting:

[leviramsey]

Thank you, Good Sir!

I found that article enlightening. May I subscribe to your newsletter?

Re:Strategy

[Fr33z0r]

I think we've got enough "???/Profit" jokes to make a decent Beowulf cluster now :D

READ PLEASE

[Anonymous Coward]

It would be nice if you all would READ things first. Considering, Amazon is NOT profitable. Its a shitty company who spent all of their stock holders money gaining share in the market place, and are just now looking into how to cover its bets. Profit my ass, they owe thousands of people millions of dollars. Please check your facts first. They are LOSING 37 cents per share.

I don't see how patents are good in this case

[reverendG]

Jeff Bezos and Amazon are one of the pioneering companies, doing what no one thought they could, and doing it right. Amazon has become my favorite marketplace; the only time I actually go to the store and buy something is when I need groceries. If there is something that I want to check out before I buy, I'll go to Best Buy, check it out, and then go home and order from Amazon.

I think that Amazon should be rewarded for having the gumption and wherewithal to blaze this trail, but I don't see how patenting things like "One click purchasing" or the idea of selling used items next to new ones can be beneficial. They have already demonstrated that they are winning market share because of a commitment to improving efficiency and technology, and those are the best reasons to retain market share. Not preventing anyone else from doing something similar.

Nearly classical economics

[Walter Wart]

A lot of people don't like Amazon's practice of patenting everything under the sun. I don't like their practice of patenting everything under the sun. Ultimately it is destructive to the long term development of the industry in the same way that the new NDA-driven brand of industry/university research is to science. But these articles give some idea of the why.

Bezos wants to make money and survive. And it's darned hard to run something like Amazon like a business. Now this should be obvious. But it brings back memories of my days as an economist (oh, the shame! the shame!)

They, like ebay, are working in as close to a frictionless economy as we are likely to get. If any facet of their business can be done more cheaply by someone else, they're screwed. We're even seeing one of the previously fictional economist's assumptions becoming true. The market setting prices immediately through the auction mechanism.

How does a firm survive in nearly classical economic conditions? It reduces costs at every point and provide barriers to entry to new firms, and damn the effect on every other part of the information industry. You also see it in the way that they provide "like goods" ("People who shopped for this also shopped for this") and pricing that varies from person to person for the same item based on their best guess as to what that person is willing to pay right now.

This is particularly true when they are competing with ebay which really doesn't have any pricing mechanism except for the pure market-driven auction one.

An interesting view on nearly classical economics

Re:Nearly classical economics

[TrueWest175]

I wouldn't want to be the one to stand up at a fund manager meeting to explain "we're not pursuing patents on our technology because we think the patent system is flawed". That would be a quick path to unemployement. They have to do what's good for shareholders, regardless of what anyone thinks of the patent system.

Re:Nearly classical economics

[KrispyKringle]

Granting a limited monopoly in the form of a patent is arguably bad enough for innovation when patents are granted for actual technological advances, say, the cotton gin (or, probably more accurately, there is a very careful balance between encouraging innovation and hindering it). Granting a limited patent for a true invention makes some sense; if it were immediately clear how the cotton gin functioned, no one would gain anything by investing the money to invent it when others could simply rip off the designs for less investment afterwards.

However, granting monopolies for business practices makes far less sense. Business plans typically do not involve huge R&D expendetures the way actual technological advances do. Instead, business plans are "gee whiz" ideas to run a business more efficiently, an end result which is ultimately more profitable for the business to implement regardless of having a monopoly on the practice or not.

If Amazon were not granted a patent for "One-Click," would they not use it? Of course not; the idea took very little investment to develop and makes their business far more profitable, regardless of its use by competitors. Patents are not necessary to inspire innovation when it comes to business practices; the necessary motive is the increased efficiency and profitability. Further, issuing a profit for a new business practice means that there can be no direct competition between Amazon and anyone else, since no one else can use Amazon's same sales methods. Therefore, there is no driving incentive for Amazon to increase their product value or profitability, and, indeed, fewer, not greater, incentive to innovate (the same problem which arises with more traditional trade monopolies).

It's difficult to show any likly benefit in innovation from business practice monopolies, but the cost is clear.

Re:Nearly classical economics

[NineNine]

It's a *very* precarious situation. Virtually any business person with experience will tell you that competing on price alone is a losing battle. Amazon needs to innovate, not just cut costs. There's *always* somebody cheaper. And most people who shop the web are the lowest form of cretin who will buy whatever they want, where-ever they can find it a penny cheaper, without any thought to who the selAler is. If Osama Bin Laden were to sell a DVD for $0.01 less than Amazon, I'm sure he'd sell out in a heartbeat.

I'm in business for myself, and personally, I'd *never* put myself in that position.

Re:Nearly classical economics

[pmz]

They, like ebay, are working in as close to a frictionless economy as we are likely to get. If any facet of their business can be done more cheaply by someone else, they're screwed.

I disagree. You are assuming people will always buy the cheapest. However, Amazon still provides something of value even if they aren't the cheapest: low risk and top-notch customer service. Even though it is true that I can get certain things more cheaply at eBay, I still buy from Amazon and others to get a known face on the other side of the transaction. Also, it is harder to get a nominal warranty on used goods from eBay, while many non-eBay second-hand vendors will provide 30-day or 90-day warranties, which has already been useful to me.

Re:Nearly classical economics

[2short]

"This is particularly true when they are competing with ebay which really doesn't have any pricing mechanism except for the pure market-driven auction one."

Of course EBay has a pricing mechanism. There is a fixed cost to list an auction. You seem to be under the impression that EBay sells "stuff". They don't. They sell auction administration (and auction visibility). It is only in hosting other peoples selling of stuff that Amazon is competing with ebay, and in this arena both companies are providing certain amounts of service (and size of customer base) and taking a certain cut. The economics here are no more classical than any other retailers offering goods from various wholesalers. It had better not be too hard to run Amazon like a business, because it is a business.

And while we're at it, if JoesWebSiteOfRetailFun.com figures out how to do things slightly cheaper than Amazon, Amazon is not screwed. Name recognition is important. On the web it's huge. Nobody has heard of Joes. (Never mind that Joes would also have to do all the things that let Amazon be as cheap as it is, including economies of scale.)

I think I understand why you're no longer an economist. No, scratch that, as far as I can tell economists just make stuff up anyway...

Re:Nearly classical economics

[Walter Wart]

I have to both agree and disagree with you.

The reason I go to Amazon isn't just price, but some of the other features - having someone else do the book searches for me, their wonderful and wonderfully expensive (for me) use of cluster analysis to figure out what I'll probably like, the lists people make, and so on.

But a lot of people really do shop just for price. Identical goods. Lower cost of getting them. Bam. Amazon can lure people like me with the extras. But it's not for everyone.

In some ways the warranties, the known face at the other end, and the customer service could be seen as price as well. There are costs in having to replace things, not getting the merchandise, spending time doing your own research, wasting money on something you find out really wasn't what you were looking for and so on.

You could make a case that the premium services available at Amazon reduce your costs as a consumer. So it's still about "cost to get what you want".

Re:Nearly classical economics

[timeOday]

The question isn't *why* companies would want patents on everything; obviously a monopoly is wonderful for whoever owns it. The question is why "we the people" are granting these patents to our own detriment.

If there are no drug patents, nobody will spend billions to research new drugs. That I can understand. But if there are no one-click or new+used patents, nobody will offer one-click shopping, or sell new and used items? Of course they would. So granting patents on these things is harmful.

Is Amazon Profitable?

[VoyagerRadio]

Is Amazon.com now turning a profit? I thought I heard mention of Amazon finally making some money sometime last year (or was it this year?). I know eBay has always been profitable, and as long as there is a huge gap between the poor and the rich, there will always be a need for an eBay. Amazon, however, is often too darn expensive, even their used listings (zMarket and such). Half.com(an eBay company)'s items seem to be cheaper than Amazon's used market items, even though the Amazon used market is full of items by many of the same sellers as Half.com. I'm wondering whether Amazon's used market is catching up with Half.com's, in terms of sellers, though.

Re:Is Amazon Profitable?

[angle_slam]

Amazon is not profitable. It's pretty easy to find information like this from Yahoo! Their net income last quarter was -$10 M according to this page.

Re:Is Amazon Profitable?

[Mr. McGibby]

No, but they are quickly getting there. Most investors have stopped worrying about this since they see it coming as a given.

Re:Is Amazon Profitable?

[jlplas]

According to the article they are ready to make a profit of $200M this year.

Re:Is Amazon Profitable?

[VoyagerRadio]

But Amazon IS profitable, or has been. I came across the following article in Forbes magazine after making the previous post (registration required): http://www.forbes.com/free_forbes/2003/0512/100tab .html Basically, it states that Jeff Bezos, the CEO of Amazon, led the company into profitability for the first time, in 2002.

Discovery, not Invention

[abcxyz]

As much as I am against the rediculious patent articles that show up on /. regularly (the articles aren't rediculious, just the patents), I've purchased several used books from Amazon using this "technology". In virtually all those cases, I would not have bought the book at retail prices, because I wasn't sure that it was worth it. It is an excellent idea, but I'm not sure it's an invention. Maybe more of discovering a way to use existing technology. Similar to the SARS DNA patent, that is not an invention, it's a discovery operation.

-- Rick

Re:Discovery, not Invention

[btakita]

The purpose of the patent is more pragmatic instead of academic. The patent system encourages innovation by protecting the invention/discovery from being copied. It also promotes the spread of knowledge by documenting the innovation.

The patent system is designed as our lawmakers see fit, not to satisfy academic categorization.

The biomedical companies told lawmakers that they needed incentive to spend billions to decode the genome. Without patents, a company would spend hundreds of millions of research money just to have a generic drug company selling a knockoff. So yes, technically DNA sequencing is a discovery, but pratically it provided incentive to industry to sequence it much faster than it would have been done with research institutions (sponsored by industry) alone.

Of course the patent needs major reformation, but thats a different topic.

Re:Discovery, not Invention

[goon america]

It's a method of doing business. It shouldn't be patentable.

When they start letting you patent methods of doing business, you can patent anything. Anything. You could patent picking your nose. You could patent swinging on a swing set. What if Picasso patented cubism?

It may be a good idea, but it's not something that should be protected by the government against competition.

Hmmmm

[mao che minh]

From the story: "Bezos 'bet big and put hundreds of his best people on it.

from an investor's letter released in April, 2003:

"Amazon.com's employee base grew from 158 to 614, and we significantly strengthened our management team."

So Bezo directed a third of his workforce to pursue just this one goal? Interesting.

Re:Hmmmm

[Anonymous Coward]

i've read over and over, and i just can't see how you inferred that from the press release!

Re:Hmmmm

[Anonymous Coward]

The press release contains Amazon's first investor letter from 1997. Here's the the 158 to 618 remark in context:

During 1997, we worked hard to expand our business infrastructure to support these greatly increased traffic, sales, and service levels:

Amazon.com's employee base grew from 158 to 614, and we significantly strengthened our management team.

Re:Hmmmm

[bobdinkel]

So Bezo directed a third of his workforce to pursue just this one goal? Interesting.
I think I speak for all moderators when I say, "Thanks for telling us how to moderate your post."



Yes, it was a joke.

Bezos' genius

[Anonymous Coward]

- was to get Wall Street to buy nothing thinking they were buying something
- was to create a web site where negative comments are systematically deleted hence convice everyone they're buying something great

in the end, the american sheeple always needs to buy something: a stock, a Michael Crichton book, a scooter, the latest piece of crap their neighbour just bought.

Well done Mr. Bezos!

Re:Bezos' genius

[HarveyBirdman]

- was to get Wall Street to buy nothing thinking they were buying something

At least Amazon had and has a product, unlike a lot of dotcoms. It's still up to the investor to do due dilligence. I made some nice cash riding AMZN up because lots of investor *didn't* do theirs.

- was to create a web site where negative comments are systematically deleted hence convice everyone they're buying something great

Aw. Did they delete your "Ths book sux!" comment? Or your 19 page treatise on why Xenosaga was an inferior RPG? Personally, I see plenty of negative comments. I posted a few myself, and they are still there.

in the end, the american sheeple always needs to buy something: a stock, a Michael Crichton book, a scooter, the latest piece of crap their neighbour just bought.

Oh, please lead us from our squalor, Mr... wait, who the flying fuck at a rolling donut are you again, oh enlightened one? Please. Spare us. You're Joe (or Jane) Nobody from Who Cares, Nowhere just like the rest of us.

So what should we do? Squat in communes and scratch away at politico manifestos into the wee hours of the morning and only buy ideologically sound books printed with soy ink on hemp paper and sold at open air markets next to the free range organic vegetable corral?

I, for one, have done well in the stock market, and I'm just Mr. Average with a discount online broker account. I made a tidy killing buying Enron put options when the rumors first started. :-) Michael Crichton isn't my cup of tea (Timeline was OK), but I know plenty of scientists and engineers (and my GP doctor) who enjoy him for a light read.

Maybe if you worked hard to increase your earning power, you'd not be so jeaous of people who can buy whatever crap they feel like buying.

Link goes to page 3 of article

[sh00z]

For the whole thing, try here

Re:Link goes to page 3 of article

[sh00z]

Never mind. I *tried* to type this (http://www.fortune.com/fortune/print/0,15935,4508 93,00.html)

Why hard to run something like Amazon as business?

[reverendG]

I don't have a background in economics, so I'm asking out of true ignorance.

I don't understand why it is difficult to run something like Amazon like a business. They are simply cutting out the distrubutor, who demands a share of profits, selling items for marginally(in most cases) cheaper than their competitors, and then charging the consumer for shipping.

It seems to me that as long as they can keep their costs below what a distrubutor would charge, they should be making money. Also, because they already have the infrastructure in place, they should have a competetive advantage over newcomers to the market space.

What factors am I overlooking?

Re:Strategy

[Neophytus]

/. is being overrun with as many cliches as a fark photoshop thread!

Amazon = Smart

[TrueWest175]

I worked there for two years and I have to say I was impressed. When I got there, they were still in the "get big fast" mode where profit and margin didn't mean anything. Then the bottom fell out of the market and they shifted to "get profitable fast". The entire focus and tenor of the company shifted in about 3 months. Jeff Bezos is a genius as a communicator. At Christmas, everyone goes to work in the warehouse unless you are pregnant, dying, or in customer service. How many warehouses in the world have people with doctorates making boxes? Not many, because no one else can convince a Ph.D to spend two weeks folding boxes. Bezos can....and does. When they look at a problem, they tend to throw all the smartest people at it and give them the world. It works. The warehouses are incredible...and they haven't even touched the level of efficiency they will be at in 5 years. Sure, they made mistakes. They overbuilt capacity and had to close a warehouse. But don't underestimate Amazon. The company is smart, plays fair, and is winning. It's good to see.

Re:Amazon = Smart

[SN74S181]

How many warehouses in the world have people with doctorates making boxes?

Two points:

1. It would amaze you how many academic subjects there are these days that you can earn a doctorate in.

2. Not everbody has the skills needed to work the till at a McDonalds.

Re:Amazon = Smart

[Anonymous Coward]

that seems like a waste. How much are they paying that Dr. to fold boxes. No wonder they had profit problems. Putting certified smart people work that anyone off the street could do for min wage.

Amazon = Dumb

Re:Amazon = Smart

[Anonymous Coward]

Not many, because no one else can convince a Ph.D to spend two weeks folding boxes.

I've always found that very easy. Most hard thinkers like a break from thinking now and then. What's hard to find is someone willing to pay a Ph.D to that kind of work when they can pay a temp 1/10th as much.

Re:Amazon = Smart

[Realistic_Dragon]

"I've always found that very easy. Most hard thinkers like a break from thinking now and then. What's hard to find is someone willing to pay a Ph.D to that kind of work when they can pay a temp 1/10th as much."

When I was doing my A-levels I used to do my best thinking whilst I was working on a till - it's fairly easy to do your math homework in your head and still have enough capacity left over to handle customers reasonably well.

Now I do my best thinking while I'm running, and my fastest running when I'm thinking. It keeps me in better shape than punching buttons on a till and it's not as degrading :o)

Re:Amazon = Smart

[Anonymous Coward]

> At Christmas, everyone goes to work in the warehouse unless you are pregnant, dying, or in customer service.
I think employees would be more impressed if he worked there for 6 months instead of 6 days...
> plays fair
how so? by patenting their way into everything?

Re:Amazon = Smart

[Rinikusu]

I can't speak for the past few years (I quit awhile back), but FedEx culture in Memphis encourages managers, Managing Directors, VP's, and whomever wants to get a glimpse of the "hub life" to volunteer and work in the Memphis Hub, sorting, handling, stacking boxes like the rest of us. I suppose it keeps your head somewhat at ground level and makes you appreciate that someone, somewhere, is doing the shit work that your decisions directly affect.

Publishing depends on inefficiency

[sssmashy]

"We suggested to members that it was in their own self-interest not to undermine their book sales by sending Web site visitors to Amazon," Aiken said. "Amazon is turning new book buyers into a used-book marketplace. That hurts profits of publishers and the royalties for authors."

I think the Author's Guild is absolutely correct in this case. Amazon claims that it's about giving customers options, or turning new readers on to authors. But studies have shown that price has almost no impact in getting readers to choose a new author. Other factors, such as book reviews and word-of-mouth recommendations, are much more influential. Readers do look for bargains, but only after they have decided which title they want.

The publishing industry depends on the systemic inefficiency of book distribution. Profit margins, as always, are razor thin. Fortunately, most books just gather dust on bookshelves once they've been read. Usually they just doesn't seem worth the trouble to sell. This is inefficient, because the unused book doesn't end up in the hands of another willing reader. But it's a boon to the publishing industry, because the willing reader will be tempted to buy new books (with much higher profit margins) instead.

Ironically, readers as a whole benefit when they are willing to fork out more cash for a book. It's important that publishers make profits or at least break even, because this allows them to take the financial risks publishing "niche" books for smaller markets or taking chances on new, aspiring authors. The alternative is to focus exclusively on mass-selling pulp, churning out whole forests' worth of best-sellers and "Left Behind"novels.

Re:Publishing depends on inefficiency

[Anonymous Coward]

Yep, the Authors Guild can drive the used book market out of existence just like the RIAA is fighting so hard to drive used CD stores out of existence.

Except the Authors Guild is run by carebears, not evil profit motivated people looking at a bottom line.

Because when the RIAA tries to shut down a P2P service or local used CD store, slashbots jump and scream about how they are dinosaurs and need to change their business model.

But the Authors Guild, being made out of candy and gumdrops, can just go ahead churning out millions of copies of books that get left on the subway or stuck on a shelf because it's profitable for them to do so.

Re:Publishing depends on inefficiency

[NDPTAL85]

www.fictionwise.com

Re:Publishing depends on inefficiency

[Anonymous Coward]

Publishing depends on inefficiency

Then either publish houses will find new models or go broke. That's the way a healthy economy works. Fighting change in the marketplace is death in the low run. In the short run, it makes you do mean things to your customers.

Re:Publishing depends on inefficiency

[harriet nyborg]

Profit margins, as always, are razor thin.

Unless you are writing Harry Potter books, the average author agreement gives the author 15% of list price. The publisher keeps 85%.

So the book that sells for $35 gives 5 and a quarter to the author, and $29.75 to the publisher, minus her publishing and marketing costs.

There are printers who can print out a single copy of a book for a few dollars. If you print a thousand, the production price is far lower.

You do the rest of the math.

I hope you don't try to shave with those "razor thin" profit margins, you'll just be pushing the shaving cream around.

Re:Publishing depends on inefficiency

[notasheep]

"Unless you are writing Harry Potter books, the average author agreement gives the author 15% of list price. The publisher keeps 85%.

So the book that sells for $35 gives 5 and a quarter to the author, and $29.75 to the publisher, minus her publishing and marketing costs.

There are printers who can print out a single copy of a book for a few dollars. If you print a thousand, the production price is far lower.

You do the rest of the math."

OK, I'll do the math for you. The list price of the book is $35. The Publisher gets $17 - the net price of the book. (Do you really think booksellers don't keep a piece of the pie?) The author gets 15-20% of the net price. An 800 page book will cost between 1-1.50 depending on the paper and the size of the print run. The publisher pays for warehousing, sales, distribution, co-op, marketing, editorial, handles returns, etc. I

n the end, the vast majority of Publishers are lucky to end up with 6-8% of the net price. Just about half of what the author got.

As the man said, profit margins are razor thin.

Re:Publishing depends on inefficiency

[Anonymous Coward]

studies have shown that price has almost no impact in getting readers to choose a new author

You can find a study to show anything you want. I know that if I'm buying a book by an new (to me) author, I'd rather risk less money on him by buying a used book. For an author that I know is good, I'm willing to invest a little more to get a new book. Furthermore, there have been several cases where I've bought used books by authors I've never heard of or known anything about. I never would drop the money for a new book on an completely unknown author. In some cases, I've then gone on to buy new books by those authors.

Prior Art

[willtsmith]

There are hundreds and thousands of Prior-art cases relevant to selling used goods online.

Exhibit 1-1,000,000 All the stuff sold on usenet before http existed.

Exhibit 1,000,000-100,000,000 eBay

Re:Prior Art

[serutan]

Read the article. Bezos isn't trying to patent online selling. What he wants to patent is a system of selling used merchandise supplied by 3rd parties, whereby you could place an order for something that has not yet been posted for sale. Sort of like a want ad, but then when somebody offers that item for sale you get matched up automatically. It's more like the stock market than an online store.

The thing that bothers me about this is that the patent would not be on a piece of code but on the very practice of doing business in that way. Sort of like patenting the concept of a mortgage. Ridiculous.

Computerization...

[Anonymous Coward]

Amazon recently had a mistake in their coupon code system for a Toys'R'Us buy one get free game deal. You could use the codes a certain way and get everything free with free shipping. I got $400 worth of games for free and there were a lot of other people on deal message boards who got a lot more than that.

There have also been price mistakes where people have gotten boxes of 20 modems for the price of one and other things.

I'm sure this is somewhat of a drop in the bucket, but all the computerization does have its price when no one is double checking orders.

Re:Computerization...

[MadAnthony02]

There have also been price mistakes where people have gotten boxes of 20 modems for the price of one and other things.

Actually, no. There have been items posted on Amazon for bulk packs of modems, cd rom drives, and sound cards that listed the price of one item next to a description of the bulk pack. People on deal-discussion boards thought they would try to get in on it, and ordered it, but they either had their orders cancelled or recieved only 1 item and had to fight with Amazon to return them

Re:Strategy

[RealBeanDip]

Yeah, and besides everyone knows it's spelled "Strategery."

Patent-pending, eh?

[Plan B]

Is there anything Amazon isn't going for a patent on?

Relevant documentation here and here.

Better off at a yard sale.

[Joe the Lesser]

Or a used books store.

Amazon takes a considerable amount of profit from you this way.

Re:Better off at a yard sale.

[Jonny Ringo]

Yeah, cause I don't find the convenience worth it.

I would rather buy a paper mark down where all the yard sales are. Spend a whole day driving to each one in hopes of finding the book I want.

Re:Better off at a yard sale.

[alptraum]

Yes, however at a yard sale or local used book store can you obtain at any given moment just about any book imaginable, plus have some say in the price you pay? Didn't think so.

Re:Better off at a yard sale.

[Joe the Lesser]

What I mean is, If you want to sell a book for 5 bucks, you may get 2 bucks for it, with Amazon keeping the rest.

I admit if you live in the williwacks and don't want to drive to a better place, then you might as well take your chances.

Re:Better off at a yard sale.

[Anonymous Coward]

me? I'll pay the extra to be able to order a book in 5 minutes, any time I want to, rather than taking an hour round trip to a used bookstore, in a (sometimes) fruitless trip to find what I'm looking for.

Amazon just lets me keep more of my own valuable time.

The used books aren't coming from Amazon's warehouseses anyways, they're coming from other used bookstores. I ordered a book on Jack the Ripper a few weeks ago, it didn't come from Amazon, in fact the company that shipped it even stuck their own bookmark in it. I ordered an old computer game (ok, only Descent 3) a while back as well. That didn't come from Amazon either.

Amazon's outsourcing just makes it quicker for me to get what I want. Shelf space is expensive, and the older games and books just aren't worth my time going in search of. If Amazon wasn't there, they'd still be sitting on the shelves gathering dust.

Hmmm

[Timesprout]

I can see a small south american tribe here have a good prior art claim on something called amazon that sells dead trees

Personal Experience & Shipping Charges

[elid]

I've bought a good number of used books from Amazon for very good prices -- I've got no complaints about the service. The only downside is that Amazon charges a set shipping fee for each item ordered (since they're coming from different sources) and it really can add up. In fact, for my last order I got such low prices for the books themselves I ended up paying more for shipping than for the books! You need to take the shipping price into account when comparing a used item to a new one from Amazon's warehouse, especially if you're getting free shipping from Amazon.

Re:Personal Experience & Shipping Charges

[Anonymous Coward]

I don't think it is a secret that Shipping is a profit center for Amazon. They go through a great deal of effort to reduce the shipping charges they pay, and only lower the shipping charges you pay as marketing demands.

Re:Personal Experience & Shipping Charges

[MadAnthony02]

That doesn't really apply to used items though. Used item at Amazon work the same way they do at half.com where private sellers ship the item and are reimbersed for shipping by Amazon. While they do make money on shipping on items they sell (or use it for promotional purposes) I don't think it really applies to used items

Re:Personal Experience & Shipping Charges

[squiggleslash]

You pay shipping on used items (money going directly to the seller, not to Amazon) and if your total order is less than $25. Otherwise it's free.

I can't believe it's a "profit center" for them. Not unless most Amazon customers are habitually ordering just one book or just one CD.

press CTRL-F , type "employee", press ENTER

[Anonymous Coward]

see subject

You linked to the wrong page.

[windowpain]

You linked to the third page of the article, not the first. This is particularly inconvenient because every page in a Fortune article is self-contained and looks identical to all other pages. I ended up reading the article backwards.

I suggest that the correct way to link to an article like this is to link to page one and note that the relevant info is on page three. Here's the correct link.

E-Tail and me tail

[ratfynk]

Problems with e-commerce are distribution, warehousing, product quaility issues, warranties etc etc. Software patents miss the mark.

Given that e-commerce is doing as well as it has, can be viewed as suprising if you really look at the problems. Setting up good reliable e-commerce is not just web hosting. Who is minding the store?
It still takes human hands to manufacture, market and distribute goods. Automation is still not good enough.

E-commerce will not replace local retail in the near future for these very reasons. Good e-commerce needs to pay more attention to the possibilities of ventures between local retailers and web based retailers. The real boom in the near future is in web assisted retail.

Re:E-Tail and me tail

[infofreako]

Looking for more detail on the theories or practices of "web assisted retail" - please expound...

-nfo

Re:E-Tail and me tail

[ratfynk]

Well thats a good sensible question. Thank you. Alot of store web sites try the Amazon clone route only to find that the comsumer wants to feel the goods. As to the percentages of how many sales arise from online access to retail stores. The stats would be very interesting to investigate.

When considering how to sell products online the delivery of the goods is the biggest headache.
How do you sell and deliver toilet paper online.

By web assisted retail I mean; Interfaces that provide great assistence to customers, thereby giving them better ability to communicate with local retailers at home on their computer before they go to the store.
Sales staff can use chat style interfaces to talk to local consumers, and send them competitive quotes.
Real time pics on the comsumers desktop of sales demos.
Audio interfaces that do not need telephones. (Ma bell will have fits)

I can go on and on but I hope you get the idea.
Yes there is room for e-commerce but I see a totally different model to work from than Amazon.

Regards Ratfynk

Re:Why hard to run something like Amazon as busine

[Telastyn]

Because any Joe can recreate amazon.

There's no great technical expertise needed to buy things, or make a website, or sell/ship things.

The difficulty comes from "selling items for marginally(in most cases) cheaper than their competitors". Given how easy it is to recreate their own situation, there's no way to do this.
This leads to a situation where to keep a competative advantage, they need to use "non-classical" techniques, like patents, name recognition, brand loyalty and the such...

Re:Amazon? They still owe me money!....

[Anonymous Coward]

shut it, retard

This is a GOOD patent.

[raehl]

The patent is doing exactly what it's supposed to do: Making sure the entity that invested in making the idea work gets the benefit of that investment. Nobody else wanted to sell used items next to new items because they didn't think it would work, or spend the money to see if it would work, so now that Amazon has spent the money to prove that the idea IS a good one, why should everyone else get to use that idea for free?

Re:This is a GOOD patent.

[Jardine]

Because it's a fucking idea. If I came up with the idea of selling beer with cereal and no one had done that, should I be able to patent the idea of selling beer with cereal?

Re:This is a GOOD patent.

[raehl]

No, because you can't patent selling. You can't patent beer with cereal. You *COULD* patent a METHOD for selling beer with cereal, or the METHOD of including beer in cereal to make cereal more marketable.

And if there was no prior art on it, and you wanted to patent it, YES, you should be able to patent it.

Should you be able to patend the idea of removing seeds from cotton? Mechanically removing seeds from cotton? No, of course not. But you CAN patent the method of using a cylinder with metal spikes which turns inside a box to remove seeds from cotton.

Can you patent the idea of bending an electron beam with a magnetic field? No. But you cure can patent the method of generating a picture bybending an electronic beam with magnetic fields.

Can you patent the idea of selling used items next to new items? No - but you CAN patent the method of selling used items by placing their pricing in the same viewing area as the new item.

Most things are obvious, after you've seen someone else do it. Just because I think Calculus is easy now that someone has shown me how to do it doesn't mean I'd have likely come up with it myself. I wouldn't have put in the resources necessary to make it work.

You don't patent ideas. You patent the METHOD DEVELOPED to make ideas WORK, because that's where the COST is, and without a reward for incurring those costs, you've have fewer people trying to make ideas work.

Re:This is a GOOD patent.

[Doomdark]

You *COULD* patent a METHOD for selling beer with cereal, or the METHOD of including beer in cereal to make cereal more marketable.

... something that many people think is wrong as well. Patenting business methods is a very new thing, and very unfortunate at that. When patents were originally introduced, the mere idea of concepting such things (which are little more than ideas, really) would have been considered insanely silly. And I hope Europe is not going to allow them to be patented (although, already there are probably backdoors via patenting them in US and trying to use various conventions to sneak it in), along with software patents. In fact, if anything is worse idea than patenting software (as if copyrights weren't enough), it must be business method patents.

And as to cost of implementing the idea, yeah right. Implementing method in this particular case is pretty close to being free. It's the infrastructure and concrete implementation that is (or at least may be) costly. If they had patented that system (supposing there was anything innovative there) that would be easier to argue for, than patenting couple of days of thinking. "Gee, hey, let's like, sell used items next to new ones". That's your business method.

Re:This is a GOOD patent.

[nagora]

You know nothing about how easy it is to get a patent on an idea in the modern US and you seem to have no idea about the chilling effects of unwarented patents on real thinkers (Oh, Jeff's a genius because he does things shops have been doing for centuries but HE patents them, what a visionary). Jesus, just try thinking about it for a moment. How does it help the economy to send a message to every programmer that anything they do today could be locked up by a trivial patent tomorrow? Perhaps you think we should all patent everything. Perhaps you have some idea as to how we could afford that? Perhaps you have no idea what you are talking about?

TWW

Re:This is a GOOD patent.

[goon america]

Methods of doing business are explicitly not patentable. Or they're not supposed to be patentable, but the USPTO will let you patent methods of using a swing set since they're so derelict in evaluating patent applications. (That URL isn't a joke, BTW.)

It's an idea, not a technical innovation. It doesn't cost anything to have an idea. And it's impossible to verify that you were the first person to have that idea. Technical innovations do cost money to develop and there really wasn't any unique technical process that had to be invented and invested in in order to implement this particular idea.

This patent should never be allowed.

Re:This is a GOOD patent.

[Anonymous Coward]

Sorry, you are wrong: patents in the U.S.A. exist "to promote the Progress of Science and useful Arts", not to make sure investors benefit from their investment. As an incentive to reveal one's invention, one is granted a limited-time monopoly over the invention.

Argueable, patents should only be granted on those inventions that are not immediately obvious on inspection.

Re:This is a GOOD patent.

[bug-eyed monster]

Let's say I had a real bookstore in Vermont selling new books, then I started a section selling used books, including books on consignment and a message board for sale and wanted ads. Some time after, a sports shop in California starts selling used items next to their new items, including used items on consignment and a message board...

With patent in hand, should I be able to stop the sports shop from opening their used item section? Should I be able to make them pay me royalties for using my idea?

Re:This is a GOOD patent.

[Hobaird]

Nobody else wanted to sell used items next to new items because they didn't think it would work

Except of course Powell's who has been doing this for years, in real life and on the web. I'm sure there are others.

Re:This is a GOOD patent.

[kimbly]

Now that Amazon has spent the money to prove that the idea IS a good one, why should everyone else get to use that idea for free

Because it wouldn't cost Amazon anything

Because it would help the rest of the economy grow.

Re:This is a GOOD patent.

[Anonymous Coward]

Wow! Consignment selling. Now there's an original idea. I'm supposed to believe that one can't find previous examples of a vendor both selling new goods and acting as an agent to sell similar used goods for other sellers. Fat f--king chance.

>The patent is doing exactly what it's
>supposed to do: Making sure the
>entity that invested in making the
>idea work gets the benefit of that
>investment.

You left out the part about 'novelty'.

Further the emphasis in patent law is the "benefit of the public", with the benefit of the applicant being of secondary importance. Explaining how taking an obvious and time tested method of marketing out of the reach of all competitors is beneficial to the public would require the cleverness of a theologian trying to explain to an inquisitive parishioner just why exactly Satan was allowed to have a calm debate with God about tormenting and testing Job, given later characterizations of Satan.

>Nobody else wanted to sell used
>items next to new items because
>they didn't think it would work,
>or spend the money to see if it
>would work,

Ever see a used Chevy for sale at a Ford dealership?

How about a used Chevy on consignment?

If you do a little investigating in the construction equipment industry you will
find plenty of examples of vendors selling used equipment for others alongside their own new product.

Re:This is a GOOD patent.

[Anonymous Coward]

It wouldn't cost anything to Amazon if Barnes & Noble started doing this? Come on... that's just naive thinking!

It's a good idea but not a technology

[yintercept]

Showing used items alongside new items is a great idea. It gives people a way to make a little bit of extra cash and makes the book market more efficient. I've made a little over a thousand bucks selling used computer books through Amazon. (About 70% of what I had paid for the books).

The technology that lets you find out what used books match new books is called a JOIN. The technology that lets you link from a new book page to a used book page is called a Hyperlink. The whole process is pretty much dependent on the fact that books have an ISBN to identify the books.

The first implementation of Amazon's joining the new and used books was needlessly rough, it is getting better. It takes a great deal of care to add functionality like Amazon's to a big site with millions of users, but the fundamental idea is not a technology.

What a joke.

[Anonymous Coward]

I rarely order from Amazon these days since most of their popular paperbacks are now selling at list price. I used to buy in bulk and save a lot of money. Now there's no point unless the book's not on the shelf at my local bookstore. Which brings me to my current order.

I placed an order for four books last week. None were in stock at the local bookstore and I figured I'd just order from Amazon and have them delivered to my door. I picked the free delivery option which groups the books into as few shipments as possible. During the checkout procedure I was advised that I would be receiving two shipments. One with the three books that were currently in stock, a second with the book that is being released at the end of the month. Seemed perfect. Until I got my order confirmation email.

"Delivery estimate: February 18, 2004 - February 25, 2004"

Wha???? That's over 9 months from now. Do they have to grow the trees to make the paper? I figured it was a glitch and waited for my shipment notification. Didn't get anything. A few days later, my order status still hadn't changed so I inquired. I got four responses.

Response 1, CSR A: Sorry about that. Technical glitch. It's been fixed and your order has been upgraded to 2-day delivery at no charge.

Response 2, CSR B: "I've checked into your order and see that the shipping instruction to "group my items into as few shipments as possible" was selected during the order process. This option can extend the estimated ship date for your order beyond the individual item availability estimates which are listed on our web site." ... "...[Book 3] is now back-ordered, and our supplier has not been able to let us know exactly when they expect to have more in stock."

Response 3, CSR A: Whoops. CSR B is right.

Response 4, CSR C: Looks like someone else already took care of this.

Odd. All three of the books that were supposed to be in the first shipment still show up as "ships in 24 hours" both in my order status page and the product description pages. I'll wait and see what happens.

Monday rolls around. I check the order status again. Oh, Goody! Two of the books have shipped. Funny. They shipped Sunday. That's a neat trick. And one of the books that was shipped is supposed to be out of stock. And one of the books that didn't ship is still listed as in stock and is supposed to be shipped today. Oh, well. At least something's on its way. Well, it will be this evening when the Sunday shipment is picked up.

Tuesday morning. Track the first package. Odd. It's still at "Billing Information Received". This is the UPS phrase for "They've told us they have a package but we don't have it in our hands yet." I check my amazon order status. Says the same thing but now I see that the other book that was supposed to ship monday has been bumped back. It's not going out until sometime between the 15th and the 20th.

So I placed the order a week ago and nothing's gone out. Half of my order is supposedly sitting on the loading dock. A quarter of the order is eluding the pickers.

Way to go, Amazon! From now on, I'm ordering my books through the mom-and-pop downtown. If I'm going to pay list price, I may as well support a local business even if I do have to get off my ass to go pick up the items.

Re:What a joke.

[HarveyBirdman]

This has got to be a post from a parallel universe. I just spot checked about 15 books at random on Amazon, and they are all at the usual 20 to 30% discount. Add the fact that orders over $25 are free shipping, and no local stores can compete, especially in terms of selection. Local bookstores have become quite dumbed down in their science and engineering sections, and the SF/Fantasy aisles seem dominated by cookie cutter series.

I've ordered from amazon nearly 50 times by now, and I have never encountered a single problem. I always check "ship as one order", but Amazon commonly ships multiple packages as the books become available, and all at their cost.

One thing I would like to see is the discounts applied to engineering texts. I can't find anyone who does that, and Amazon would own that market if they did. The nearest technical bookstores to me are all 20 miles or more away, have horrific parking in crime ridden areas and charge full price. Why is it that the most intellectual bookstores are always in the most non-intellectual areas?

Amazon is one of the few online stores done right. Their crossreferencing of every book in multiple ways has led me to authors I never would have otherwise discovered. Never understood the "evil" labeling of Amazon. Because of some patent silliness? At least they're not dumping poison into rivers or releasing buggy operating systems or something.

Re:What a joke.

[Anonymous Coward]

No, it's not from a parallel universe. It's reality. Go look up some sci-fi or fantasy paperbacks and see how many of them are discounted. I'm not talking about oversize, overpriced trade paperbacks or hardcovers. The normal size ones that sell for $5.99-7.99.

I've been ordering from Amazon since 1997. My archive folder for Amazon orders has 85 entries. I'd say I'm pretty familiar with them. Titles that had a 20-30% discount when I ordered them now sell for list price. That's reality.

Since the prices went up, I only used Amazon to get oddball books that I wouldn't expect to find in my local bookstores (and sometimes popular ones that were out of stock locally). But if this last order is any indication of what's happened to their service, it's no longer more convenient than just placing the order at a local bookstore.

Re:What a joke.

[evilWurst]

Yes, that's what happens when you group a lot of stuff into one package for the free shipping...you have to wait for thing to get shuffled around between the amazon warehouses until all your stuff is in one place. The shipping is still as fast as always when it's just one item, and decently fast when it's two items. Three or four can take forever.

It's better to make two orders of $27 than one order of $54, the way things are set up right now for the free shipping.

Re:What a joke.

[powerbarr]

San Diego Technical Books provides a lot of discounts on technical books. However, I think most engineering texts are publisher priced and can't be messed with.

Re:What a joke.

[Anonymous Coward]

'cept for the fact that I picked free shipping and the summary indicated that they would be sending one package very quickly with three books and a second package with the last book when it is released.

If their fulfillment system is really all that and a bag of chips, why did it give me a mid-may ship date for the first package and a late may/early june ship date for the second one during the order process then provide an absurd date (next _year_) after I'd submitted the order? And why did I get two conflicting explanations (both of which turned out to be wrong)? And why was a package listed as "shipped" on a Sunday? And why did that "shipped" package not get to UPS until Tuesday? And why did the shipment of another book (still listed as in stock) get delayed for yet another week?

Amazon's losing it and that really sucks because I used to be able to count on them to come up with some really hard to find titles. If they can't manage to handle a mass-market paperback order, how can I expect them to find me a rare OOP? That used to be a real strong point. :(

Re:Why hard to run something like Amazon as busine

[FatRatBastard]

Sorry, but I have to laugh. If any Joe can recreate Amazon, they why haven't they done it? I seriously doubt that the "one-click-patent" is the thing that makes or breaks a company.

Yes, throwing something up on a website is easy, but the logistics of inventory managment isn't, and that seems to be where Amazon has done a damn good job (especially when they sell other people's stuff and have *zero* inventory to manage, a'la eBay).

The same is true about Dell. According to you any idiot should be able to put together a multi-billion dollar computer business simply by throwing up a web page or two. As Compaq how that worked out for them. Dell ate their lunch and it hade *everything* to do with inventory control.

HUGE FEES, but they get away with it

[Gregory S Patterson]

An anecdotal comparison: I own an item that's been out of print for quite a while and is rather rare. Being a broke college student, I naturally was looking into selling it. A little searching showed that the item sells on ebay regularly for around $80-100; on amazon (where people go who don't know how to use ebay or are afraid to) it goes for $170-200.

Simple choice, right? Well get this, ebay's fees (in my case) are $0.93 plus 2.75%. Amazon charges $0.99 plus 15%! I really hate paying huge fees when they're doing hardly any work, but the visibility is what they're selling.

Sell on ebay: $90 minus $3.40 fees = $86.60 NET PROFIT

Sell on amazon: $170 minus $26.49 fees = $143.51 NET PROFIT

Would you give up $56.91 purely to avoid supporting an "evil" company and their stupid patents? For most people, it's just not worth it. I hate his guts but Bezos is smart as hell.

Re:HUGE FEES, but they get away with it

[grinwell]

Someone should mod the parent up a little--it's an interesting and ironic anecdote ;)

Sell on ebay: $90 minus $3.40 fees = $86.60 NET PROFIT
Sell on amazon: $170 minus $26.49 fees = $143.51 NET PROFIT

Advice to broke college student: show a little initiative, slacker. BUY the copy on eBAY and SELL it on Amazon. DUH. $143 - $90 = $53 = 59% profit margin.

Re:HUGE FEES, but they get away with it

[Gregory S Patterson]

Wow...I mean yeah, I knew I was a slacker, but...well, I guess I didn't realize how obvious I was making it. =]

Seriously though, I've done the buying/reselling/middle-man thing before and made a little cash, but it's not fun. Also my example didn't include a lot of the complexities (shipping costs, deadbeat sellers/buyers) that make it only worth your while if you do it frequently and with higher margins (300% plus) . And it's usually better when you're buying IRL (surplus auctions, thrift stores, etc) and then selling online.

Best people on it?

[nolife]

Bezos 'bet big and put hundreds of his best people on it.'

How can one person honestly work close enough with thousands of people that he knows each and every one of them, and then be able to pick the "best hundreds" out from the total pool. This project may have been a top priority for Amazon but attempting to show how high with a statement like the above proves nothing.

This year, my lawn has been such a priority for me that I have spent 5 times the amount of time and 100 times as money on it then I did last year. This efort has really paid off as this year my lawn and trees are greener, fuller, and look great.

What that really means is:
Last year we did not have any rain so nothing was growing and I did not spend more then 2 hours a month cutting the brown grass. All I had to buy was weed wacker line for $10. This year it has been raining a lot, my lawn is growing about 4 inches a week because of the rain and I have to cut it more often. I also had to spend a $1000 on a tractor because my old POS mower finally died.

Okay, mod as troll... I just thought that original statement was bogus.

Re:Why hard to run something like Amazon as busine

[malfunct]

That said there is no reason they can't run the business in a pure classical economic environment and make everyone happy. The "profit" might be 0 economically but that doesn't mean that stockholders and employees don't get paid. 0 economic profit means that the price is at the minimum point required to keep it worthwhile to run the company, stockholder dividends at some minimal level are part of the cost of business and not profit in the economic sense.

Re:Why hard to run something like Amazon as busine

[spinkham]

So? Any Joe can recreate Walmart too, but it would take a phenomenal amount of capital to get anywhere close to the point of competing with them.
The same is true with amazon. We don't let walmart patent the "make a huge freaking store" method of business, why should we let amazon patent the "click to buy things" business?
Should we give walmart a patent if they want to start selling used books next to their new books? Then why should we give a patent to amazon when the only difference is the venue?

Correction

[f97tosc]

Fortune reports that the patent-pending practice of selling partners' used and new goods next to Amazon's own...

No. If you read the Fortune article, or the patent itself, you will see that this is not the case.

The patent covers the specific feature of pre-orders, e.g., allowing buyers to set up requests for used products.

It does not cover the basic idea of selling used goods next to the new. This is hardly patentable, because it does not pass the basic criterium for being patentable - it is not new!

Tor

Re:Correction

[theodp]

From the SUMMARY OF THE INVENTION section of the patent application...

[0013] To assist potential buyers in efficiently locating the marketplace listings for a particular product, each product detail page preferably displays or summarizes the existing marketplace listings for the corresponding product. These listings may be associated with a variety of different sellers (including individuals and small merchants), and may be for both new and used units of the product. Thus, by accessing the detail page for a particular product, a buyer can efficiently and accurately locate all of the current marketplace listings (if any) for that product, as well as view detailed product information from the product database (typically including product images, third party product reviews, etc). The user can also preferably compare the prices, product conditions, and other parameters of the various listings, and can initiate purchasing of the product from a particular seller.

OLD publishing depends on inefficiency.

[raehl]

NEW publishing depends on not having publishers.

If publishers won't make any money, they'll cease to exist, and authors will simply take advantage of new digital publishing techniques.

The argument that people will cease to write unless publishers can make a profit is no more valud than the argument that people will cease to make music if record companies cease to make a profit. People will always write, and people will always make music, and if they want to feed themselves without having to do anything else, they'll find a way to get you to pay for their goods.

Readers, as a whole, benefit from being able to buy a book that's part of a 20-book run for the same price as a book that's part of a 1 million book run. Arguing that inefficient distribution of large-run works will bring the consumer more choice than effecient distribution of large AND small run works is just silly.

Re:OLD publishing depends on inefficiency.

[west]

NEW publishing depends on not having publishers.

The argument that people will cease to write unless publishers can make a profit is no more valid than the argument that people will cease to make music if record companies cease to make a profit. People will always write, and people will always make music, and if they want to feed themselves without having to do anything else, they'll find a way to get you to pay for their goods.

Actually, there's absolutely no guarantee that an effective means of communication of published works to readers will exist. Without the publishers to filter works, there's every possibility that most people will simply find alternate things to spend their money on.

I have little trouble believing that 10-20 years from now people may be (on average) reading 1/20th of what they used to. That bookstores will be almost non-existent and that only a handful of titles will be published that can be "more or less" guaranteed enough sales to make money before the extreme efficiencies of the market wipe out sales. And of course, if there aren't enough sales, then everybody stops selling books.

Of course, if Amazon held all the sales of a market 1/20 the size that it used to be, it would still be a huge success for them!

Of course, there will be a thriving subculture of literature, but the idea of making enough money to say, make a living could well be laughable in the next while. Sort of like making vinyl records. A labour of love, not a way to bring something to the masses.

There are certainly many other markets that have been obliterated by changes in market conditions. The idea that the Author's Guild is attempting (through persuasion, not legal means) to stop what could be a serious threat to their industry doesn't seem unreasonable.

Amazon also better at used-item refunds than eBay

[SuperKendall]

From personal experience, I've found ordering used stuff from Amazon to go very smoothly. I've had only one bad experience with a seller - I ordered a limited edition of a DVD, and they shipped the regular one... repeated attempts to get them to send me the correct one (even after I had returned the original) ended with them claiming I was supposed to get the normal edition, even when I showed them the email receipt from Amazon.

Then I noticed Amazon's A-to-Z guarantee - All I had to do was provide details of what went wrong and they reversed the charge. It was much, much simpler and quicker than trying to go through Safe Harbor on eBay.

I still like eBay for a lot of stuff (after all, there are a lot of people there and I trust the rating system more...), but Amazon continues to really hold the crown customer service wise.

Bezos is selling Amazon shares

[guacamolefoo]

An interesting footnote to the "Amazon is kicking ass" coverage in Fortune is that Bezos is selling shares again.

He sold 6 million shares this week. His salary is only about 80,000, but still, it doesn't look great. $6,000,000 is probably just chump change compared to his 2-3 billion bankroll of AMZN shares.

This is not an indication that the sky is falling (AMZN looks like it is ok going forward), and diversification is smart. Nevertheless, he is selling and not buying shares. That is worth something to know.

GF.

Re:Bezos is selling Amazon shares

[Anonymous Coward]

Yah, but maybe he just wants to buy a new yacht. Theres an infinate number of reasons to sell, but only one to buy. Be more concerned about whether the mutual funds are buying or selling Amazon.

Re:Bezos is selling Amazon shares

[timmyf2371]

Doesn't really show much, to be honest.

Bill Gates consistently sells shares, as has been well publicised - doesn't mean that MSFT are going down the pan.

Tim

Amazon used marketplace makes me happy

[gnurb]

Yesterday, I bought a used book on Realbasic (O'Reilly) for around 4 bucks(!) Bezos is a genius, and Amazon is my favorite store (online or off)

half.com going bye-bye

[sabernar]

This is a bit off-topic, but half.com is disappearing, probably by the end of the year. Ebay is folding it into their main site. :(

Re:half.com going bye-bye

[aflat362]

I know - that sucks doesn't it?

I prefer shopping at half.com over ebay because people set a price and can wait forever for a buyer.

Do you think ebay will carry over this functionality to their main site?

Even if they did it would still suck for buyers because so many more people go to ebay.com and that means increased demand and higher prices on average.

Re:half.com going bye-bye

[Shur79]

What are you basing this assertion on? I have heard nothing about Half.com folding into Ebay. Regards, Seth

Amazon not take, I give

[alien_tracking_devic]

I live in the city, so I don't have a "yard" or a used book store within walking distance. Even if I did, how much could I get for my personal CD collection? $2-$3 a pop, even if the locals had the same taste as I do.

Amazon allows me to get my stuff in front of thousands of people across the country who are actually looking for that obscure CD I have for sale. In many cases I've doubled my money with the hard-to-find stuff, all by just doing a search and fillng in a form. I just drop it all in the mail box at shipping time. That is really convenient and I'm glad to give a piece to Bezos for the help.

Re:Amazon not take, I give

[anubi]

"Even if I did, how much could I get for my personal CD collection? $2-$3 a pop, even if the locals had the same taste as I do."

The last garage sale I went to, CD's were 25 cents each. And they weren't selling.

I wasn't interested either. They would have been worth more to me if they were blank CDR.

I get the idea that "millions" is probably more accurate than "thousands" when talking of exposure through a mainstream site which provides the search and accounting services such as Amazon and eBay.

Kudos to Amazon! Glad to see them in the fray.

Re:Amazon? They still owe me money!....

[sirinek]

The warehouse they ship a lot of stuff from is in Lexington. And I hope you used a credit card to order, then you can dispute the charges, and Amazon would take notice. :)

Major Prior Art

[Sabalon]

Oxford Books Too (a now gone used book store) in Atlanta had this back in 93/94. You could have them put you on a waiting list for something you were interested in, and when it came in, they called you.

FedEx comment in the article.

[Anonymous Coward]

The Fortune article states "With FedEx everyone knew about the mail and airplanes, but no one had put it together". Does the author know anything about how the airline industry was formed in the US? Hint, mail routes, using early aircraft to carry mail... OK, nit picking, but that wasn't really a true statement.

Re:YOU FAIL IT!

[Anonymous Coward]

You FAILED to entertain me. MONKEY

paper backs

[HarveyBirdman]

OK, point granted on that one. I haven't bougt a paperback in several months on Amazon. However it's still cheaper than local stores given the free shipping, or at least until the corrupt, evil hippies running California enforce the sales tax for out-of-state purchases. :-\

I also just like that big box full of books showing up. :) As for oddballs, Amazon got me into the world of graphic novels and magna. I can't even find those at local bookstores, and I'm just too damned old to walk into a comic store. :-(

Barnes and Noble?

[WatertonMan]

As fascinating as Amazon has been to watch, I wish that someone would write a comparison with some of their competitors. For instance Barnes and Noble has actually been competing quite well with Amazon. They offer about 80% of the service and typically add Amazon services a few months after Amazon has them. (i.e. digitized back covers, indexes and table of contents) Moreover I find that on average Barnes and Noble ends up being cheaper - especially if you purchase their frequent purchaser discount. (Get a bunch of friends, buy it together, and it ends up costing next to nothing) The advantage with B&N is also having the bookstore in your town where you can pick up books. (Although with Borders, Amazon is heading that direction as well)

It was a great article, but I wonder how all these sorts of companies compare. Of course considering the amount of money I've spent at both the past few years, I can't complain. Further most of the complaints I've had about buying online (not being able to read the book) have disappeared.

Given that they carry obscure books (I study a lot of philosophy) they really are a salvation. Once upon a time I could only get technical books when I made trips to places like Los Alamos, Berkeley, or the like. Now I have the entire library available - often with helpful discussions.

Check BookCrossing

[shreak]

http://www.bookcrossing.com/home

BookCrossing is an easy way to clean off those old bookshelves without having to figure out where your local used book store is. It's more like donating books to the public domain.

=Shreak

This actually hurts niche markets *less*

[Trepidity]

It's the big best-sellers that you see hundreds of copies of for sale on ebay/amazon/etc.; niche stuff is much harder to find used, because when people buy it it's 'cause they want to keep it. I'm personally more familiar with the used market for music CDs, which works very strongly in this way -- if you want a copy of a Britney Spears album, you can find dozens of them for $1-$3 apiece, because lots of people bought it when it was hot and now are trying to get rid of it. If, on the other hand, you want a copy of an album by a niche band, it's hard to find used stuff at all, and when you do it's in the $8-$12 range, not much cheaper than buying it new (I personally listen mostly to EBM/industrial, which is somewhat of a niche genre, and this holds true for nearly all bands in the genre, even relatively popular ones like Wumpscut and Skinny Puppy).

no, you'd be worse off

[Trepidity]

Used book stores take considerably more profit from you; they generally buy at around 30-50% of the price they hope to be able to resell the book for (used CD stores are even worse, usually paying more like 15-30%). As for selling it yourself, you'll be lucky to get someone to buy any given book for $1 at a yard sale, while selling on Amazon (or ebay, or half.com, or whatever) makes it more likely that someone who actually wants your book and might be willing to pay a reasonable price for it will see it.

Or maybe you have no comprehension of patents...

[raehl]

The only programmers you would be sending that message to are stupid programmers. Intelligent programmers understand that ideas OTHER people come up with are only patentable by those people. Yes, USPTO screws it up every now and again, but there is a system in place for redress.

Jeff is *NOT* patenting something that regular shops have been doing for years. Giving someone the option of buying a used item from someone else instead of the new item you're selling, as part of an online ordering system, is *NEW*. Amazon is the only company that's even ATTEMPTED such a thing as far as I'm aware, and they spent significant resources MAKING it work and PROVING it could work. Now that Amazon has spent those resources, why should, say, Barnes and Noble get to use the method that Amazon developed for free with little risk?

If Barnes and Noble wanted to sell stuff using the method Amazon developed, *THEY* should have spent the resources to develop said method, and then THEY would get to patent it. Patents are protection for those who invest significant resources in developing something new, which is EXACTLY what Amazon did. Amazon developed the method, Amazon gets exclusive rights to use that method for X number of years in return. Nobody else spent a cent to help make Amazon's method work.

It seems to me that you're just bitter someone who convinces investors to give him millions of dollars in capital and then spends years developing a new system with it gets to use their system exclusively. I mean, why should someone who does work be entitled to more than someone who posts on Slashdot saying "Yeah, but ANYONE could have done that!" Anyone except everyone other than Jeff Bezos apparently.

That's a good one!

[abulafia]

Because any Joe can recreate amazon.

There's no great technical expertise needed to buy things, or make a website, or sell/ship things.

Heh. That's funny.
True, one could buy the talent and over the course of time recreate the Amazon site featureset.

Takes you a while to get there, and a lot of capital and management expertise, and all the while you're competing with someone already there.

And, of course, you have to raise capital. Any Joe can do so taking a summer stroll down Sand Hill Road, right?

Don't forget There's no great technical expertise needed to [...] sell/ship things.

Tell that to Walmart, who sued Amazon over hiring away thier operations talent. (Walmart didn't win, which of course is right and proper.) Tell that to the company (I forget the name) who sold Amazon a ~$10M mostrosity that takes things off a conveyer belt, scans a barcode, routes it down another conveyerbelt to land in the right bucket with the rest of the order, and hands it to packaging, and some absurd rate-of-items per minute.

Now make it work all together with the workers, delivery, forcasting, ordering and transport. And make sure the feedback loop to the website works well, and handle the accounting. Watch your costs. Now, go make some decisions about how to make it better.

You very clearly have no clue what the word "operations" means.

NOTE: I'm not defending the patent.

Re:Or maybe you have no comprehension of patents..

[nagora]

Intelligent programmers understand that ideas OTHER people come up with are only patentable by those people.

Oop! The one-click patent was a patent on someone else's idea.

Yes, USPTO screws it up every now and again, but there is a system in place for redress.

HA HA HA HA HA HA HA HA HA HA HA. Who are you? Rip Van Winkle?

Giving someone the option of buying a used item from someone else instead of the new item you're selling, as part of an online ordering system, is *NEW*

No it's not. It used to be quite common in shoe shops and I've seen several mixed new/old bookshops. Oh. I see. You think that taking someone else's old idea and doing a webpage to do the same thing is worth a 20 year control of the market. Interesting. Stupid, but interesting. Except of the interesting bit; I made that up.

Now that Amazon has spent those resources, why should, say, Barnes and Noble get to use the method that Amazon developed for free with little risk?

We could debate the issue if any examples existed but they don't. This has nothing to do with the validity of patents for real inventions. The Amazon patents are all other people's ideas which Bozos has just had the gall to file for. I've nothing against patents on real, physical inventions generally.

TWW

Re:In case of slashdotting:

[ratfynk]

On the male psyche
you missed google search for XXX pussy etc and AMAZONS

Bad oversite but I will get moded down if I do not include AMAZONS porn search and possible patents!

Next...

[saberworks]

The book publishers will realize that they can make more money by licensing the book content similar to how MS licenses software. So when you buy a book, you will have to agree to a license agreement before you open the package. At that point, they will prohibit you from re-distributing it more than once (again, similar to MS license agreements). You are, of course, free to use said book to start your camp fire.

If the patent is for selling used next to new then

[Anonymous Coward]

... it is the worst use possible of IPR and should be violated violently often. The "online world" is not some parallel universe. If you can sell things on a shelf - new and used beside one another - then you should be able the same thing "online" without IPR restrictions. This is a business process and should not be patentable period.

And, sorry, if this took *100* programmers to do then Amazon is full of *idiots*.

Re:Why hard to run something like Amazon as busine

[daoist]

the logistics of inventory managment isn't,

The logistics of inventory management depends upon two things:

• How solid the database that one uses is.
• How accurate the data that is entered in the database is.

Keep the data accurate, and inventory management is trivial.

All the original site had to do was hook the CD-Rom from Ingram up with Anthology, [ Well, maybe not Anthology], or one of the other bookstore POS software programs [ There was one that ran a *Nix clone, whose name I have forgotten], and connect that to the net. It was doable, even in 1994. The hardest part then was convincing the money people that an online bookstore would eventually show a profit.

(especially when they sell other people's stuff and have *zero* inventory to manage, a'la eBay).

They still have to handle customer disputes. Setting up an online bookstore has theoretical zero stored inventory. The only books that are ordered, are the ones that have been sold. They get shipped out the day they are received. This is where location is crucial. A warehouse across the road from Ingram, or Baker & Taylor is much better than a warehouse two states from the Ingram or Baker & Taylor.

fraud

[BubbaMike]

And if the partner defrauds the buyer then Amazon says it has no liability and will do nothing to help you get your money back. They sell you the item, they charge your credit card but they are not involved in the sale. Just ask them.

Re:Or maybe you have no comprehension of patents..

[notasheep]

Sorry, but the idea of selling someone else's used stuff next to new stuff is nothing new. Consignment shops have been doing it for years - make that centuries.

Nothing new here folks, move along.

Maybe I should take out a patent on selling flowers with get well cards - that's got to be a new one, eh? No, wait, make that used funeral flowers next to new funeral flowers...

Boy, I got to get me a patent attorney.

Try again.

[raehl]

They didn't patent "selling used stuff next to new stuff". They patented selling SOMEONE ELSE'S USED STUFF next to new stuff. Moreover, someone else's used stuff that the Amazon never possessed in the first place.

Re:Try again.

[nagora]

They patented selling SOMEONE ELSE'S USED STUFF next to new stuff.

So? I've seen that too in shops run by charity organisations. Big deal. Is that supposed to be a defense?

Ah, well. Now that they've patented auto-completion I'm sure you'll just be orgasmic at the continuing rate of "innovation" at Amazon.

TWW

You're missing a KEY difference...

[raehl]

Consignment sales include the item being at the point of sale.

The whole genius with what Amazon does is they never don't possess the item or ship the item.

Business Hyperspace

[serutan]

The patent system seems to have turned into a kind of business hyperspace, a shortcut between point A and point B that bypasses normal activities like inventing better products, manufacturing and marketing them. Instead, you can step into this other dimension, redefine something as yours, and walk out the other side owning part of somebody else's business. It's only a matter of time before concepts like adjustable interest rates will be patented. If only I had patented "buy low, sell high."

fscking simple.

[jotaeleemeese]

Publish less books, concentrate in quality, raise prices.

Re:Why hard to run something like Amazon as busine

[synx]

No great technnical expertise necessary?!

You make it sound like almost no work was put into Amazon. That is clearly incorrect.

If creating a competitor to Amazon was so easy, why hasn't there actually been one? I highly doubt the success of Amazon had anything to do with their patents. One click really isnt what Amazon is known for.

Anyways, I think you're underestimating how difficult it is to run Amazon's business. Additionally Amazon actually carries inventory (evidenced by the single item detail page which shows '24 hour availability' - kind of hard to do that if you have to have everything shipped in).

Re:Why hard to run something like Amazon as busine

[synx]

I said before and I'll say again - Amazon carries inventory. Its obvious to any regular user of their system.

Even if your database is accurate with the physical inventory count, there are other issues... like how much inventory to hold, when is it appropriate to sell inventory, etc, etc. Lots of analysis that needs to be done, its not extremely trivial.

Its called 'supply-chain software' or 'enterprise resource planning'. Lots of companies make a zillion dollars doing this software, including IBM.