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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."
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.
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Need a calculator?
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.
Why should I argue rationally with someone being irrational? I'll just mock them instead.
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.
laugh hard, it's a long way to the bank
"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.
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
-------- -------- Support Wesley Clark for president!!!
Or a used books store.
Amazon takes a considerable amount of profit from you this way.
"I only speak the truth"
Karma: null(Mostly affected by an unassigned variable)
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.
laugh hard, it's a long way to the bank
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.
OH THE SHAME I fell off the wagon and use sigs again!
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?
paintball
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?
Blessed are the pessimists, for they have made backups.
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.
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.
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.