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.

[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.

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

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:Strategy

[Fr33z0r]

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

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.

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.

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

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.

Link goes to page 3 of article

[sh00z]

For the whole thing, try here

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?

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.

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.

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.

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.

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?

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.

[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.

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: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

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.

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.

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.

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.