Hacker News Reader

Comment by Grombobulous | Hacker News Reader

To steal Benn Jordan’s ideas, capitalism is replacing itself with leveragism.

You don’t buy things from Amazon because they’re the best store with the best prices, you buy them because they’re the only store that has their own massive scale delivery service that delivers more packages than FedEx or UPS (not combined, but Amazon still delivers more packages than either).

It’s not possible for another store to compete with that. There is no competition. Starting a competitor to Amazon would be more difficult and capital intensive than starting a new car or rocket company.

There is no other store that can get me the most obscure and random stuff in less than 24 hours. Walmart can’t do it, Costco can’t do it, Target can’t do it, Dollar General can’t do it.

View on HN

Not to mention the sheer number of things that they offer unrelated to the commerce side of things

I don't even live in the US or shop on Amazon anymore but I still have a Prime subscription just in case something good is on Prime Video (this doesn't happen often...)

Actually I just remembered there were several things recently that I could not find locally and so I used international shipping from Amazon.com which turned out to be way cheaper than you would expect I think mostly due to the Prime subscription

https://youtube.com/watch?v=NFt3KKBT00M

A similar scenario played out in my head recently when I needed to forward some of my mail internationally

> You don’t buy things from Amazon because they’re the best store with the best prices, you buy them because they’re the only store that has their own massive scale delivery service that delivers more packages than FedEx or UPS (not combined, but Amazon still delivers more packages than either).

Speak for yourself. Their delivery service is awful and I'd choose UPS 100% of the time instead if they gave me the choice.

It was Amazon's increasingly slow and unreliable deliveries that caused me to cancel Prime earlier this year, and I'm strongly motivated to shop elsewhere now because I know that the package will be delivered by someone other than Amazon's own service.

> no other store that can get me the most obscure and random stuff in less than 24 hours

Amazon has been dropping the ball pretty regularly on shipping recently.

Yeah and it's not obscure or random stuff if it is in the Amazon warehouse that is in your town. That is the only way one day works they already have it on site.

Not necessarily because I'm sure they have bigger warehouses that ship to the smaller regional ones very often and streamlined

In a day you have to be kidding me. You haven't ran any logistics.

> It’s not possible for another store to compete with that. There is no competition.

That's an interesting theory. How do you reconcile it with the observable reality of there being thousands of e-commerce stores, marketplace platforms, and other sales channels operating in direct competition with Amazon?

Any one store, but there are plenty of niche stores that compete for whatever thing you are looking for.

The comment is deleted now, but a user who shall remain nameless challenged folks to find a vendor that could get a "TPM module for an ASRock Rack motherboard" delivered to their house tomorrow.

Well, if you order within the next nine-ish hours and are willing to pay 29 USD for both next-day delivery and "Rush Processing", Newegg absolutely will deliver this item [0] to my door tomorrow. Maybe that's not the TPM module the user had in mind, but -if that's the case- the task being underspecified is not my problem. ;)

[0] <https://www.newegg.com/asrock-tpm2-s-other/p/N82E16816775003>

That was me. That is the correct module.

$29 for overnight shipping is more than the cost of one month of Prime by approximately double, which is an entire month of free expedited shipping, usually overnight and sometimes same-day.

Is anyone else remotely price competitive? I can find the module on eBay with free shipping but they quote me 3-10 day delivery.

You are missing something else: you followed the race to the bottom. You knew exactly what you wanted and nothing else can substitute (correct me if I'm wrong, but I doubt anyone else who makes a TPM that will fit your motherboard). Your only consideration is price and fast shipping - there isn't much for anyone to compete on and so only the largest will.

In the more typical case these is. I recently needed a compass (my son is in scouts), what do I know about a compass: not much. Amazon will give me hundreds of options, some good, some really bad: I'd have to buy the one expensive name brand I know (and hope they are still as good as they were when I was a kid), or risk buying junk - worse junk in a way I wouldn't recognize in time to return it. However I found a small niche orienteering suppler that knows their product and so was able to direct me to a brand I've never heard of that while not as good as the name bring, was both a lot cheaper and good enough. They beat the race to the bottom because for a slightly higher price than amazon they could deliver me the exact thing I need for a still reasonable price.

It's almost as though market competition precisely refers to lots of vendors targeting lots of different criteria to win business from differentiated market segments, with many being successful within particular niches, but with the largest overall at any moment being the one that's currently most adept at optimizing its operations to serve the preferences of the widest segment. Who could have guessed?

> That was me.

Sure. I wasn't going to name you because I had no idea exactly why you'd deleted that comment, so I wasn't gonna be rude and attach the challenge to your name.

> $29 for overnight shipping is more than the cost of one month of Prime by approximately double...

What I've told you is that there are other retailers who will next-day ship you all sorts of "specialty" items like that one. So, Challenge Completed.

Whereas what you've told me is that overnight shipping for this one part is a little less than 1/6h the cost of a year of Amazon Prime. Given that I've only gotten things next-day shipped two or three times in my mumble decades of life, it sounds like not using Amazon saves me a notable chunk of money.

Also, I've heard from a ton of people out in the boonies that Prime ships very few -and sometimes no- items to them same day or overnight. The Prime Promise seems to be extremely location-dependent.

If you don’t have Prime you can either buy it for a single month or buy overnight shipping on the individual item. Both those options are far less than $29.

You did complete the challenge, but it proved that Amazon has a nearly insurmountable logistics advantage compared to competitors.

> ...has a nearly insurmountable logistics advantage...

Nah.

People in the boonies wouldn't be able to get gratis next-day shipping on that part. Based on the reports I've been hearing, they'd often be lucky to get six day shipping. Ya'll are now squarely in the part of the lifecycle where Amazon quietly practices aggressive "service differentiation" in order to keep its margins where they want them.

Amazon shipping and logistics are heavily subsidised by the social contract in Western Countries - it's not remotely a fair comparison even if these were removed based on Amazon's effective corporate income tax rates coming in as low as 1.4%.

In the US alone Amazon has received over $11 billion in cumulative taxpayer subsidies, and governments spend an average of nearly $43,000 per fulfillment center job created.

This is ramping up exponentially with regard to their data center rollout. In a single instance in rural Oregon, five AWS data centers will avoid $1 billion in property taxes.

This is completely aside from the qualitative damage done to traditional retail, shopping districts as a whole, SME innovation on consumer products, and distorting market competition beyond all recognition.

https://goodjobsfirst.org/amazon-tracker/

https://cictar.org/all-research/amazon

> There is no other store that can get me the most obscure and random stuff in less than 24 hours.

Thats an edge case isn’t it?

Your example actually is in support of capitalism, because I can guarantee you that under some centralized government system this would not happen!

But will you do what it takes to make sure that it could happen again?

Amazon itself is not going to be shy about changing the rules in its favor.

> But will you do what it takes to make sure that it could happen again?

I have no idea what this means.

They’re saying that starting a competitor to Amazon is now impossible regardless of capital investment.

> They’re saying that starting a competitor to Amazon is now impossible regardless of capital investment.

Competing in which market? Amazon is a conglomerate operating in e-commerce, retail, cloud computing, online advertising, digital streaming, entertainment, and artificial intelligence.

That breadth is part of why competing is so tough.

> That breadth is part of why competing is so tough.

I don't see it. In each of the industries they operate in, they face fierce competition. Many of those competitors also compete with Amazon across multiple of those industries plus others that Amazon does not compete in.

Competition is by definition tough. But I push back against the original thesis that Amazon has such leverage that it is impossible to compete with them (in all the cases, you're not just competing against them!)

Who said anything about a centralized government system?

We aren’t comparing capitalism to that.

We are comparing a deeply broken antitrust regulatory environment that is ending capitalism, or ant least the free market competitive style of capitalism you are romanticizing, and replacing it with leveragism or legal cartels or whatever you want to call it.

Amazon is a failure of underregulated capitalism because it’s not possible for anyone to compete with them.

Amazon should have been required to split off AWS from Amazon years ago, and I’d say there’s a very good argument to be made that their fulfillment business constitutes a national monopoly. FedEx and UPS don’t actually provide the services that FBA does, which makes Amazon a monopoly.

> Amazon is a failure of underregulated capitalism because it’s not possible for anyone to compete with them

What do you meany nobody can compete with Amazon? It happens all the time across the various markets they're in: e-commerce, retail, cloud computing, online advertising, digital streaming, entertainment, and artificial intelligence.

How do I start a fulfillment business that can get a roll of toilet paper delivered to the doorstep of consumers nationwide inside of 24 hours and have that transaction be profitable?

How much investment money and customer volume do I need to make that business viable?

Fulfillment business is very hard. Amazon has invested well into the hundreds of billions building it out, and that's supported by their economy of scale of Amazon.com. A fulfillment business for toilet paper would never pencil out profitably no matter how hard you try.

This is actually a great example of the consumer winning out due to Amazon's business. Pre-Amazon, 24 hour shipping was literally not a thing, even 2 day shipping, especially for free, was a major innovation of the site.

So for fulfillment for general goods, I do think this is something that you will never be able to compete with Amazon on as a small player profitably. However, there is plenty of competition in specific verticals, such as Instacart or Doordash for groceries specifically. And if you want to be a toilet paper producer/seller, that is possible too (just not the fulfillment part but again I'm not sure why we expect "toilet paper fulfillment" to be a valid category that needs to be a thing), for example I bought my phone case from Dbrand due to the strength of their product and marketing. As a small player you need to compete on specific verticals but that has always been the case. Amazon was originally a book seller.

> How do I start a fulfillment business that can get a roll of toilet paper delivered to the doorstep of consumers nationwide inside of 24 hours and have that transaction be profitable?

As with all successful businesses, you start small.

You figure out what's your edge. You are resourceful.

You don't compete with ANY competitor by trying to do 100% what they do out of the gate.

Pro-tip: selling (rather than producing) toilet paper is probably never a big business anyhow.

If all we are going to do is engage in vague inspirational idealism rather than using realistic boundaries to the discussion I fear the relevance to the subject at hand fades away.

> You don't compete with ANY competitor by trying to do 100% what they do out of the gate.

This idea bleeds into the definition of a monopoly. I can’t just make a mobile operating system like Apple and Google because I won’t have a competitive advantage. I can’t make my own Amazon competitor because their edge is that they deliver more packages than UPS or FedEx. I can’t compete with Google search because the web browser that comes with Android defaults Google on the home page.

Sure, nobody is trying to do 100% of what their competitors do, but I wouldn’t be able to do 5% of what Amazon does even if you handed me billions in seed capital.

It sounds like you’ve decided it isn’t possible to compete, there’s nothing worth trying. I suppose that’s a fair stance to take and I’m not here to convince you to be more resourceful and strategic.

Meanwhile, lots of people are starting and building successful businesses.

We can certainly agree that lots of people are starting and building successful businesses. But I would hope we can also agree that there are many business categories where entry into the market is extremely difficult.

And hopefully you can agree that, conceptually, monopoly businesses do exist and have existed in the past.

Reply on news.ycombinator.com