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Comment by shmerl | Hacker News Reader

I.e. it's a lock in trick? One should avoid such things.

It depends on how you define "trick." If you're going into it with eyes wide open, you're using it to derive the benefits, and you've got good self-control, then a loyalty program can be very valuable to you as a consumer.

If you're going into it expecting benefits, and you find yourself getting carried away and overspending, then it's less valuable to you.

I wouldn't call it a trick, so much as I'd call it a loyalty program -- with all the potential risks and rewards that such a term entails. There's nothing necessarily shady or evil about a loyalty program. Indeed, if it makes Amazon a much better consumer experience for you, it can be a win-win.

If it was an option, like you can currently choose to buy Amazon gift cards or enroll in Prime, sure. Even an option with incentives. But if you move towards making proprietary currency the only way to pay in a given area, it seems shady to me. Not illegal-type shady, but has-bad-motives-type shady. These kinds of proprietary currencies are a typically deliberate attempt to reduce the transparency of prices, by adding an addition layer of indirection people have to mentally jump through in order to think accurately about and compare them (you can see that in part in how most such currencies pick weird exchange rates, not decimal ones that would be easier to think about).

But if you move towards making proprietary currency the only way to pay in a given area, it seems shady to me.

Somehow, I doubt Amazon plan to remove the other payment options.

One such example could be the Microsoft Points - perfectly falls under your description. I can never remember the exchange rates, and they deliberately offset the prices so you always have residual points. For example, the minimum points you can buy are 400 ($5) but the cheapest item is 80, then 240, then 360... so you will never be able to spend ALL of them entirely (barring many, many transactions).

An additional twist is to price things in prime numbers so that buying multiples leaves a residual balance.

But isn't every number the sum of two primes?

> buying multiples

Plus there's stuff like using off-by-one values for fractional exchange. Eg 79 points for 99c, or vice versa. If you step to 80p / dollar it's easy to calculate a sufficiently-good approximation mentally, but lots of people aren't used to mental shortcuts like that.

My issue with loyalty programs is that they are used for in-store analytics. I don't like being the focus of analytics sometimes.

You realize that Amazon can already run all the analytics they want when you buy anything from Amazon, right?

Indeed. I wasn't talking about Amazon per se, more discussing loyalty cards in general. For example, I purchase some RayBan sunglasses the other day in Brisbane city, and they asked for a _lot_ of personal details. Far more than were needed for warranty purposes, and the like. I have issues with things like that :)

You can benefit from the lock in. Amazon pays a fortune on my shipping for Amazon Prime. I ordered about 90 times last year, and got 2 day shipping on all of them. It replaces going to the store for many things, so more important to me is the time I saved shopping.

The upside for them is I spent about $4000 on Amazon last year, which is way more than I would otherwise. I don't know if it is good for them, but it sure seems good for me.

I'm 100% with you there. I don't even bother price shopping anymore because I know with Amazon it will be close or better than average big city pricing and I get everything in a time period which seems instant.

I don't know if it's just me, but I noticed that the BEST price is not always on amazon. Most of the time, the retail stores' price is equal to what amazon advertises. Some stores (Costco & Sams) offer items at far below what Amazon offers them for. Most of the time, I only save paying the tax...

Does Costco offer free 2-day shipping? (or free shipping, period?)

If you are comparing an in-store price to the amazon Prime one you have to factor in the costs (implicit and explicit) of actually making a trip out for a particular item or waiting for your monthly Costco run to pick-up X rather than having it here by Saturday.

No Costco offers something similar to 'instant shipping', which means you come, you shop, you leave :)

you forgot the step of waiting in line for 20 minutes after collecting your goods for the privilege of giving them your money.

Also the step where you can buy many more things on amazon than you can at Costco. That said, if you want 300oz of peanut butter Costco may ne the winner there

I prefer to support Newegg when it comes to computer accessories for example because of patent trolls busting, and surely not Amazon who promote DRM. I'd buy on Amazon only as a last resort, if there are no other options.

Do they really? At start yes, I felt like it was good. All items, free shipping. It was really a good deal. But these days I ALWAYS see the same item I'm purchasing, much lower, without prime.

Example:

Item A, $100 PRIME

Item A (ie same item..), $80 (no prime available) $8 2d shipping, free super savers shipping.

I'm actually cancelling my prime account because of this. There is none of the last 10 objects i bought over the last 3 month that didn't have this issue.

Amazon can't really avoid doing stuff like this, because their business model (retail) sucks, and makes very little money due to razor thin margins. So they trot out every trick in the book.

> Walmart can't really avoid doing stuff like this, because their business model (retail) sucks, and makes very little money due to razor thin margins. So they trot out every trick in the book.

Wait, no, Walmart avoids things like loyalty card discounts, etc. They also seem to have a decent business model. You're going to have to elaborate a little more.

>Walmart avoids things like loyalty card discounts

Walmart has "walmart cards" and while they don't give you a discount, what you will notice is that if you return something they might resist if you ask for cash back but saying "put it back on my walmart card" will result in a near instant refund in almost any situation.

I always thought it worked for Walmart because they have disgustingly high volume? (And therefore could have razor thin margins.)

And Amazon doesn't have a "disgustingly high volume"...??

I've heard there was some other trick involved in Amazon's profits, that worked precisely because of high volume, and wouldn't work for middle / small size circulation. Something with reinvesting temporary resources during some time slot and etc. But I'm not sure how valid such claim is.

What profits?

Something like this. Let's say Amazon sells 1000 items from some manufacturer. Amazon pays manufacturer with delay (let's say 20 days after they get the merchandise). But Amazon manages to sell this 1000 in 10 days (because they have massive sales scale). In result Amazon has spare money for 10 days until they need to pay. So they have a potential to use them for 10 days. That's what I've heard, I'm not sure how valid this is.

This seems very pertinent to the current thread. Amazon Coins means Amazon gets Customer's money before it is actually used.

In this case, the vendor should just increase their prices to reflect the interest on the credit that they're extending Amazon for those twenty days. This is equivalent to Amazon borrowing from a bank for those 20 days, but perhaps for some reason the creditor's interest rate is lower than the bank's.

Yes, it's equivalent to a loan with no interest rate. Whether vendor has to increase prices or not - that's up to the vendor. I just described how Amazon has a potential to profit from lower than common prices and fast shipping - it increases this loan time window.

Well, Walmart doesn't have razor thin margins. On some things they do (on some things they even lose money) but e.g. toys have a markup of over 40%, for example. That's probably not even the highest margin.

It's possible that Walmart just repects their customers a bit more.

It's a different kind of lock in. Phone lock in is real because the apps I bought on e.g. IOS don't transfer anywhere else. In the case of e.g. frequent flyer miles, that's something they just give me for "free" as part of using their service. That makes the next purchase potentially cheaper so I'll tend to shop with them again. But I could just walk away (and have, in the case of airlines) if I feel the need since this was essentially a gift to me in any case.

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