First let me say I love Amazon.com, we do business together, it is possible to make money with Amazon.com, and I do. As far as I am concerned, they are just another retailer to whom I sell. Nothing more nothing less.
Having said that, funny that I should be criticizing ecommerce websites just as Amazon, the world's #1 online retailer by far, offers a webinar on state of the art eCommerce websites, which supports exactly what I have been saying. I am delighted at the confirmation from Amazon. Web developers should begin looking for other work.
When you have an hour, check it out for yourself here.
It does not quite embed, but this is the session you want.
The Agility Imperative - learn how to use micro-sites and flash sales to drive growth
Amazon says in this webinar business people "can no longer depend on SEO" and such. O really, what changed? I have said all along you never could. There is more: if you think that stuff is any good, Amazon says you are trapped in "traditional processes." Amazon catches up with me today.
But wait, ok, so far it has been a waste of money, but where is the science that the "new stuff" pays off? In this hour long video, there is no evidence that the new ideas are any better.
As background, Amazon hired Forrester Research to find out new trends in web marketing. Forrester Research has found some people really like SaaS to build eCommerce systems, connected to Amazon Stores. The science does not get any better than that in this state of the art explication.
Now the webinar covers both B2b and B2C websites. I know nothing of B2C, but if the B2B info is any guide, the B2C info is just as bad.
So Forrester finds, talking to about 90 people (!?) that you need to use flash sales, micro sites, daily deals, etc, to match customer needs. And to get 700,000 hits in one hour, as one flash sale generated, you need Amazon.com's scalable cloud system and a SaaS designed website to get the numbers up to 700k an hour for "millions of dollars in orders.".
Problems:
1. What does it cost to create such a website?
2. 700,000 people at once, and millions of dollar can be less then $3 per visitor. I wonder how that metric stands for web performance?
3. What is being sold, at what margin? What does this event mean in the life of the company? Is this sustainable? Was the flash sale a loss leader? Were they getting rid of a huge inventory mistake, wherein the webmaster, buyer and sales manager all beam with pride at each other, as the unemployment line gets closer for them?
4. Once you have paid for this infrastructure, how often can you create a flash sale that generates 700,000 visitors in one hour (assuming it is not a net deficit event.) Is this repeatable?
5. What are the logistics of moving so much inventory? One assumes this means ramping up and ramping back down. Expensive.
6. The exposure of such a sale and the chance of customer dissatisfaction leading to a devastating return rate is imprudent.
On the B2B part of the webinar, much effort is directed as to how to "get around your customers and go straight to the consumers." Risky business that strategy, without knowing if it will work. They mention Russell Athletic as one company doing it. Russell just laid off another 191 people. If I sold uniforms, I'd go after Russell's retail base, now the Russell is trying to cut them out.
The Forrester research is presented in the webinar by a fellow with an English accent. Often when people have nothing to say they bring in someone with an English accent, like Piers Morgan. I would not have thought of that unless he kept quoting "what one company we talked to said.." "We believe that is increasingly how you need to think..." Well, wait, where is any science from your survey and research? There is none, it is only "hey you were all wrong, and here is the next best guess."
The summary features a couple of companies who have brought Amazon and SaaS together to make some wonderful things happen, although the only mention "zero fraud tolerance." What? Zero tolerance anything is usually a bad idea in business. Excellent gets you to say 98% of the way, at a certain cost. Eliminating that last 2% usually costs another 25%. It is usually not worth it, that is it costs more than the "zero tolerance" of fraud, in this instance. I worry for the company that is in the exhibition case.
The scenario here is the same "gee whiz, wouldn't this be cool...!?" process that Amazon decried in the opening of the webinar. There is no science that says any of these ideas will work.
To make clear, I am arguing that websites do less, not more. if you think you need all this SaaS/Amazon etc stuff, well, you can get it all for $40 a month from yahoostores. That is how I know what I am talking about, I've been trying out all of these ideas for nearly 15 years online. I have actually been profitable that whole time, although never big. Since I am self-employed I cannot afford to lose money. We entrepreneurs never take risks.
Feel free to forward this by email to three of your friends.
Having said that, funny that I should be criticizing ecommerce websites just as Amazon, the world's #1 online retailer by far, offers a webinar on state of the art eCommerce websites, which supports exactly what I have been saying. I am delighted at the confirmation from Amazon. Web developers should begin looking for other work.
When you have an hour, check it out for yourself here.
It does not quite embed, but this is the session you want.
The Agility Imperative - learn how to use micro-sites and flash sales to drive growth
Amazon says in this webinar business people "can no longer depend on SEO" and such. O really, what changed? I have said all along you never could. There is more: if you think that stuff is any good, Amazon says you are trapped in "traditional processes." Amazon catches up with me today.
But wait, ok, so far it has been a waste of money, but where is the science that the "new stuff" pays off? In this hour long video, there is no evidence that the new ideas are any better.
As background, Amazon hired Forrester Research to find out new trends in web marketing. Forrester Research has found some people really like SaaS to build eCommerce systems, connected to Amazon Stores. The science does not get any better than that in this state of the art explication.
Now the webinar covers both B2b and B2C websites. I know nothing of B2C, but if the B2B info is any guide, the B2C info is just as bad.
So Forrester finds, talking to about 90 people (!?) that you need to use flash sales, micro sites, daily deals, etc, to match customer needs. And to get 700,000 hits in one hour, as one flash sale generated, you need Amazon.com's scalable cloud system and a SaaS designed website to get the numbers up to 700k an hour for "millions of dollars in orders.".
Problems:
1. What does it cost to create such a website?
2. 700,000 people at once, and millions of dollar can be less then $3 per visitor. I wonder how that metric stands for web performance?
3. What is being sold, at what margin? What does this event mean in the life of the company? Is this sustainable? Was the flash sale a loss leader? Were they getting rid of a huge inventory mistake, wherein the webmaster, buyer and sales manager all beam with pride at each other, as the unemployment line gets closer for them?
4. Once you have paid for this infrastructure, how often can you create a flash sale that generates 700,000 visitors in one hour (assuming it is not a net deficit event.) Is this repeatable?
5. What are the logistics of moving so much inventory? One assumes this means ramping up and ramping back down. Expensive.
6. The exposure of such a sale and the chance of customer dissatisfaction leading to a devastating return rate is imprudent.
On the B2B part of the webinar, much effort is directed as to how to "get around your customers and go straight to the consumers." Risky business that strategy, without knowing if it will work. They mention Russell Athletic as one company doing it. Russell just laid off another 191 people. If I sold uniforms, I'd go after Russell's retail base, now the Russell is trying to cut them out.
The Forrester research is presented in the webinar by a fellow with an English accent. Often when people have nothing to say they bring in someone with an English accent, like Piers Morgan. I would not have thought of that unless he kept quoting "what one company we talked to said.." "We believe that is increasingly how you need to think..." Well, wait, where is any science from your survey and research? There is none, it is only "hey you were all wrong, and here is the next best guess."
The summary features a couple of companies who have brought Amazon and SaaS together to make some wonderful things happen, although the only mention "zero fraud tolerance." What? Zero tolerance anything is usually a bad idea in business. Excellent gets you to say 98% of the way, at a certain cost. Eliminating that last 2% usually costs another 25%. It is usually not worth it, that is it costs more than the "zero tolerance" of fraud, in this instance. I worry for the company that is in the exhibition case.
The scenario here is the same "gee whiz, wouldn't this be cool...!?" process that Amazon decried in the opening of the webinar. There is no science that says any of these ideas will work.
To make clear, I am arguing that websites do less, not more. if you think you need all this SaaS/Amazon etc stuff, well, you can get it all for $40 a month from yahoostores. That is how I know what I am talking about, I've been trying out all of these ideas for nearly 15 years online. I have actually been profitable that whole time, although never big. Since I am self-employed I cannot afford to lose money. We entrepreneurs never take risks.
Feel free to forward this by email to three of your friends.
6 comments:
John, How profitable (or not) is Amazon really?
Check this out:
http://www.theverge.com/2013/4/12/4217794/jeff-bezos-letter-amazon-investors-2012
http://thinkpayments.blogspot.com/2013/03/4-reasons-why-amazon-may-never-be.html
http://www.wired.com/business/2013/04/amazon-stock-plunge-could-mean-higher-prices/
http://www.guardian.co.uk/commentisfree/2013/may/16/amazon-tax-avoidance-profits
http://tech.fortune.cnn.com/2013/01/29/amazon-profits-take-a-dive/
http://seekingalpha.com/article/402321-will-amazon-ever-be-profitable
http://techcrunch.com/2013/01/29/wtf-amazon-barely-ekes-out-profit-on-21b-in-sales-hits-negative-pe-misses-estimates-guidance-yet-stock-jumps-10/
You know, in my draft I was actually going to take on the question as to whether Amazon itself was profitable, but it is a big topic. Amazon's balance sheet shows inventory as an asset which pretty much mirrors its net value. That is tight. Amazon as I am sure one article stated, has exposure in pending tax liabilities, which I believe should not be pressed, but the reality is we live in kleptocracies.
Look at the airline industry. Sure Alaska has a profitable year, but since the Wright Brothers flew, the industry has never taken in more money from paying passengers then went out as expenses. the difference is continuous bailouts over the decades (getting to a century now.) These things can happen.
I love Amazon, and think like all corporations it ought to be tax-exempt, I hope the find secure footing, I love their innovations.
Could implementation of internet sales tax affect Amazon's profitability? With shipping charges as well for ordering from them online (they also pick up the shipping fee if a customer orders over a set amount), this could make it harder for Amazon to be profitable. It would be cheaper for a customer to just find the same product in a brick-and-mortar store nearby.
http://articles.latimes.com/2013/apr/25/business/la-fi-tn-amazon-reports-first-quarter-earnings-20130425
Amazon sees a 37% decline in profit (as of April, 25, 2013).
"Gillis said he assumed that Amazon only makes three-tenths of a penny on every dollar of revenue."
Walmart has real stores all over the country - I think that when Walmart gets its act together regarding its internet website, Amazon may very well be toast and get killed off by Walmart (or bought by Walmart - can you imagine that?). A retail website is a good compliment in addition to an actual brick and mortar store presence, but the retail web site won't do well by itself - as evidence by Amazons' lack of profitability after having been in existence for years now. Amazon was started in 1994, shouldn't they be doing better regarding profitability? They're just a catalog retailer company, like Sears was initially- Instead of a printed paper catalog, they have a website catalog - so what? Do they really have a sustainable business model? John, you argue against ecommerce websites, and it doesn't look like Amazon is doing as well as everyone thinks.
http://smallbusiness.foxbusiness.com/sbc/2013/12/30/6-ways-retail-will-change-in-2014/?intcmp=obnetwork
The idea (or myth?) that e-commerce will be a significant factor in sales is persistent. But do they have the data to show this?
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