Amazon – A Retailing Dinosaur

Without a doubt, Amazon has revolutionized the retailing industry. They dominate e-commerce retailing in the Western World. So what logical person calls them a retailing dinosaur?

Me.

My opinion only matters if you accept me as a sane person. In fairness, questioning my sanity is not difficult.

1. I just posted that cartoon for all to see. And placed a copyright logo on it. As if someone would steal that work of art. 
2. I enjoy winter and snow. Lots of snow.
3. I share my house with six crazed Siberian Huskies.
4. My Jeep Wrangler can almost always be found windowless – in the middle of February – because the dogs complain otherwise.

Understanding your reluctance to accept my assertion without proof, please give me a few minutes to explain via a simple, true story.

Sunday morning, I shopped the only enjoyable way I know how – sitting in front of my computer. The rest of you can get into your cars, drive to a shopping center or mall, and interact with other people.

Not me. I do not want noise and irritation. I sit right here in the peace and quiet of my home. Well, except for those six Siberian Huskies. Let’s just say they create the ambiance of pushy crowds. With fur.

Anyway, I placed orders with three companies – Amazon, B&H Photo Video, and Chewy. I browsed their websites, easily found the items I was looking for, added them to my shopping cart, and paid for them with that magical little plastic card. Each of the orders qualified for free shipping. And, just two days later, my purchased items arrived.

Most of my purchases.

The UPS truck chugged into my driveway with my B&H order around noon Wednesday. Three hours later, a Fed Ex van delivered my Chewy order.

But no Amazon.

Right after waking up Thursday morning (ok, and feeding breakfast to six starving Siberian Huskies who insist I keep my priorities straight), I logged into my Amazon account to check on the status. Not out for delivery. Not on a truck somewhere. Amazon has not shipped the order yet. Nor do they plan to ship it until tomorrow.

“Wait a minute,” you protest, “Just buy Amazon Prime. Your order would arrive on Wednesday, too.”

You are correct. I could pay $99 per year and have free two-day shipping.

Please go back and reread that sentence. Does anyone else have a problem with “pay” and “free” being included in the same sentence?

My problem is that I am an accountant by training. Yes, I know, further proof of my lack of sanity. But that horribly rational, financial mind never stops questioning dollars and cents. Who, my mind screams, would pay for something to be free – that other vendors give for free – and consider it a bargain?

The answer – many people. CNN estimates that half of households in the United States have Amazon Prime.

Many Prime Members are buying something other than free shipping. Streaming. Music. Books. Etc.

I do not want those things. I tried them with an Amazon Prime Free Trial. The unfortunate answer – I do not find Amazon best in class in any of those categories. And nor do I pay anyone else for those services, so I cannot even save any money by canceling other services.

And, worse, my rational, financial mind associates the whole Amazon Prime bundle with another infamous bundle – a satellite or cable TV bill.

 

According to a 2014 Nielsen Advertising and Audience’s report, the average American household receives 189 channels. And watches 17. That’s right, the average American household watches less than 9% of the channels they purchase.

And I am worse than that. I only want to watch Walking Dead, Mr. Robot, and Survivor.

Ok, Survivor is further proof of my lack of sanity. Yes, I love that show. I don’t watch a minute of any other reality TV show, but I never miss Survivor. And while we are discussing Survivor, I suggest to Mark Probst and Mark Burnett a way to liven up Survivor.

Model it after Walking Dead. Forget being voted off the Island. Let’s see Boston Rob deal with Walkers.

 

Back to cable TV bundling. Satellite and cable may appear dominant today; but, they will fail because the market does not want what they are selling.  An entire industry has sprung up to change the way we watch TV. Over six million homes in the US have broadband internet access, but no cable or satellite TV. They are paying less to watch only what they want to watch.

Likewise, I do not want the other services in Amazon Prime. The only thing of value is “free” shipping. Without having to pay for free.

Let’s be fair, though. Shipping is not free. The shipping cost is built into the price, right? So that must mean the other vendors have higher prices than Amazon. So let’s price compare my purchases:I ordered Stewart Pro Freeze Dried Beef Liver treats in the 21 ounce container from Chewy for $35.89. We could buy the same item from Amazon for the same price. So far, the same cost.

I ordered Stewart Pro Freeze Dried Beef Liver treats in the 21 ounce container from Chewy for $35.89. We could buy the same item from Amazon for the same price. So far, the same cost.

 

But a single container of treats is less than the minimum $49 purchase required from either vendor. Chewy charges a flat shipping charge of $4.95 to receive the order within two days. Amazon charges $7.27 for five day shipping and $12.67 for two day shipping. So, for a non-prime customer, Chewy is still cheaper AND faster since Chewy’s order shows up in two days.

But, you protest, if I had Prime membership, Amazon would have shipped the treats and I would have received them in two days. For free! Well, free if you ignore that $99 annual membership. Beware, here comes the accountant again. I could also order those treats 20 times, paying $4.95 for each shipment, before I spent as much as the Prime Membership costs.

Or do what I did Sunday. Order two containers of treats from Chewy and get free shipping. For free. And it arrived in two days.

Enough with dog supplies. Let’s check B&H Photo Video. What I purchased Sunday is not a fair comparison because it was a sale item from B&H.

If you are a photographer, you understand addiction. You must buy new equipment all of the time. And B&H is an enabler. Every morning, they send you an email with items on sale that day. Great items. And I bought one of those items. And it shipped at no extra cost and arrived yesterday.

But, let’s be fair to Amazon and compare a regularly priced photography item. Purchasing the basic “Nifty Fifty” Canon lens – EF 50mm f/1.8 STM Lens from either B&H or Amazon costs $125. Just like those Stewart Dog Treats, the same price, right?

 

No. Not only does B&H give you 2% rewards on that lens (a $5 coupon on a future order – and we photographers always have something else we want to buy), they offer free expedited shipping (Northeast US – 1 day, Mid Atlantic – 2 day, Western half – 3 day). Free. Already built into the price.

And Amazon? Free shipping is 4-7 days or $5.44 for 3-4 day or $11.58 for 2 day. Or, again, $99 “free” shipping.

Dead horse. Beatings. You get it. Amazon and its competitors charge similar prices for items, but Amazon is more expensive for shipping.

Still, they are convenient, right? I like Amazon. I ordered from Amazon on Sunday. So I have to wait for a slower shipping method because I refused to pay a fee for free expedited shipping.

The Real Issue

But that isn’t the issue. The shipping method isn’t slower. Or at least, the primary delay is not the shipping company. The primary delay is Amazon itself.

Remember, I have not received the Amazon order because they have not even shipped it yet. Their competitors, who charge the same or lower prices processed and packed the orders on Sunday. Sent me tracking numbers on Sunday. Sunday. They did not even wait until Monday.

But not Amazon. Not Sunday. Not Monday. Not Tuesday. Not Wednesday. Not – so far – Thursday. No, they plan to do it Friday. Five full days after receiving my order. And processing my credit card.

Why not? Are they less organized than their competitors? Are they understaffed?

I don’t believe that. I think their systems are state of the art.

My guess? By delaying the shipment, they are creating an illusion of value for their Prime Membership shipping. Rather than wait a week or more, I could pay the Prime extortion fee and my products would have packed and shipped Sunday or Monday. As long as I only compare Amazon with Amazon, Prime Membership feels worth it.

But if I compare it to their competitors, it is not.

The result? I only buy from Amazon when I can not get something another way. Or they actually beat the price.

I suspect, over time, less and less people will pay for Prime. The only people who will pay for it will be those who make lots of small orders. Which will increase cost to Amazon.

And, that, is why I think Amazon will go the way of the dinosaur.

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P.S – Just as I was about to publish this post, UPS pulled in the driveway. With a part for my tractor. A part that was ordered on Tuesday from a tractor supply company.

Amazon has still not shipped my products.