Home » Amazon, PG's Thoughts (such as they are) » Why all the news about Amazon?

Why all the news about Amazon?

2 March 2016

On occasion, PG is accused of being some sort of shill for Amazon.

He’s not.

He’s one of the millions of fans (including shareholders bidding up Amazon stock into the stratosphere) who thinks Amazon is a cool company doing cool things in cool ways.

This goes way beyond Amazon’s participation in the book business.

Beginning in the eighties, Wal-Mart (now Walmart) was recognized as an extremely well-run retailer. Among many other innovations (including extraordinarily sophisticated computer systems way ahead of their time) Walmart was notable for putting big box stores in small communities, places other big box retailers thought were not populous enough to support a large store. Virtually all of its early growth was outside of major metropolitan areas.

In addition to substantially improving the lives of the people in those small communities (better prices, better selection, retail jobs that weren’t dead-ends), Walmart made a lot of money for people who bought its stock. Business magazines and newspapers loved writing stories about Walmart and how Sam Walton had built a worldwide empire from a single store in a small town in Northeast Arkansas.

Of course, those who saw Walmart as a business that was challenging legacy retail practices suffered from Walmart Derangement Syndrome. Suppliers complained that Walmart buyers pushed harder than anyone else for low prices and fast delivery which squeezed supplier profit margins. Competitors built fantasies that the world would be better if Walmart stopped offering every day low prices.

Customers voted with their money and made Walmart the largest retailer on the planet. Low prices helped poor people stretch their money to buy food and clothing for their families. To this day, if you want to see where local poor people shop, go to Walmart. For PG, at least some of the anti-Walmart sentiment included an element of disdain for Walmart customers.

Reportedly Jeff Bezos studied Walmart closely before he started Amazon. Every day low prices could be Amazon’s credo as well.

The response of some suppliers to Amazon – traditional publishers most notably – has reminded PG of the response of some suppliers to Amazon Walmart. Amazon is an agent of change at least as much as Walmart was an agent of change. From the viewpoint of some suppliers, change is fine as long as they can continue to run their businesses in the way they always have.

The simple reason that PG posts so many items about Amazon is that Amazon is doing far more interesting things than any other organization in the world of books. And, with Amazon’s help, indie authors are doing far more interesting things than non-indie authors are.

How many interesting things does Hachette do in a week? Could you build a blog around the latest developments from Randy Penguin?

While PG appreciates all authors, all too often, he sees talented authors who are traditionally published limited by their publishers.

Indie authors often act like Amazon has set them free.

PG likes posts about freedom and innovation.

Amazon, PG's Thoughts (such as they are)

53 Comments to “Why all the news about Amazon?”

  1. I agree with you, re WALMART. Tho’ today Walmart has an understandably earned bad reputation due to their labor practices, etc… it was also an amazing innovation at the time, and brought things (and jobs) to places that never had either.

    And also, it should be noted, WALMART led to other businesses doing the same (I’m thinking of COSTCO, that’s the first thing that came to mind), without the same bad labor practices. It was about fulfilling a need. It was smart.

    I don’t agree with WALMART’s labor practices, but I cannot deny they changed the marketplace for rural communities (including the one I grew up in) for the better.

    I believe Amazon is doing the same.

    I live in NYC now, and one of the attractions of living in this very expensive area in the beginning is that you could shop for things at very specific shops you couldn’t get elsewhere… books, clothing all sorts of things. Now you can get them with a click of the button, no matter where you live.

    Those shops still sell, too… but now to more people … thru amazon.

    • @ Joshua

      COSTCO pays decent wages. Their employees don’t have to apply for food stamps. And whenever I’m at COSTCO — I go for the inexpensive food court although I’m not a member — I always see it jammed with people and full carts of stuff.

      People vote with more than just their feet. Their wallets are a big factor in the choices they make. Failing, un-innovative, complacent businesses always b**** about how their competition is “unfair.” But the bitchers never seem to get off their duffs and do what it takes to complete for customers successfully.

      Amazon has enabled millions of mon n pop small businesses to do well selling their wares through Amazon. These MnP’s are adapting to the new world of commerce. While others aren’t.

      • The other interesting thing about COSTCO (and I live in NYC, as I noted) is that I see bodega owners (small neighborhood shops) pull up and load their vans with goods from COSTCO, then go sell the same stuff outta their mini-marts.

        For about 3 times the cost, though.

        We like COSTCO a lot… you can also buy movie tickets, insurance, trips… you can quite simply purchase anything thru them if you’re a member… and it’s a good deal.

        The fact that the people who work there all seem happy helps, too.

    • This is a good point when turned around and then applied to Amazon of the future. I love Amazon. I sell a lot of books on Amazon. Amazon and I trade paychecks every month (they pay me and I buy almost everything there). I have no ADS, so let’s be clear on that.

      -Walmart was amazing at opening avenues for lower prices to the masses.
      -Amazon is amazing at opening avenues for lower prices to the masses.

      -Walmart completely revolutionized the way stores are stocked and just in time deliveries.
      -Amazon ditto, particularly with Prime and distributed warehousing and then again with POD for books.

      -Walmart got a huge market share, and then started being evil towards vendors and employees, cutting manufacturers’ ability to innovate, improve products, and still make a profit.

      -Walmart got in trouble with horrific labor practices.

      -Walmart then became recognized for the lowest possibly quality items and those of us in the middle class began shifting to Target for our big box store needs.

      The key here is that while I hope Jeff Bezos studied Walmart well, I also hope he kept studying them. Right now authors are being squeezed with illogical changes happening in KDP in terms of KU, but that is limited to books.

      I do hear grumblings occasionally from the retail side, but with mostly third party sellers who are responsible for their own pricing, it’s not quite the same thing as Walmart. The exception would be their requirement to compete with the contracted prices Amazon has for items stocked in their warehouses, but their flexible pricing based on recent purchases, stock and so on make that again different from Walmart’s big contracts and fixed pricing.

      Going back to books, the seriously slipping rate for KU reads, the terribly inconsistent KENPC for books (how it is that some books with 50K words get assigned 25% more (or higher) pages than someone with another 50K book, even when comparison shows similar paragraphs and short dialog, remains a mystery), the sheer volume of scam books (insert link for important message at the beginning of EVERY one of 90 scam stories that will take the reader to the end and trigger a $15 buck payout for garbage), and the absolute lack of communication from Amazon…all of these things are unsettling and make it very difficult to *plan* even a short term business plan.

      This is classic vendor squeeze after first making sure that the vendor is reliant on you for distribution and sales. Walmart was the first, true master at that tactic.

      I have recently felt like I was a product at Walmart when dealing with Amazon. As much as I love Amazon (and I do), I sure hope they aren’t getting the mindset of a post-conquest Walmart.

  2. Bezos did study WalMart.
    In fact, he poached so many WalMart logistics personnel, WalMart sued.


  3. What I find interesting is that no one in the industry saw the opportunity and acted upon it.

    How is is that one of the major, or for that matter, minor retailers, distributors or publishers couldn’t or wouldn’t see the opportunity that the internet presented?

    The same is true for music. Apple did what the studios, distributors, and retailers wouldn’t. It must be embarrassing to have someone from outside the industry disrupt it so.

    And we all now the trials of Blockbuster, Kodak et al.

    I would’ve loved to have been a fly on the wall when the suits were discussing strategy ad how their positions were too strong to worry about digital/internet interlopers.

    • That’s not what happens. The disrupted companies have too many corporate and political structures to deal with that make it impossible to turn the ship around. When your executive bonus is based on short-term profits, there’s no incentive to be tied to a no-record-yet experimental division in your company.

      You need firms with a strong entrepreneurial focus, or with a single powerful hand on the helm. Rarely, you get both (as in Amazon). It’s the nature of entrepreneurial firms that they age into sclerotic enterprises, unless the leadership actively prevents it, and that is even rarer.

      • You should be able to find a copy of “The Peter Principle” online for cheap.


      • The whole system works fine. The established firms keep doing what they have been doing, and that keeps a steady supply of goods and services flowing to consumers.

        New entrants build their businesses in the stable market environment maintained by the the established firms.

        Then the established firms disappear and the new entrants become the established firms.

        Then it starts all over again.

        Who cares if the established firms missed the opportunity? The markets remain healthy and consumers benefit.

    • The thing is that it’s extremely difficult for a company with an entrenched interest to disrupt itself—because of necessity that requires doing things that hurt your main line of business in the hope of establishing some new line that you have no real idea will work. Your shareholders tend to prefer you making money now rather than risking it all on possibly making money later.

      This is why the biggest innovators in a given industry—Apple, Amazon, Netflix—tend to come from outside the industry where they’re innovating. They don’t have an established business to disrupt. (And I believe Netflix was privately-held when it decided to disrupt its own rental-by-mail business with Internet streaming video, which meant it didn’t have shareholders to put up a fuss.)

      I went into some of that in this TeleRead post, in which I discussed the digital revolution I didn’t notice.

      • Agreed, Chris.

        It requires a determined and powerful leader to make a large company disrupt itself. Almost never happens.

        • It happened with Andy Grove and Intel, with Tom Watson and IBM, and with Juan Trippe and Pan Am.

        • Twenty years ago it happened at Microsoft when Bill Gates disrupted every program and product line in the company and ordered every manager to turn on a dime and force the company out onto the World Wide Web.

          Microsoft eventually lost its capacity to disrupt its existing business lines so completely and move so fast (my opinion), but it did have a heyday.

          • Heh, I’ve always wonder how big a clue bat they had to use to convince poor Billy the WWW wasn’t the ‘passing fad’ he kept calling it …

      • Felix J. Torres

        In some instances where a company does disrupt itself the legacy units within the company react by strangling the unit doing the new business.

        A good case study is IBM and the rise and fall of the IBM PC. The PC was created by an independent unit separate from the glass house gang and once it became clear that the PC was no fad, the mainframers asserted their power and took control and proceeded to slowly kill the business by changing the very practices that made the original PC a success: first by replacing the open expansion bus of the PCs with the proprietary MicroChannel and then trying to replace DOS/WINDOWS with OS/2. It took them barely two years to turn the PC from industry leader to also-ran.

        Internal politics almost always favor the legacy gangs.

  4. One difference was wally-world only wanted products on their price point. In order words you sold it to wally-world at the price they wanted or you didn’t sell it.

    I remember an article years ago of why you wouldn’t find Snapper mowers at wally-world. It seems wally-world wanted them cheaper than they could be made, and Snapper refused to lower the quality of their mowers to meet that price-point.

    Also unlike wally-world, I haven’t been hearing of Amazon’s new hire training including showing the floor staff how to apply for food stamps …

    • Calling them ‘wally world’ doesn’t negate that they saw opportunities that no one else did, and that Amazon learned from them. Yes, their labor practices suck. (Bites tongue on mentioning politicians with ties to Walmart) But that doesn’t mean they didn’t see an opportunity that other retailer turned their nose up at.

      That said, had they been even more innovative and less tied to bad labor practices, THEY could have been today’s Amazon.

      • Oh, agreed. And I’m as guilty of complaining about them and still using them as a couple posts down they whine about how Amazon drops reviews. (new patio set last week, was shopping there Monday and at Sam’s today …)


        One other thing about ‘all the Amazon posts’ here isn’t always or even often actually about Amazon, but about how others are reacting to how Amazon does/doesn’t do things.

      • Today’s Amazon will be tomorrow’s dinosaur that is upended by some innovators nobody takes seriously. Capitalism won’t stop for Amazon.

  5. PG likes posts about freedom and innovation.

    Me too. Along with your clever, insightful commentary this is why TPV is one of the three websites I have to visit every day.

  6. Barbara Morgenroth

    I went to Walmart yesterday and I’m glad I did because I got what I wanted and saved money, too.
    I also went to Kohl’s to get new jeans and they didn’t have my size. I came home and ordered them from Amazon at $20 less. (Lee Riders regular fit if anyone is interested).

  7. WalMart has a well-deserved bad reputation for cutting corners, especially with their suppliers. It’s also a horrible place to buy “fresh” produce. They really went downhill after their Sam Walton died.

    And I say that having shopped there. Thank God I rarely have to go there anymore.

    The irony is that their website could have been a serious competitor to Amazon, but they were locked into their business model and resistant to change.

  8. Funny you should inquire about what Hachette is doing this week that is an “interesting thing”: How about buying another publisher instead of innovating itself?

    Yes, Walmart’s labor practices could stand a lot of improvement. That’s true for the entire retail industry, from big operations — including Amazon and Powell’s, for that matter — on down to mom-and-pop stores in East Boondocks. This is not a defense of Walmart; it’s merely pointing out that this is an industry problem, not a one-company problem. (And the less said about mercantilism and the mercantile class’s sense of entitlement in the face of comparative-advantage economics, the better, especially because it’s an academic inquiry requiring scholarly competence in at least one language other than English.)

    • From the link, Shatzkin sez,

      “If you take the long view, I’d be so bold as to say we’ll have two big trade publishers 10 years from now, and no more.”

      Okay. But I thought the guardians of culture were concerned that Amazon had a monopoly or something that suppresses books? Or something. How could having only 2 publishers be a good thing? I’m not sure that having only “five” (the Big 5) is a good thing, in that light.

      Clarification request: when you speak of innovation, do you mean Perseus is an innovative company, or do you just mean that Hachette didn’t bother to create for itself the imprints that Perseus has? If the former, I’m wondering if Hachette is bringing in new blood in order to enact reforms. That could be exciting. But I’m guessing you mean the latter?

      • Felix J. Torres

        It’s a good thing because the two survivors will be based in Manhattan and run by the good old boys, not in Seattle or Michigan or the Carolinas, run by outsiders.

        It’s the same logic why everybody screams “antitrust” at Amazon distributing half the tradpub trade books in the US while applauding when the randy penguin *publishes* half those books and decides what gets and doesn’t get published.

      • We’re not getting it. When/if Allen’s qig5 consolidate, it’s a GOOD thing. If the ‘Zon ends up the major bookseller, it’s a BAD thing. See Whale Logic (TM), a kissin’ cousin of Whale Math (TM).

    • Heh, I liked the line:

      “Hachette has cultivated a stable of best-selling authors, including James Patterson, Michael Connelly and Donna Tartt, and like most of the big five publishing houses, it remains in many ways dependent on blockbuster hits to drive revenue.”

      Their top writers are kept in their ‘stable’, ready to be rode hard and put away wet.

      The lesser writers are kept in pens and sheared to the skin (and sometimes beyond) …

    • And the less said about mercantilism and the mercantile class’s sense of entitlement in the face of comparative-advantage economics, the better, especially because it’s an academic inquiry requiring scholarly competence in at least one language other than English.

      Come on. Tell us the language so I know how deficient I am when discussing comparative advantage.

    • Good points about the retail industry as a whole, C.E.

      The simple fact is that, while there are excellent retail employees, the lower hurdle for competent retail employees permits a lot of people to compete for those jobs, hence the salary rates.

      Every place I’ve lived, however, the Walmart employees earned more than employees working for locally-owned retailers.

      And in every place I’ve lived, when a new Walmart opens, it has ten applicants for every opening, including a lot of applicants from other national retailers.

      • “And in every place I’ve lived, when a new Walmart opens, it has ten applicants for every opening, including a lot of applicants from other national retailers.”

        And, every time a Walmart opens myriad other stores open up all around it.


  9. For PG, at least some of the anti-Walmart sentiment included an element of disdain for Walmart customers.

    That’s how it seemed to me, with the “People of Walmart” site. The attitude seemed to always be that wanting necessities at an affordable price was a character flaw.

    The Big 5 seem to take that same attitude: how dare you expect to afford books! Whereas, I’m thinking that the barebones Kindle costs slightly less than the GameBoy I bought with my carefully saved baby-sitting money, and of how many books my younger self could have bought at the prices indies charge. Especially if Amazon let’s you use those $25 gift cards for that.

    But Amazon’s current success does make me wonder how often companies remain nimble and adaptable. I remember Steve Ballmer saying something when he helmed Microsoft that to me explained its troubles then: He was mystified why Microsoft employees had the iPod instead of the Zune. He thought it should be like the car companies, where people who work for Ford don’t drive Chevys. Not invented here …

    I thought he was backward. As a rule you should be looking into what your competition is doing, especially if they do what you do better than you do. I hope Bezos chooses his successor carefully. Well, at least don’t leave until someone credible comes along to compete with Amazon, anyway.

    • He thought it should be like the car companies, where people who work for Ford don’t drive Chevys. Not invented here …

      I think Ford employees buy Fords because they can get them for much less than they can get a Chevy.

      And Chevy employees buy Chevys because they can get them for a lot less than Fords.

      But, if a Zune was available for a lot less than an iPod, there is a lot bigger problem.

    • There is way more wrong with Ballmer than that. But that’s certainly part of it. (I’ve met the guy).

  10. Among all its other developments, ‘ve been interested in what it is doing with Echo and Alexa. Since they have opened its AKS platform, several industries are finding a use for it including Ford’s anticipated incorporation of it and, this week, marketing for the new Batman movie has found an interesting approach with an audio choose your own adventure game. http://www.theverge.com/2016/3/1/11143548/amazon-echo-alexa-batman-vs-superman-murder-mystery

  11. I love the other side of the disdain, which is “I won’t buy at Walmart/Amazon/box store x, because it is better to buy local”. Umm, I hate to nit-pick, but who do you think works at the big store that employs 100s if not 1000s, as compared to the local retailer may or not hire one or two and who charges you too much for the same items? It’s called the multiplier effect for a reason. Not to mention that all the cities/boroughs that LOBBY for Walmarts to come to their area because they know the economic boom is worth more than the economic wane elsewhere. Highly disruptive, but worth it.

    I wonder though if Amazon will eventually allow a company like, say, Hachette to come along and act like a 3rd Party vendor through the Amazon window. Lots of companies selling other products do, and they (mostly) get to set their own prices when they do. Things that Amazon won’t stock, including a lot of import items. I’ve bought a computer table, some toys, and even a couple of indie books in recent months that were all “filled by non-Amazon vendors”. The Big Pubs already do some of it with the direct transfer of some data, etc. but I wonder if they will upload all their own files, handle the shipping, etc., thus giving AMazon a smaller share since they are handling everything themselves, rather than as Shatzkin discussed, maybe some of them having their own sites too and selling direct.


    • “I wonder though if Amazon will eventually allow a company like, say, Hachette to come along and act like a 3rd Party vendor through the Amazon window.”

      I’d say ‘no’, mainly because if they did the customer would see any errors/problems with that third party or their site as being an ‘Amazon’ problem.

      One thing I hated while doing tech support was getting bad reviews that read: Tech was great and got my fixed up — but your sales staff lied to me on what this equipment could do. Rating for the company?:1(crap) out of 5 …

      I can’t see Amazon allowing Hachette or anyone else the ability to get their customers mad at Amazon for how the third party handles things.

    • I think PotterWorld did exactly that. If you went to PW and hit BUY, it put you on a regular Amazon page.

      Amazon has a zillion third party vendors that handle all parts of the transaction other than payment. Amazon just collects payment and sends the vendor a sales notice with a name and address. the vendor handles everything else.

      Amazon takes its cut, and credits the vendor account with the net. It’s very easy to use. For the small vendor, he even gets the Amazon cut rate UPS shippig rate.

    • Felix J. Torres

      Submitted for consideration, the epilogue to the decade-long drama over WalMart coming to DC:


  12. Is it too late (or too early) to add that the traditional model of books being fully refundable for bookstores should be killed, stabbed, fried or otherwise dispatched?

    Authors just love it when publishers withhold 40 percent (or more) of royalties against returns, for years. Publishers must love getting those stripped covers, while other bookstores are demanding they reprint the same book (which they usually don’t).

    Stupid, wasteful and medieval.

  13. Patricia Sierra

    PG, I love seeing your Amazon posts.

  14. Interesting thoughts. Warren Buffet’s BH portfolio contains a lot of Walmart stock. It is tempting because of the dividends, and I was considering buying some myself. But looking into Walmart’s strategies and financials I realized that increasingly Walmart and Amazon are becoming the major competitors in retail in the future. To paraphrase the Bad News Bears, “That’s bad news for Walmart.”

  15. Great post. Keep those Amazon stories coming…

  16. If anyone’s recently called you an Amazon shill, PG, I’m happy to jump in on your side. My eye is always drawn to the Amazon posts here since, as you say, that’s the most interesting and successful company these days, and those posts usually yield the most interesting discussions.

    Just my take.

  17. Amazon seems quite different than walmart who has squeezed its suppliers til they bleed and… well, when I ask employees at wally world how they are treated, whether they think they are working for a great company, the answers range from sad to sad. Walmart might be all econ w no people-care. Amazon seems different. At least I hope so.

  18. Amazon is great for us international buyers and sellers as well, making books available to us that we would never have seen in Australia otherwise, cheaper, and providing a sales outlet not available here either. Loving that disruption! We need to look at the biggest possible picture.

    Slightly off topic, Google gets a lot of flak as well, but look what they’ve given us for free, and by that I mean billions of people. Google Maps, use it every day, a search engine still unsurpassed (personal opinion), free email. Yes, maybe they’ve mostly done it to build a customer base, but the motive doesn’t detract from the immense value-add.

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