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Mighty Amazon 189

Posted by michael from the watch-out-for-piranhas dept.
theodp writes "Fortune reports that the patent-pending practice of selling partners' used and new goods next to Amazon's own was CEO Jeff Bezos' response to the emerging threat of eBay. Seeing an opportunity to overtake the online auctioneer as well as a way to slow the need to add warehouse capacity, Bezos 'bet big and put hundreds of his best people on it.' While Bezos' decision caused a lot of discomfort at the time, including the Authors Guild protest and the subsequent e-mail campaign in Amazon's defense, today almost 20% of the e-tailer's unit volume is sold through others, yielding revenue that is almost pure profit."
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Mighty Amazon

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  • profit. (Score:5, Insightful)

    by rumpledstiltskin ( 528544 ) on Tuesday May 13, 2003 @02:05PM (#5946959) Homepage Journal
    and it's probably a strong contributing factor to Amazon's finally being profitable. I don't know how much I like there being a patent on this, but it isn't a bad idea, even if the author's guild is up in arms over it. Personally, one of my favorite stores is half price books.
    • Problem is, you can only find a book at Half-Price Books if someone else decided it's not worth keeping.

    • Re:profit. (Score:5, Interesting)

      by MsWillow ( 17812 ) on Tuesday May 13, 2003 @02:40PM (#5947406) Homepage Journal
      Amazon could be profitable any time Jeff wanted it to be. The rules say that a company must show a profit at least once every "n" years, and when they show a profit, they end up paying taxes on it.

      What Jeff did was to play that game, pouring any excess money back into making Amazon grow, until they finally had to show a profit. He's still doing that, and when people realize that Jeff knows the rules, and how to work around them, they'll better understand what he's doing.

      I used to work with Jeff, years ago, at a place called Fitel, in New York City and London. Got to know him fairly well - he's actually a fairly accomplished hacker (in the old, good sense of the word) - as a child, overseas, he calibrated everybody's VCR digital counters, and had a BASIC program that converted between the different units, so that when the other ex-pats exchanged VCR tapes with indicators of where each show started, they'd be able to fast-forward to that spot on their VCR. Clever :)

      So, please, folks. Realize that Jeff Bezos is one darned-clever dude, and react accordingly. He's not lost a bet that I know of in the nearly-twenty years that I've known him.
      • The rules say that a company must show a profit at least once every "n" years, and when they show a profit, they end up paying taxes on it..

        So by your logic it would be better for me to make $0 and not pay taxes on it than to make $100,000 a year and pay $20,000 of it in taxes?

        I can understand funnelling profits (ie. any excess money) back into the business. But basically that just means making a profit and writing some of it off, all businesses do that.

        Basicaly what I'm saying is its always bette

        • Re:profit. (Score:5, Informative)

          by gte910h ( 239582 ) on Tuesday May 13, 2003 @03:44PM (#5948138) Homepage
          Naw, that isn't how corporations work.

          You see as a C-Corporation, profit is pretty much the money you haven't spent on something. When you make profit, you have to give a portion of it, say 20% of it, to the government, which you never get back.

          Instead, you can re-invest it into the company, and you have a bigger company that can do bigger things in the future. If you "invest" it into a company jet, you do so with company money and viola, it can be purchased at effectively 25% less (as you didn't have to pay income tax on that profit). And salaries of employeess of the company, such as that of bezos himself, are an expense and do not come out of the profits of a corperation.

          Sure the company owns the plane, but you CONTROL the plane, and get all the benefits out of it.

          Imagine monopoly, the board game, with the same rules as usual, but every time you hit go you write down how much money you have. If you have more money this time than the last time, you give %20 of the difference to the bank.

          See how in that situation, you'd do well to spend that money on things such as improvements on your properties, and buying new properties, rather than to turn a profit?

          I recommend the book, Inc and Grow Rich, to learn more about the workings of C-Corperations from a working man's perspective.

        • Re:profit. (Score:3, Insightful)

          by shreak ( 248275 )
          It's not always better to make a profit. It depends on the organization. It's not in an NPO's best interest to show a profit (and if you think all NPOs are set up as goody-goody orgs, think again).

          Practically every movie ever made in modern times does not show a profit.

          For a corporation the goal not to make a profit, it's to "increase shareholder value". Turning a profit is one way to do this. Growth is another. Growth is usually achieved by taking revenue and pouring it back into expansion or R&D. Of

          • Re:profit. (Score:3, Insightful)

            by Doomdark ( 136619 )
            Even outside of a big corp., profit is overrated.

            I'm not sure it is all that overrated. At least up until stock market bubble, many investors thought profits to be irrelevant, and growth to be "the thing". Back then profit was severely underrated, IMO.

            Profits do matter for some things, anyways; dividends can only be paid on profit, and cash companies need for high liquidity usually comes from profits. Alternative is to accumulate debt, but really, nothing beats cash without debt, no matter what size t

            • Unless, huh, I got a loan and bought cash.

              I believe you're misunderstanding a 'cash-rich' industry, inplicit in this article. A 'cash-rich' company would only [choose to] be so because growth had stalled so cash becomes preferable to reinvestment (which shows little return). I may be in a successful industry but have little cash, because its better spent (and results in increased growth).

              Then the tax treatment of dividends vs balance hseet growth or reinvestment, whether funds are better raised by what
              • Unless, huh, I got a loan and bought cash.

                Hmmh? Yes, companies loan to get cash, even often to just avoid using their "own" cash (raising their liquidity). But that doesn't really contradict "cash is good" statement. :-)

                But I believe I was only replying to specific "profits are overrated" comment. I do understand that sometimes (often) it makes more sense to just reinvest money straight off (writing off investments), that's obvious, especially on companies in fast-growth industry sectors. This does n

      • Re:profit. (Score:2, Insightful)

        by /dev/trash ( 182850 )
        Great way of apologizing for Amazon's lack of profits. I'd say it's more due to the fact that expeneses were greater than revenue, not that he was trying to avoid taxes.

        One day the cash will run out and so will Amazon's luck.
      • Amazon could be profitable any time Jeff wanted it to be. The rules say that a company must show a profit at least once every "n" years, and when they show a profit, they end up paying taxes on it.

        Please provide a citation. Theres no such rule in the United States.

  • Article Text (Score:5, Informative)

    by Anonymous Coward on Tuesday May 13, 2003 @02:06PM (#5946972)
    Mighty Amazon
    Jeff Bezos has been hailed as a visionary and put down as a goofball. He's proved critics wrong by forging a winning management strategy built on brains, guts, and above all, numbers.
    FORTUNE
    Monday, May 12, 2003
    By Fred Vogelstein

    "Mr. Bezos, can you hold that bottle of water on your head so I can make sure I'm in focus?" "Mr. Bezos, when you jump, can you spread your arms and legs in the air?" "Mr. Bezos, while you're in the air can you turn your body 90 degrees and land in a sitting position?"

    Jeff Bezos is having his picture taken jumping on a giant trampoline, and, remarkably, he looks like a man in his element. Most CEOs wouldn't pose for a photo like this in a million years. Risk life and limb to look undignified? Not a chance. But Bezos, who is 39, embraces the experience with the enthusiasm of a 10-year-old in an arcade. He cracks jokes about his receding hairline, he chats up the photographer about his equipment, he even helps the photo assistants rearrange the shot. "We ought to try this on the vomit comet," he says mid-jump, referring to the plane astronauts use to simulate weightlessness. "That would be really cool." He protests only once, after 30 minutes of jumping, when the water bottle he keeps placing on his head for the photographer springs a leak. "Next time we do this I think I'm going to need a stunt double," he says. When it's all over, he pulls out his own camera and orders everyone onto the trampoline for a group shot.

    Anyone who knows Bezos understands that it doesn't take much to get the founder and CEO of Amazon.com to start acting up. In good times and bad, Bezos has always been a man of exaggerated gestures, whether he is dressing up like a four-star chef to promote Amazon's kitchen store, climbing atop a conference table on all fours to signal his interest in a business presentation, or just unleashing his famous braying honk of a laugh. During the Internet bubble his oversized personality made him seem fun and inspiring, and he shrewdly used that to make himself and his company one of the most talked about business stories in a generation. When Amazon's stock price fell and its losses continued to mount, he endured whispers that his behavior made him look clueless.

    Today only three questions about Bezos's behavior are relevant: Is he as goofy as Bill Gates? Is he as goofy as Michael Dell? And is he as goofy as the late Sam Walton? Such comparisons would have been laughable when conventional wisdom had Amazon joining the dot-com trash heap. Not anymore. Amazon has started to thrive. While most of American business is still sputtering, Amazon's revenues, at $4 billion, are growing by more than 20% a year. Marketing, inventory, and warehouse operating costs, once so high they made old-fashioned retailers look efficient, are now so low that only Dell's and very few others' are better. Amazon's operating profit margin, at 5% in the all-important fourth quarter, beat that of most retailers, and approached Wal-Mart's 6%. And Amazon is generating so much cash--$135 million last year, rising to an estimated $300 million this year--that it just paid off 12% of its $2.3 billion debt. At a recent $30, Amazon's share price is at a two-and-a-half-year high, making it one of the top stocks over the last five years, even taking into account its rise and fall during the bubble. It has outperformed Dell, Cisco, Microsoft, Wal-Mart, and GE, to name a few.

    And while Amazon still hasn't turned a profit yet, it's headed toward profitability so fast that investors have stopped worrying about whether it will ever make money. Now they simply debate how much. Profitability has taken awhile because the company borrowed heavily during the bubble to finance its growth, and interest-related expenses still suck away a lot of what flows to the bottom line. Its relatively new electronics, tools, and kitchen business is losing money too, though at a rapidly shrinking rate. But with costs falling and revenues and operating profit rising each quarter, it's exp

  • Patents again? (Score:4, Insightful)

    by Blaine Hilton ( 626259 ) * on Tuesday May 13, 2003 @02:06PM (#5946976) Homepage
    I for one think it's a great idea, however I don't think they should be able to patient something like that. Much like one click ordering, it's just crazy. When are they going to start patenting basic life processes like exhaling, and then expect everyone to pay fees? Much like that one drug, "the purple pill", that they patented t he substance the body makes when you ingest the pill, thereby locking out all competition.

    --
    Need a calculator [webcalc.net]?

  • It's good to see the small guy win one.

  • I don't see how patents are good in this case (Score:5, Insightful)

    by reverendG ( 602408 ) on Tuesday May 13, 2003 @02:15PM (#5947106) Homepage
    Jeff Bezos and Amazon are one of the pioneering companies, doing what no one thought they could, and doing it right. Amazon has become my favorite marketplace; the only time I actually go to the store and buy something is when I need groceries. If there is something that I want to check out before I buy, I'll go to Best Buy, check it out, and then go home and order from Amazon.

    I think that Amazon should be rewarded for having the gumption and wherewithal to blaze this trail, but I don't see how patenting things like "One click purchasing" or the idea of selling used items next to new ones can be beneficial. They have already demonstrated that they are winning market share because of a commitment to improving efficiency and technology, and those are the best reasons to retain market share. Not preventing anyone else from doing something similar.

    • This is a GOOD patent. (Score:2, Insightful)

      by raehl ( 609729 )
      The patent is doing exactly what it's supposed to do: Making sure the entity that invested in making the idea work gets the benefit of that investment. Nobody else wanted to sell used items next to new items because they didn't think it would work, or spend the money to see if it would work, so now that Amazon has spent the money to prove that the idea IS a good one, why should everyone else get to use that idea for free?
      • Methods of doing business are explicitly not patentable. Or they're not supposed to be patentable, but the USPTO will let you patent methods of using a swing set [uspto.gov] since they're so derelict in evaluating patent applications. (That URL isn't a joke, BTW.)

        It's an idea, not a technical innovation. It doesn't cost anything to have an idea. And it's impossible to verify that you were the first person to have that idea. Technical innovations do cost money to develop and there really wasn't any unique technical pr

  • Nearly classical economics (Score:5, Interesting)

    by Walter Wart ( 181556 ) on Tuesday May 13, 2003 @02:15PM (#5947108) Homepage
    A lot of people don't like Amazon's practice of patenting everything under the sun. I don't like their practice of patenting everything under the sun. Ultimately it is destructive to the long term development of the industry in the same way that the new NDA-driven brand of industry/university research is to science. But these articles give some idea of the why.

    Bezos wants to make money and survive. And it's darned hard to run something like Amazon like a business. Now this should be obvious. But it brings back memories of my days as an economist (oh, the shame! the shame!)

    They, like ebay, are working in as close to a frictionless economy as we are likely to get. If any facet of their business can be done more cheaply by someone else, they're screwed. We're even seeing one of the previously fictional economist's assumptions becoming true. The market setting prices immediately through the auction mechanism.

    How does a firm survive in nearly classical economic conditions? It reduces costs at every point and provide barriers to entry to new firms, and damn the effect on every other part of the information industry. You also see it in the way that they provide "like goods" ("People who shopped for this also shopped for this") and pricing that varies from person to person for the same item based on their best guess as to what that person is willing to pay right now.

    This is particularly true when they are competing with ebay which really doesn't have any pricing mechanism except for the pure market-driven auction one.

    An interesting view on nearly classical economics
    • I don't have a background in economics, so I'm asking out of true ignorance.

      I don't understand why it is difficult to run something like Amazon like a business. They are simply cutting out the distrubutor, who demands a share of profits, selling items for marginally(in most cases) cheaper than their competitors, and then charging the consumer for shipping.

      It seems to me that as long as they can keep their costs below what a distrubutor would charge, they should be making money. Also, because they al
      • Because any Joe can recreate amazon.

        There's no great technical expertise needed to buy things, or make a website, or sell/ship things.

        The difficulty comes from "selling items for marginally(in most cases) cheaper than their competitors". Given how easy it is to recreate their own situation, there's no way to do this.
        This leads to a situation where to keep a competative advantage, they need to use "non-classical" techniques, like patents, name recognition, brand loyalty and the such...

        • Re:Why hard to run something like Amazon as busine (Score:4, Insightful)

          by spinkham ( 56603 ) on Tuesday May 13, 2003 @03:05PM (#5947712)
          So? Any Joe can recreate Walmart too, but it would take a phenomenal amount of capital to get anywhere close to the point of competing with them.
          The same is true with amazon. We don't let walmart patent the "make a huge freaking store" method of business, why should we let amazon patent the "click to buy things" business?
          Should we give walmart a patent if they want to start selling used books next to their new books? Then why should we give a patent to amazon when the only difference is the venue?
        • Because any Joe can recreate amazon.

          There's no great technical expertise needed to buy things, or make a website, or sell/ship things.

          Heh. That's funny.
          True, one could buy the talent and over the course of time recreate the Amazon site featureset.

          Takes you a while to get there, and a lot of capital and management expertise, and all the while you're competing with someone already there.

          And, of course, you have to raise capital. Any Joe can do so taking a summer stroll down Sand Hill Road, right?

        • No great technnical expertise necessary?!

          You make it sound like almost no work was put into Amazon. That is clearly incorrect.

          If creating a competitor to Amazon was so easy, why hasn't there actually been one? I highly doubt the success of Amazon had anything to do with their patents. One click really isnt what Amazon is known for.

          Anyways, I think you're underestimating how difficult it is to run Amazon's business. Additionally Amazon actually carries inventory (evidenced by the single item detail pa
    • I wouldn't want to be the one to stand up at a fund manager meeting to explain "we're not pursuing patents on our technology because we think the patent system is flawed". That would be a quick path to unemployement. They have to do what's good for shareholders, regardless of what anyone thinks of the patent system.

    • Re:Nearly classical economics (Score:5, Interesting)

      by KrispyKringle ( 672903 ) on Tuesday May 13, 2003 @02:49PM (#5947490)
      Granting a limited monopoly in the form of a patent is arguably bad enough for innovation when patents are granted for actual technological advances, say, the cotton gin (or, probably more accurately, there is a very careful balance between encouraging innovation and hindering it). Granting a limited patent for a true invention makes some sense; if it were immediately clear how the cotton gin functioned, no one would gain anything by investing the money to invent it when others could simply rip off the designs for less investment afterwards.

      However, granting monopolies for business practices makes far less sense. Business plans typically do not involve huge R&D expendetures the way actual technological advances do. Instead, business plans are "gee whiz" ideas to run a business more efficiently, an end result which is ultimately more profitable for the business to implement regardless of having a monopoly on the practice or not.

      If Amazon were not granted a patent for "One-Click," would they not use it? Of course not; the idea took very little investment to develop and makes their business far more profitable, regardless of its use by competitors. Patents are not necessary to inspire innovation when it comes to business practices; the necessary motive is the increased efficiency and profitability. Further, issuing a profit for a new business practice means that there can be no direct competition between Amazon and anyone else, since no one else can use Amazon's same sales methods. Therefore, there is no driving incentive for Amazon to increase their product value or profitability, and, indeed, fewer, not greater, incentive to innovate (the same problem which arises with more traditional trade monopolies).

      It's difficult to show any likly benefit in innovation from business practice monopolies, but the cost is clear.

    • It's a *very* precarious situation. Virtually any business person with experience will tell you that competing on price alone is a losing battle. Amazon needs to innovate, not just cut costs. There's *always* somebody cheaper. And most people who shop the web are the lowest form of cretin who will buy whatever they want, where-ever they can find it a penny cheaper, without any thought to who the selAler is. If Osama Bin Laden were to sell a DVD for $0.01 less than Amazon, I'm sure he'd sell out in a he
    • They, like ebay, are working in as close to a frictionless economy as we are likely to get. If any facet of their business can be done more cheaply by someone else, they're screwed.

      I disagree. You are assuming people will always buy the cheapest. However, Amazon still provides something of value even if they aren't the cheapest: low risk and top-notch customer service. Even though it is true that I can get certain things more cheaply at eBay, I still buy from Amazon and others to get a known face on t
    • "This is particularly true when they are competing with ebay which really doesn't have any pricing mechanism except for the pure market-driven auction one."

      Of course EBay has a pricing mechanism. There is a fixed cost to list an auction. You seem to be under the impression that EBay sells "stuff". They don't. They sell auction administration (and auction visibility). It is only in hosting other peoples selling of stuff that Amazon is competing with ebay, and in this arena both companies are providing
    • The question isn't *why* companies would want patents on everything; obviously a monopoly is wonderful for whoever owns it. The question is why "we the people" are granting these patents to our own detriment.

      If there are no drug patents, nobody will spend billions to research new drugs. That I can understand. But if there are no one-click or new+used patents, nobody will offer one-click shopping, or sell new and used items? Of course they would. So granting patents on these things is harmful.

  • Is Amazon Profitable? (Score:3, Interesting)

    by VoyagerRadio ( 669156 ) <harold.johnson@gmail.com> on Tuesday May 13, 2003 @02:15PM (#5947115) Journal
    Is Amazon.com now turning a profit? I thought I heard mention of Amazon finally making some money sometime last year (or was it this year?). I know eBay has always been profitable, and as long as there is a huge gap between the poor and the rich, there will always be a need for an eBay. Amazon, however, is often too darn expensive, even their used listings (zMarket and such). Half.com(an eBay company)'s items seem to be cheaper than Amazon's used market items, even though the Amazon used market is full of items by many of the same sellers as Half.com. I'm wondering whether Amazon's used market is catching up with Half.com's, in terms of sellers, though.

  • Discovery, not Invention (Score:4, Interesting)

    by abcxyz ( 142455 ) * on Tuesday May 13, 2003 @02:17PM (#5947138) Homepage
    As much as I am against the rediculious patent articles that show up on /. regularly (the articles aren't rediculious, just the patents), I've purchased several used books from Amazon using this "technology". In virtually all those cases, I would not have bought the book at retail prices, because I wasn't sure that it was worth it. It is an excellent idea, but I'm not sure it's an invention. Maybe more of discovering a way to use existing technology. Similar to the SARS DNA patent, that is not an invention, it's a discovery operation.

    -- Rick
    • Showing used items alongside new items is a great idea. It gives people a way to make a little bit of extra cash and makes the book market more efficient. I've made a little over a thousand bucks selling used computer books through Amazon. (About 70% of what I had paid for the books).

      The technology that lets you find out what used books match new books is called a JOIN. The technology that lets you link from a new book page to a used book page is called a Hyperlink. The whole process is pretty much depend
    • It's a method of doing business. It shouldn't be patentable.

      When they start letting you patent methods of doing business, you can patent anything. Anything. You could patent picking your nose. You could patent swinging on a swing set [uspto.gov]. What if Picasso patented cubism?

      It may be a good idea, but it's not something that should be protected by the government against competition.

  • Hmmmm (Score:5, Interesting)

    by mao che minh ( 611166 ) * on Tuesday May 13, 2003 @02:17PM (#5947140) Journal
    From the story: "Bezos 'bet big and put hundreds of his best people on it.

    from an investor's letter [corporate-ir.net] released in April, 2003:

    "Amazon.com's employee base grew from 158 to 614, and we significantly strengthened our management team."

    So Bezo directed a third of his workforce to pursue just this one goal? Interesting.

  • For the whole thing, try here [fortune.com]

  • Amazon = Smart (Score:4, Insightful)

    by TrueWest175 ( 606770 ) on Tuesday May 13, 2003 @02:23PM (#5947198) Homepage
    I worked there for two years and I have to say I was impressed. When I got there, they were still in the "get big fast" mode where profit and margin didn't mean anything. Then the bottom fell out of the market and they shifted to "get profitable fast". The entire focus and tenor of the company shifted in about 3 months. Jeff Bezos is a genius as a communicator. At Christmas, everyone goes to work in the warehouse unless you are pregnant, dying, or in customer service. How many warehouses in the world have people with doctorates making boxes? Not many, because no one else can convince a Ph.D to spend two weeks folding boxes. Bezos can....and does. When they look at a problem, they tend to throw all the smartest people at it and give them the world. It works. The warehouses are incredible...and they haven't even touched the level of efficiency they will be at in 5 years. Sure, they made mistakes. They overbuilt capacity and had to close a warehouse. But don't underestimate Amazon. The company is smart, plays fair, and is winning. It's good to see.
    • How many warehouses in the world have people with doctorates making boxes?

      Two points:

      1. It would amaze you how many academic subjects there are these days that you can earn a doctorate in.

      2. Not everbody has the skills needed to work the till at a McDonalds.

    • I can't speak for the past few years (I quit awhile back), but FedEx culture in Memphis encourages managers, Managing Directors, VP's, and whomever wants to get a glimpse of the "hub life" to volunteer and work in the Memphis Hub, sorting, handling, stacking boxes like the rest of us. I suppose it keeps your head somewhat at ground level and makes you appreciate that someone, somewhere, is doing the shit work that your decisions directly affect.

  • Publishing depends on inefficiency (Score:5, Insightful)

    by sssmashy ( 612587 ) on Tuesday May 13, 2003 @02:23PM (#5947207)

    "We suggested to members that it was in their own self-interest not to undermine their book sales by sending Web site visitors to Amazon," Aiken said. "Amazon is turning new book buyers into a used-book marketplace. That hurts profits of publishers and the royalties for authors."

    I think the Author's Guild is absolutely correct in this case. Amazon claims that it's about giving customers options, or turning new readers on to authors. But studies have shown that price has almost no impact in getting readers to choose a new author. Other factors, such as book reviews and word-of-mouth recommendations, are much more influential. Readers do look for bargains, but only after they have decided which title they want.

    The publishing industry depends on the systemic inefficiency of book distribution. Profit margins, as always, are razor thin. Fortunately, most books just gather dust on bookshelves once they've been read. Usually they just doesn't seem worth the trouble to sell. This is inefficient, because the unused book doesn't end up in the hands of another willing reader. But it's a boon to the publishing industry, because the willing reader will be tempted to buy new books (with much higher profit margins) instead.

    Ironically, readers as a whole benefit when they are willing to fork out more cash for a book. It's important that publishers make profits or at least break even, because this allows them to take the financial risks publishing "niche" books for smaller markets or taking chances on new, aspiring authors. The alternative is to focus exclusively on mass-selling pulp, churning out whole forests' worth of best-sellers and "Left Behind"novels.

    • Re:Publishing depends on inefficiency (Score:2, Interesting)

      by Anonymous Coward
      Yep, the Authors Guild can drive the used book market out of existence just like the RIAA is fighting so hard to drive used CD stores out of existence.

      Except the Authors Guild is run by carebears, not evil profit motivated people looking at a bottom line.

      Because when the RIAA tries to shut down a P2P service or local used CD store, slashbots jump and scream about how they are dinosaurs and need to change their business model.

      But the Authors Guild, being made out of candy and gumdrops, can just go ahead c
    • NEW publishing depends on not having publishers.

      If publishers won't make any money, they'll cease to exist, and authors will simply take advantage of new digital publishing techniques.

      The argument that people will cease to write unless publishers can make a profit is no more valud than the argument that people will cease to make music if record companies cease to make a profit. People will always write, and people will always make music, and if they want to feed themselves without having to do anything e
      • NEW publishing depends on not having publishers.

        The argument that people will cease to write unless publishers can make a profit is no more valid than the argument that people will cease to make music if record companies cease to make a profit. People will always write, and people will always make music, and if they want to feed themselves without having to do anything else, they'll find a way to get you to pay for their goods.

        Actually, there's absolutely no guarantee that an effective means of communica
    • http://www.bookcrossing.com/home

      BookCrossing is an easy way to clean off those old bookshelves without having to figure out where your local used book store is. It's more like donating books to the public domain.

      =Shreak
    • It's the big best-sellers that you see hundreds of copies of for sale on ebay/amazon/etc.; niche stuff is much harder to find used, because when people buy it it's 'cause they want to keep it. I'm personally more familiar with the used market for music CDs, which works very strongly in this way -- if you want a copy of a Britney Spears album, you can find dozens of them for $1-$3 apiece, because lots of people bought it when it was hot and now are trying to get rid of it. If, on the other hand, you want a
    • Publish less books, concentrate in quality, raise prices.

  • Prior Art (Score:1, Insightful)

    by willtsmith ( 466546 )
    There are hundreds and thousands of Prior-art cases relevant to selling used goods online.

    Exhibit 1-1,000,000 All the stuff sold on usenet before http existed.

    Exhibit 1,000,000-100,000,000 eBay
    • Read the article. Bezos isn't trying to patent online selling. What he wants to patent is a system of selling used merchandise supplied by 3rd parties, whereby you could place an order for something that has not yet been posted for sale. Sort of like a want ad, but then when somebody offers that item for sale you get matched up automatically. It's more like the stock market than an online store.

      The thing that bothers me about this is that the patent would not be on a piece of code but on the very practice

  • Computerization... (Score:1, Interesting)

    by Anonymous Coward
    Amazon recently had a mistake in their coupon code system for a Toys'R'Us buy one get free game deal. You could use the codes a certain way and get everything free with free shipping. I got $400 worth of games for free and there were a lot of other people on deal message boards who got a lot more than that.

    There have also been price mistakes where people have gotten boxes of 20 modems for the price of one and other things.

    I'm sure this is somewhat of a drop in the bucket, but all the computerization does
  • Is there anything Amazon isn't going for a patent on?

    Relevant documentation here [userfriendly.org] and here [userfriendly.org].

  • Better off at a yard sale. (Score:5, Insightful)

    by Joe the Lesser ( 533425 ) on Tuesday May 13, 2003 @02:32PM (#5947316) Homepage Journal
    Or a used books store.

    Amazon takes a considerable amount of profit from you this way.
    • Yeah, cause I don't find the convenience worth it.

      I would rather buy a paper mark down where all the yard sales are. Spend a whole day driving to each one in hopes of finding the book I want.
    • I live in the city, so I don't have a "yard" or a used book store within walking distance. Even if I did, how much could I get for my personal CD collection? $2-$3 a pop, even if the locals had the same taste as I do.

      Amazon allows me to get my stuff in front of thousands of people across the country who are actually looking for that obscure CD I have for sale. In many cases I've doubled my money with the hard-to-find stuff, all by just doing a search and fillng in a form. I just drop it all in the mail bo

    • What I mean is, If you want to sell a book for 5 bucks, you may get 2 bucks for it, with Amazon keeping the rest.

      I admit if you live in the williwacks and don't want to drive to a better place, then you might as well take your chances.
    • Used book stores take considerably more profit from you; they generally buy at around 30-50% of the price they hope to be able to resell the book for (used CD stores are even worse, usually paying more like 15-30%). As for selling it yourself, you'll be lucky to get someone to buy any given book for $1 at a yard sale, while selling on Amazon (or ebay, or half.com, or whatever) makes it more likely that someone who actually wants your book and might be willing to pay a reasonable price for it will see it.
  • I can see a small south american tribe here have a good prior art claim on something called amazon that sells dead trees
  • I've bought a good number of used books from Amazon for very good prices -- I've got no complaints about the service. The only downside is that Amazon charges a set shipping fee for each item ordered (since they're coming from different sources) and it really can add up. In fact, for my last order I got such low prices for the books themselves I ended up paying more for shipping than for the books! You need to take the shipping price into account when comparing a used item to a new one from Amazon's ware
  • You linked to the third page of the article, not the first. This is particularly inconvenient because every page in a Fortune article is self-contained and looks identical to all other pages. I ended up reading the article backwards.

    I suggest that the correct way to link to an article like this is to link to page one and note that the relevant info is on page three. Here's the correct link [fortune.com].

  • E-Tail and me tail (Score:2, Insightful)

    by ratfynk ( 456467 )
    Problems with e-commerce are distribution, warehousing, product quaility issues, warranties etc etc. Software patents miss the mark.

    Given that e-commerce is doing as well as it has, can be viewed as suprising if you really look at the problems. Setting up good reliable e-commerce is not just web hosting. Who is minding the store?
    It still takes human hands to manufacture, market and distribute goods. Automation is still not good enough.

    E-commerce will not replace local retail in the near future for these

  • What a joke. (Score:5, Interesting)

    by Anonymous Coward on Tuesday May 13, 2003 @02:59PM (#5947642)
    I rarely order from Amazon these days since most of their popular paperbacks are now selling at list price. I used to buy in bulk and save a lot of money. Now there's no point unless the book's not on the shelf at my local bookstore. Which brings me to my current order.

    I placed an order for four books last week. None were in stock at the local bookstore and I figured I'd just order from Amazon and have them delivered to my door. I picked the free delivery option which groups the books into as few shipments as possible. During the checkout procedure I was advised that I would be receiving two shipments. One with the three books that were currently in stock, a second with the book that is being released at the end of the month. Seemed perfect. Until I got my order confirmation email.

    "Delivery estimate: February 18, 2004 - February 25, 2004"

    Wha???? That's over 9 months from now. Do they have to grow the trees to make the paper? I figured it was a glitch and waited for my shipment notification. Didn't get anything. A few days later, my order status still hadn't changed so I inquired. I got four responses.

    Response 1, CSR A: Sorry about that. Technical glitch. It's been fixed and your order has been upgraded to 2-day delivery at no charge.

    Response 2, CSR B: "I've checked into your order and see that the shipping instruction to "group my items into as few shipments as possible" was selected during the order process. This option can extend the estimated ship date for your order beyond the individual item availability estimates which are listed on our web site." ... "...[Book 3] is now back-ordered, and our supplier has not been able to let us know exactly when they expect to have more in stock."

    Response 3, CSR A: Whoops. CSR B is right.

    Response 4, CSR C: Looks like someone else already took care of this.

    Odd. All three of the books that were supposed to be in the first shipment still show up as "ships in 24 hours" both in my order status page and the product description pages. I'll wait and see what happens.

    Monday rolls around. I check the order status again. Oh, Goody! Two of the books have shipped. Funny. They shipped Sunday. That's a neat trick. And one of the books that was shipped is supposed to be out of stock. And one of the books that didn't ship is still listed as in stock and is supposed to be shipped today. Oh, well. At least something's on its way. Well, it will be this evening when the Sunday shipment is picked up.

    Tuesday morning. Track the first package. Odd. It's still at "Billing Information Received". This is the UPS phrase for "They've told us they have a package but we don't have it in our hands yet." I check my amazon order status. Says the same thing but now I see that the other book that was supposed to ship monday has been bumped back. It's not going out until sometime between the 15th and the 20th.

    So I placed the order a week ago and nothing's gone out. Half of my order is supposedly sitting on the loading dock. A quarter of the order is eluding the pickers.

    Way to go, Amazon! From now on, I'm ordering my books through the mom-and-pop downtown. If I'm going to pay list price, I may as well support a local business even if I do have to get off my ass to go pick up the items.
    • This has got to be a post from a parallel universe. I just spot checked about 15 books at random on Amazon, and they are all at the usual 20 to 30% discount. Add the fact that orders over $25 are free shipping, and no local stores can compete, especially in terms of selection. Local bookstores have become quite dumbed down in their science and engineering sections, and the SF/Fantasy aisles seem dominated by cookie cutter series.

      I've ordered from amazon nearly 50 times by now, and I have never encountered

    • Re:What a joke. (Score:3, Informative)

      by evilWurst ( 96042 )
      Yes, that's what happens when you group a lot of stuff into one package for the free shipping...you have to wait for thing to get shuffled around between the amazon warehouses until all your stuff is in one place. The shipping is still as fast as always when it's just one item, and decently fast when it's two items. Three or four can take forever.

      It's better to make two orders of $27 than one order of $54, the way things are set up right now for the free shipping.

  • HUGE FEES, but they get away with it (Score:5, Informative)

    by Gregory S Patterson ( 567055 ) on Tuesday May 13, 2003 @03:01PM (#5947656)
    An anecdotal comparison: I own an item that's been out of print for quite a while and is rather rare. Being a broke college student, I naturally was looking into selling it. A little searching showed that the item sells on ebay regularly for around $80-100; on amazon (where people go who don't know how to use ebay or are afraid to) it goes for $170-200.

    Simple choice, right? Well get this, ebay's fees [ebay.com] (in my case) are $0.93 plus 2.75%. Amazon charges [amazon.com] $0.99 plus 15%! I really hate paying huge fees when they're doing hardly any work, but the visibility is what they're selling.

    Sell on ebay: $90 minus $3.40 fees = $86.60 NET PROFIT

    Sell on amazon: $170 minus $26.49 fees = $143.51 NET PROFIT

    Would you give up $56.91 purely to avoid supporting an "evil" company and their stupid patents? For most people, it's just not worth it. I hate his guts but Bezos is smart as hell.
    • Someone should mod the parent up a little--it's an interesting and ironic anecdote ;)

      Sell on ebay: $90 minus $3.40 fees = $86.60 NET PROFIT
      Sell on amazon: $170 minus $26.49 fees = $143.51 NET PROFIT

      Advice to broke college student: show a little initiative, slacker. BUY the copy on eBAY and SELL it on Amazon. DUH. $143 - $90 = $53 = 59% profit margin.

  • Correction (Score:5, Informative)

    by f97tosc ( 578893 ) on Tuesday May 13, 2003 @03:05PM (#5947716)
    Fortune reports that the patent-pending practice of selling partners' used and new goods next to Amazon's own...

    No. If you read the Fortune article, or the patent itself, you will see that this is not the case.

    The patent covers the specific feature of pre-orders, e.g., allowing buyers to set up requests for used products.

    It does not cover the basic idea of selling used goods next to the new. This is hardly patentable, because it does not pass the basic criterium for being patentable - it is not new!

    Tor
    • From the SUMMARY OF THE INVENTION section of the patent application...

      [0013] To assist potential buyers in efficiently locating the marketplace listings for a particular product, each product detail page preferably displays or summarizes the existing marketplace listings for the corresponding product. These listings may be associated with a variety of different sellers (including individuals and small merchants), and may be for both new and used units of the product. Thus, by accessing the detail page for

  • Amazon also better at used-item refunds than eBay (Score:4, Informative)

    by SuperKendall ( 25149 ) * on Tuesday May 13, 2003 @03:10PM (#5947779)
    From personal experience, I've found ordering used stuff from Amazon to go very smoothly. I've had only one bad experience with a seller - I ordered a limited edition of a DVD, and they shipped the regular one... repeated attempts to get them to send me the correct one (even after I had returned the original) ended with them claiming I was supposed to get the normal edition, even when I showed them the email receipt from Amazon.

    Then I noticed Amazon's A-to-Z guarantee - All I had to do was provide details of what went wrong and they reversed the charge. It was much, much simpler and quicker than trying to go through Safe Harbor on eBay.

    I still like eBay for a lot of stuff (after all, there are a lot of people there and I trust the rating system more...), but Amazon continues to really hold the crown customer service wise.

  • Bezos is selling Amazon shares (Score:5, Informative)

    by guacamolefoo ( 577448 ) on Tuesday May 13, 2003 @03:13PM (#5947805) Homepage Journal
    An interesting footnote to the "Amazon is kicking ass" coverage in Fortune is that Bezos is selling shares again.

    He sold 6 million [yahoo.com] shares this week. His salary is only about 80,000, but still, it doesn't look great. $6,000,000 is probably just chump change compared to his 2-3 billion bankroll of AMZN shares.

    This is not an indication that the sky is falling (AMZN looks like it is ok going forward), and diversification is smart. Nevertheless, he is selling and not buying shares. That is worth something to know.

    GF.

  • Major Prior Art (Score:4, Informative)

    by Sabalon ( 1684 ) on Tuesday May 13, 2003 @03:25PM (#5947951)
    Oxford Books Too (a now gone used book store) in Atlanta had this back in 93/94. You could have them put you on a waiting list for something you were interested in, and when it came in, they called you.

  • Barnes and Noble? (Score:3, Insightful)

    by WatertonMan ( 550706 ) on Tuesday May 13, 2003 @03:58PM (#5948292)
    As fascinating as Amazon has been to watch, I wish that someone would write a comparison with some of their competitors. For instance Barnes and Noble has actually been competing quite well with Amazon. They offer about 80% of the service and typically add Amazon services a few months after Amazon has them. (i.e. digitized back covers, indexes and table of contents) Moreover I find that on average Barnes and Noble ends up being cheaper - especially if you purchase their frequent purchaser discount. (Get a bunch of friends, buy it together, and it ends up costing next to nothing) The advantage with B&N is also having the bookstore in your town where you can pick up books. (Although with Borders, Amazon is heading that direction as well)

    It was a great article, but I wonder how all these sorts of companies compare. Of course considering the amount of money I've spent at both the past few years, I can't complain. Further most of the complaints I've had about buying online (not being able to read the book) have disappeared.

    Given that they carry obscure books (I study a lot of philosophy) they really are a salvation. Once upon a time I could only get technical books when I made trips to places like Los Alamos, Berkeley, or the like. Now I have the entire library available - often with helpful discussions.

  • The patent system seems to have turned into a kind of business hyperspace, a shortcut between point A and point B that bypasses normal activities like inventing better products, manufacturing and marketing them. Instead, you can step into this other dimension, redefine something as yours, and walk out the other side owning part of somebody else's business. It's only a matter of time before concepts like adjustable interest rates will be patented. If only I had patented "buy low, sell high."

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