Interesting that this "transformation" is pretty close to what Sun and other dot com infrastructure sellers were promising in 1998. They phrased it as "take your small town business and give it a world wide footprint" but it is the same. They missed the "we'll take 1/3 of your price too" part :-).
That, in itself, is just curious. But the interesting lesson here is that the real thing has not been "web presence" or world wide visibility, it was Amazon has built a pretty impressive logistics setup for moving stuff from vendors to users. It rivals what Sears & Roebuck did in the 60's and 70's. THAT seems to be the missing piece which one might call "logistics as a service."
It makes me wonder why Aliexpress doesn't have more warehouses in the US. Clearly there are a number of Amazon vendors who buy from factories advertising on AE and then drop ship to Amazon, and sell at a markup that covers Amazon's take and gives them a profit. So basically Amazon is taking a big piece of the "value chain" from factory to customer. If you can run a distributed logistics operation at 20% or even 15% of the market value of the goods your distributing, you can under cut Amazon.
Given that Walmart already has relationships with freight forwarders from China and a bunch of brick and mortar stores that could double as warehouses, I wonder if they have considered this as a "side hustle."
Considering that this hinges on the cost of operations for the logistics service the interest in logistic based robotics is quite understandable.
> It makes me wonder why Aliexpress doesn't have more warehouses in the US
My guess would be liability. A lot of what's sold on Aliexpress is... questionable. Fakes, products that are patently unsafe or don't meet US regulations, fraudulent specs, etc.
What's happening right now is basically a bit of a laundering operation where small "front" businesses in the US, often registered to residential addresses, import small chunks of the inventory, collect markup, and resell it domestically on Amazon, eBay, Etsy, walmart.com marketplace, or whatnot.
And if their USB chargers keep catching fire or a big brand gets uppity about trademark infringement, the retailer disappears, and a new one pops up. Amazon gets some flak in the media every now and then, but they are several steps removed from the phenomenon.
If you had a Chinese megacorp with a large US footprint, they would likely soon find themselves in hot water with all kinds of regulatory agencies. Partly because there would be a single party with gobs of money to go after, and partly because of anti-China sentiments.
> My guess would be liability. A lot of what's sold on Aliexpress is... questionable. Fakes, products that are patently unsafe or don't meet US regulations, fraudulent specs, etc.
I wonder how much further Amazon can go in this direction before it runs into the same problem?
And the obvious side-effect which nobody really wants to talk about is the destruction of the manufacturing industry in the US and the off-shoring of jobs to China.
This is why it's so galling to see people in Silicon Valley moaning about the recent round of IT retrenchments. The f*king nerve of them.
Tech companies didn’t cause offshoring of US manufacturing. That’s been a long running trend since the 70’s across business sectors.
Not to mention that generally it’s executives at the companies who made the decisions leading to offshoring, and executives aren’t the ones losing their jobs.
Tech workers are grossly overpaid, but even so at the end of the day they’re still working class.
Its the people at the very top of the corporate ladder who makes the calls to offshore. Always good to keep in mind when these same companies bitch and moan about China but are also the same ones who chose to offshore to China. China is, from my understanding, upfront with what they want out of the deal, so there isn't any actual, "well we didn't know so don't blame us." Nah, China told them upfront what those offshoring deals meant.
The government's you guys "democratically elected" cause pain to the working classes and did everything that the wealthy and asset owning classes dreamed of. What is the point of democracy if there is no democracy at the workplace itself ? Most workplaces are top down central command authoritarian structures and that is what we all have to face day to day, everyday.
"What is the point of democracy if there is no democracy at the workplace itself?"
Do you mean this seriously? Corporations come and go all the time, and if they make a catastrophic decision, usually the worst possible outcome is bankruptcy, not war.
Yes, there is a tiny amount of "too big to fail" corporations whose characteristics are closer to a state than to a private organization, but compared to the government, any single corporation has negligible influence on your life.
I would say it depends. Technology has actually pushed this quiet a bit. A small tech company whose tech you rely on today could make a decision that is catastrophic to you as much as the government. Think of like a password manager, a tech company that sells you an IOT device that you have in your home with poor security. Technology has made this a game change where even a sole proprietorship could do this. But this is more of a side effect of tech and how cheap and accessible tech has become. That isn't to say tech is bad, but it has trade offs like all things do. You can make a product that thousands of people use and become self employed by just developing a simple app that you sell in a playstore. It has never been possible for a single person to develop a product and it have the capability to be distributed and used by such a large group of people. Sure, it may not launch a war, but it could still lead to catastrophic outcomes to you as an individual. You don't need to be a behemoth anymore to cause serious impact. It may not cause a war, but it could lead to someone draining out your bank account.
Like, obviously I'd be in a big trouble if my password manager suddenly put all of my data online and it could lead to massive financial damage.
At the same time, there are governments that literally have the power to kill their citizens (or citizens of nearby countries). At least LastPass can't declare a war upon me.
"it could still lead to catastrophic outcomes to you as an individual"
True, but an individual is vulnerable almost by definition. A schizophrenic neighbor may decide that you are an alien in human skin and kill you. (I have a friend who barely survived precisely such encounter, being shot no less than 9 times from a CZ75. I have seen the (healed) entry wounds, that guy was extremely lucky.)
Nevertheless it takes a government to ruin lives of an entire nation.
Hear, hear! Though it's probably reasonable to distinguish between representative democracy, which we're all familiar with, and direct democracy, which is satisfying but hard to scale beyond small groups. I would say that our autocratic workplaces were not designed to plunge workers into misery, that's just a side effect of making all that money. Worth shining some light on, since the basic underlying principles of capitalism are supposedly benefiting everyone (just not very equally...). Unfortunately it's hard to run any experiments with alternatives, though there are coops and workers' collectives.
US manufacturing output is up, though, just not jobs. That's generally good, just like it's good we aren't all subsistence farmers anymore. US unemployment is of course currently the lowest it's been in 50 years.
China got low-value-add final assembly work, and it's now starting to leave them as their wages have risen.
To be honest maybe I am just old but it seems like every argument and quibble people have been having over Amazon is the exact same arguments I saw back in the early 2000's the only difference is the company was Wal-Mart instead of Amazon.
There is one single really key difference. Walmart takes responsibility for the products they put in their store. That they are genuine and represented as they are. They squeezed sellers, encouraged moves to china and all of that, but they aren't a marketplace - they are a store. Amazon has abrogated all responsibility in that area and pretended they are the equivalent of the open field on which a flea market is set up.
> Walmart takes responsibility for the products they put in their store.
Amazon also did this for it's physical stores. Walmart does not do this for it's web presence - it has a third party marketplace you need to actively avoid.
I have both Prime and Walmart+ due to credit card benefits, and honestly don't see a huge difference in either experiences. Amazon is more spammy but faster shipping, Walmart less selection and slower but more reliable shipping. Walmart is more curated, but you still need to ignore the third party crap.
Walmart third-party is a dumpster fire. Every single thing I ordered through it here in Canada arrived late or not at all, replacement orders sometimes arrived eventually, products were often damaged (a jug of glasses cleaner was leaking right through a soaked outer shipping box), vendors take zero responsibility, and it took multiple calls/emails/delays to get refunds from Walmart.
I avoid it like the plague. I don't even use their website because it's hard to consistently filter that crap out. And their site wasn't great to start off with in any case. Good riddens.
I think I have to repeat that after each search (at least back when I last used the site). And it usually took many searches to find the product I sought.
Walmart now operates a marketplace (https://marketplace.walmart.com/). However, I am unsure if they take those same validation steps as they do in their physical stores or not.
Came here to make that point. I know that newegg and bestbuy have done the same. And, much like amazon and ebay, I expect pretty much zero verification and Sisyphean dispute processes.
Another really key difference is that Walmart operates retail locations that compete with (more realistically, undercut) smaller local businesses and gut small town America. Let's not paint a rosier picture just because it happened a while ago.
Amazon has killed plenty of small businesses that survived Walmart. Walmart didn’t go after the hobby shop style niche business the way Amazon’s million product warehouse could.
People worked out you can compete with Walmart by having a deeper selection as long as the population density supports it, but it’s not clear what small retail can do to survive Amazon.
On the flip side Amazon created hundreds of thousands of small business, it allowed them access to a global market. The ones that died could have done the same and remained competitive, they were asleep at the wheel instead. I see Walmart as more of a monopolist by going into small towns and selling at a loss. Whereas Amazon was an equalizer allowing anyone to compete in a global marketplace, those that opted not to, got their lunch stolen.
Hardly, the vast majority of physical stores don’t manufacture anything they simply aggregate merchandise from wholesalers and operate a physical location. There is no way to transition that model to Amazon marketplace because they don’t have any way way to differentiate themselves. Attempting that transition would have simply lost them a great deal of money.
There are a mix of ways to profitability operate with Amazon both legitimately or via various kinds of fraud. However, suggesting that transition is often as reasonable as telling a barber to open a veterinary clinic, it’s just a completely different kind of business.
But that’s changing the measurement to fit your argument, most sellers on Amazon aren’t directly manufacturing their goods either, yet still have margin. We are talking about retailers switching how they offer their goods. Rely less on the store front and just ship more stuff, isn’t a major change to business model. Adding a shipping center isn’t hard.
But either way business is dog eat dog and you have evolve to survive. Don’t blame the competition for building a better mousetrap. This is free markets and capitalism operating as intended.
You’re the one suggesting these companies could have made the switch.
I have no problem with capitalism crushing companies, as long as it’s head to head in a free market rather than based on fraud or avoiding regulations. I am simply pointing out Amazon has been a huge net loss for small businesses, which it objectively has.
The fraud is integral to their business model at this point, though.
They deliberately chose a way of storing products that makes them vulnerable to fraud. Fixing that would require storing them differently (which would be more expensive to them).
Likewise, cutting down on unsafe or white label products would increase the quality of the products they sell but adding a vetting process and stricter moderation would significantly increase labor costs per product and if companies at scale want to avoid one thing, it's dynamic labor costs.
They literally can't do better at cleaning up the fraud because there is no market incentive for them to do so and doing so would reduce profits and thus shareholder value. To borrow your line: it's just free markets and capitalism working as intended.
It’s also not in their best interest to let things get out of control. Free markets ebb and flow.
I don’t know of any other platform that has a markedly better vetting process, Walmart, eBay, AliExpress, Wish, etc all have much the same or worse issues with this. But they all seam to be very pro consumer when it comes to returns, none seem to ask any questions.
Maybe it’s not a conspiracy but rather an industry wide problem of playing wack-a-mole with scammers, that every platform is continually dealing with.
I don't think it's that simple. I've heard stories of Amazon doing data analysis on its own marketplace, coming out with competing products for ones it think it can make a profit on, and putting them above the 3rd parties in search results.
That wasn’t invented by Amazon, Many retailers do this. Grocery stores white label. REI is another great example, they run data analysis on what sold the most, what features were searched for most and built their own products.
> Amazon created hundreds of thousands of small business
Based on my experience most of those small businesses are reselling uncertified whitelabel shovelware (especially electronics) from Ali Express. That's a bit like praising cancer for rejuvenating the body by reducing the mean age of all cells.
Of course you could also say it created a lot of businesses via "self-employed" last mile delivery drivers but I think we're all adult enough to acknowledge that the gig economy is a scam to skirt labor laws, not an actual net positive for those working within it.
Pretending small businesses could have kept up with Amazon by "doing the same" is absurd. Small businesses lack the infrastructure to offer one day (or even same day) deliveries and free returns with full refunds. We've reached a point where buyers take these things for granted to the point of balking at shipping costs for goods privately sold on eBay classifieds because they have no idea what delivery companies like UPS or DHL charge.
Even as a marketplace, Amazon cannibalizes its sellers via its "Amazon basics" brand which copies products if they get popular enough and often undercuts their pricing while also benefiting from the Amazon branding.
> Whereas Amazon was an equalizer allowing anyone to compete in a global marketplace, those that opted not to, got their lunch stolen.
Saying "allowed anyone" makes it sound like it was optional, yet that "those that opted not to" died off demonstrates that it wasn't. It's nearly impossible to start a small local retail shop but it's also nearly impossible to be a small retail seller on Amazon. There's a reason white label shovelware dropshipping is so ubiquituous: by creating your own brand to resell white label products you make it harder to compare you to your competitors selling the same garbage and you no longer have to directly compete on price. This is effectively the only kind of business on Amazon marketplace that doesn't directly suffer the race to the bottom.
> This is free markets and capitalism operating as intended.
Yes, that's the problem. Free markets accelerate monopolization by forcing local small businesses to compete globally with international megacorps on those megacorps' terms.
The benefits of small local businesses are externalities to capitalism so they get sanded off eventually. Free global markets just rapidly speed up that process.
I’m not saying it’s right or wrong, nor fair, more pointing out that attacking them for using the levers and dials available To them to return value to shareholders, is short sighted. literally every other company is doing the same, just not as efficiently.
I do agree with your point on Walmart, what is on the shelves at a physical location. However, Walmart's online store is just as bad, if not worst, than Amazon.
There are a few complaints that are unique to Amazon, but really it just speaks to how little has been done to fix the problems Walmart brought to our attention decades ago. Not dealing with those issues back then just opened the door for Amazon to come in and screw people over in similar ways. I hope people realize that their problems they have now aren't just about Amazon either and that unless things change it'll be some other company 10-20 years in the future doing the same things to the next generation.
I refuse to believe that customers getting "cheaper goods" is dependent on employees having to piss in bottles to keep their jobs, or employees suffering twice the number of severe injuries as other warehouse workers. Surely, selling counterfeit/fraudulent products and allowing scammers to have free run of their platform isn't a requirement for consumers getting inexpensive goods either. Amazon pockets billions every year. They can more than afford to treat their employees and their customers better without raising prices a single penny and still remain profitable. Less profitable perhaps, but profitable.
Amazon should be held accountable for their failures and for the harms they are causing to both customers and employees so that the next company to rise up knows that abusing workers and turning a blind eye to fraud won't be tolerated and that the laws and protections enacted to rein in amazon's exploitative practices will effect them as well.
I’m not referring to Amazon’s practices or counterfeit goods. I’m referring to passing laws that “prevent the harm done” by Walmart crushing mom and pop stores.
Walmart has never to the best of my knowledge been accused of the rampant selling of counterfeit goods in their physical stores nor do the people who deliver to stores have to “pee in bottles”.
Crushing mom and pop stores isn't the only issue Walmart and Amazon share.
Both have mistreated employees and stole product designs to push their own versions of popular items undercutting the original. Walmart employees weren't peeing in bottles, but unsafe working conditions and union busting have been problems for both companies. Walmart.com is known for selling counterfeit goods, while the physical stores routinely sell dangerous items. It seems that filling your store shelves with the cheapest goods from the third world isn't always safe for your customers.
I do think that fixing a lot of the "quibbles" people have concerning Walmart and Amazon would help make things more competitive and help give smaller stores a better chance though.
> "take your small town business and give it a world wide footprint" but it is the same. They missed the "we'll take 1/3 of your price too" part
For someone that doesn’t sell consumer goods that cut can sound like a lot.
But getting distributed in brick and mortar retail, the cut is far greater (at least 50%).
And the alternative is direct online sales, which only recently has become viable in a scalable way for most consumer brands (thinking of the DTC revolution here)
I think this is a solid point. Different distribution methodologies change the numbers. If you sell to a distributor at 60% of list (giving them "40 points" in the lingo) and they then sell to a reseller at 80% of list, the brick and mortar store has the option of having a "10% to 15% off sale" and still making money.
Hence the "rule" that your cost of goods needs to be 1/3 of the MSRP if you want to go through two tiers of distribution.
At Freegate we shipped directly to retailers and gave them 30 points off MSRP, but that meant on a new order, they ordered from us, we shipped to them and they shipped to the customer so a fairly long lead time between order to arrival.
When I was at Google the PM for "consumer devices" was looking at what it would cost to get things on the shelf at Fry's and Bestbuy and the price negotiation was more about where on the shelf it sat rather than store profit it seemed. Something to factor in to the economics as well.
But the bottom line here is that there is a "market price" for something, and the "cost to get it to market" + "cost to make it" and if that market price is less than the sum of the other two, well you can't make it up on volume :-).
I think Amazon's LAAS business made that calculation simpler and thus there was less uncertainty about whether or not one could make any money selling them.
My understanding is that most stores (especially grocery stores) basically make no money on sales...purely break even +/- a percent or two... all the actual profit comes from selling premium shelf space.
On the model of "make the profit on replacement parts," perhaps grocery chains should be buying hospitals chains to profit from all the unhealthy food they are selling.
Chewy hasn't solved the problem that Pets.com had, we've just had enough free cash flowing around for longer this time so it doesn't matter.
When Chewy starts to make more than they spend then it will be interesting, but as it stands now it just looks like we're in a bigger bubble rather than solving problems that couldn't be solved back then.
>It makes me wonder why Aliexpress doesn't have more warehouses in the US
I'd suspect they do. Here in Australia, it's really common to get AliExpress goods delivered in 2-3 business days, with an AusPost label on the box and a return address in Melbourne.
Even for goods not physically located in the country, they're clearly doing something clever in terms of consolidating packages, booking out large chunks of air cargo space and dispatching from a local warehouse. Same deal with the Australian return address, but 7-10 days instead of 2-3.
You can tell when they're coming via this route, as they'll have the shipping method "AliExpress Standard Shipping". CaiNiao is still your bog standard 4-6 weeks by boat.
This is a pretty new thing, and only came about after China lost access to subsidised global shipping (as in, subsidies from other developed countries, not the Chinese Government) in 2021.
AliExpress sellers also lost access to subsidised shipping from the Chinese government in the last few years. Prior to this, for certain locally manufactured goods, they could send them overseas at a rate of something like 1 yuan per half-kilo (essentially US$0.02 or so for a USB cable), hence why you'd get all these $1 items with free shipping.
It makes me wonder why Aliexpress doesn't have more warehouses in the US
because US is not a free market. Gatekeepers got to take their cut (if you don't get outright denied access to the market because nationalism). Amazon is as good as any other gatekeeper, so why change ?
I see it differently, do you have a description of what a "free market" would be that the US doesn't have? You mention Gatekeepers but I'm not sure I understand that reference. As I see it there isn't anything stopping me from selling things directly from my web site to anyone in the world right? Where is the gate keeper in that scenario?
We're talking about a scenario where AliExpress builds warehouses and logistics inside the US to better deliver chinese imports, in direct competition with Amazon.
I see an obvious gatekeeper.
As a game, can you find any example of a foreign company successfuly setting up infra in the US to chalenge an US behemoth ?
Define infra? Because many, many, many markets in the US have incredibly large amounts of foreign companies
Japanese/German car makers
A whole host (most?) of clothing retailers all across the price spectrum, (H&M, Zara, Uniqlo at the low end, most luxury brands are European - this market is dominated by foreign firms)
Gas/gas stations (Shell, BP)
I think it'd be harder to find industries without foreign companies operating in the US
Restiction were set on import volume and makers comprnsated with US production as a politcal middle-ground. Those large amounts are partly (mainly ?) US cars.
> clothing
As you point out, luxury brands is where foreign companies have a presence. Feels like small potatoes to me.
> Shell, BP
Am not well versed in oil, but from a cursory look at Shell it has a US entity traded in the US market, partly producing US gas to US customers: https://en.m.wikipedia.org/wiki/Shell_USA
> As you point out, luxury brands is where foreign companies have a presence. Feels like small potatoes to me.
H&M, Zara, and Uniqlo are luxury?
> Am not well versed in oil, but from a cursory look at Shell it has a US entity traded in the US market, partly producing US gas to US customers: https://en.m.wikipedia.org/wiki/Shell_USA
It's literally the US subsidiary of Shell? It's still owned and controlled by the foreign company. This is how international business works once companies reach a scale where they employee large numbers of workers in a foreign country. See Ford of Europe, ExxonMobil Europe, Apple Japan etc - these aren't European/Japanese companies, they're just branches of American ones
None of them are building infra to a level that rivals US behemoths. They are well known foreigns brands, but nether commands a high market share nor represent an existential threat to US brands.
To note even Gap is bigger than any of those 3 mentionned.
I was pointing at the luxury market because there’s probably more competion from the outside.
> Shell
You’re not answering on how it operates in the US. Toyota US is in the same situation: it’s a subsidiary of the Japanese entity, but still “builds” cars in the US. Customer perceive them as Japanese cars perhaps, but if they‘re not marked at imported cars, that perception is just misplaced.
Shell US refining its own oil in the US falls in the same bucket to me.
The discussion was wether there was examples of foreign companies building infra to directly import foreign goods into the US market. It seems to be diverging into “are there well know and successful foreign brands in the US”
This may not be what you're thinking but I see many;
Nokia on phones vs the Bell companies, Toshiba on laptops, pretty much everyone on the PC vs IBM, the entire Steel industry, the railroad industry before them, Japanese cars eating Detroit's lunch, Zenith and RCA's TV market, GE's appliance market.
Where is the gatekeeper in the Amazon/Aliexpress scenario? I'm sorry but I don't see that one yet.
EDIT: You did say "infra" and the best example I know of are the foreign car companies that set up factories here to build cars in the US to get around import issues.
First part is focusing on individual consumer goods sold through US retailers.
Your second part and edit on car manufacturers is spot on: they were set a quota of "US made" cars and had to build factories in the US as a condition to continue chalenging US local makers.
I see those actions as setting up barriers but they do prevent people who can't meet that barrier out. My thinking of gatekeeping is more absolute, as in "there is no way for you to enter here" and thus "breaking the gate" would have legal and/or diplomatic consequences.
So for me there are two concepts, trade barriers and gatekeeping. Tariffs come under the heading of trade barriers as well in my view.
In that sense, your view on gatekeeping would be more like what happened to Huawei and how they were straight banned from the US market.
It sometimes happens, but few things are so black and white in politics and market regulations IMO. Killing the viability of an import route by pushing the tarrifs outside of the reasonable range is often enough and helps to avoid "smoking gun" headlines.
I could go either way in this. Considering all Chinese entities must comply with their government no matter where they operate, the US was gate keeping the Chinese government from operating here. Not just some random company. And I’m ok with this, US citizens can not free hold corporations in China, why should we allow the reverse?
Hong Kong for instance is a freer market. Ofc it s easy: we dont build cars, we dont produce sugar, we dont design processors, all the stuff that's severely restricted in the US is due to an imbalance between the need of voters and the ideology of free markets.
As long as the US listens to or need the votes of their people, they cant be a free market.
Yeah, you can buy similar prefab homes on Amazon. Actually most of the ones linked from blog posts are now "currently unavailable", and most of the ones that show up in search results now are sheds or cabins with no bathrooms. But here's one with a bathroom and is ready to buy for $8,800. https://www.amazon.com/dp/B0B6V1G81D/
> But the interesting lesson here is that the real thing has not been "web presence" or world wide visibility, it was Amazon has built a pretty impressive logistics setup for moving stuff from vendors to users. It rivals what Sears & Roebuck did in the 60's and 70's. THAT seems to be the missing piece which one might call "logistics as a service."
I can't really agree with this. Amazon started out by using existing delivery services. And the quality of delivery from Amazon at that time was much higher. Now that they prefer using their own delivery services, their delivery sucks. They've built a logistics setup that is much worse than what we already had.
That, in itself, is just curious. But the interesting lesson here is that the real thing has not been "web presence" or world wide visibility, it was Amazon has built a pretty impressive logistics setup for moving stuff from vendors to users. It rivals what Sears & Roebuck did in the 60's and 70's. THAT seems to be the missing piece which one might call "logistics as a service."
It makes me wonder why Aliexpress doesn't have more warehouses in the US. Clearly there are a number of Amazon vendors who buy from factories advertising on AE and then drop ship to Amazon, and sell at a markup that covers Amazon's take and gives them a profit. So basically Amazon is taking a big piece of the "value chain" from factory to customer. If you can run a distributed logistics operation at 20% or even 15% of the market value of the goods your distributing, you can under cut Amazon.
Given that Walmart already has relationships with freight forwarders from China and a bunch of brick and mortar stores that could double as warehouses, I wonder if they have considered this as a "side hustle."
Considering that this hinges on the cost of operations for the logistics service the interest in logistic based robotics is quite understandable.