Tag: Amazon

Amazon, UPS and why number crunchers might soon need psychology degrees

From GigaOm

Shipping giant UPS failed millions of customers this holiday season, missing the delivery of “a small percentage of its packages” on the Christmas Eve, according to a statement it released on Tuesday. Meanwhile on the day after the Christmas Day, e-tailing giant Amazon is crowing about signing up more than one million Amazon Prime members last week and that it registered record number of orders. Later Amazon said it would offer shipping refunds on packages affected by the UPS delays. Both events are linked, and here is why.

Amazon’s great success doesn’t have to be UPS’ failure, but in this case the culture and expectations of the web met the real world, and the real world experienced what the web kids call a “fail.”

Amazon accepted responsibility for the issue, and immediately started compensating disappointed customers. They took a risk by pushing the deliver window at the eleventh hour, and “lost” a small battle. But they’ll win the war by taking the heat (UPS not so much), as competing online retailers, both established and upstart, simply can’t absorb such costs.

It boils down to scale: mass amounts of data used to determine not only price elasticity of demand and reorder points and quantities, but also average time for delivery and the possibility of customer dissatisfaction in a myriad of circumstances, the chance that UPS might fail again notwithstanding. It was, in some respects, an investment for the company – there will likely be some valuable nuggets taken from the lesson, and chances are they’ll be worth more than those $20 gift cards. No surprise this experiment to gather data points far down the tail occurred so soon after the drone play. Next up: building an entire department whose sole purpose will be assessing the emotional needs of their customers, because the allure of instant gratification definitely gripped hard this time around.

Now ignore my hypothetical babble and go read the original article instead.

MG signing off (because he has Amazon Prime, but mostly for the streaming shows and Kindle Lending Library)

UPDATE: We have seen the Scrooge, and it is us. Uh … you maybe.

The cost of publishing on the Kindle

A group I’m a part of is in the process of assembling a publication directed straight to Kindle, so I found this analysis timely…

The amount of revenue each publisher earns for their Kindle newspaper/magazine is calculated thus:

(Price – delivery costs) x 70%

“Delivery costs?” I hear you cry. This is the wonderful world of electronic publishing: Amazon hasn’t got an army of paperboys popping the newspapers through letterboxes each morning.

It does, however, pay for “free” 3G connections in the souped-up version of the Kindle, and someone has to pay for that data. And that someone is largely (70%) the publishers, particularly those who want to include anything other than plain text in their periodicals.

I’m not sure how applicable it is, as 1) we’re not doing a periodical, and therefore 2) not going to worry much about images. But it deserves revisiting my own analysis of the matter.

Three wishes, for the Kindle

Amazon KindleI’ve read several books on my particular device, and am happy to say it’s a pleasure. Now, however, I wish the Kindle had a little more.

In no particular order…

1) An email client. I think a scaled down version of say Thunderbird would suffice. It could be made accessible by wi-fi only, and with attachments disabled. Rich text, however, would be nice.

2) A notepad. Simple enough, particularly considering the Kindle has a decent little QWERTY keyboard on it. Allow note taking, and saving as files under a particular collection.

3) A WordPress client. Heck, my Blackberry has one, so why not the Kindle? Again, connectivity through wi-fi only, but this device would be a great mobile blogging unit even if it was just text.

MG signing off (to dream of understanding the API, so I could fulfill these wishes myself)

eBooks provide benefit across the publishing value chain

It’s out of print, a familiar moniker for those seeking titles long since published, particularly when the author put their best foot forward on the first attempt and nobody has been able to match it since. The publisher has a choice to make: do a small run and risk sitting on 999 copies, or forgo the cost along with the potential revenue. In either scenario, the author has little to gain. Meanwhile, by the time the house has distributed the second printing, the original purchaser has already made their decision – picking up a used copy in the secondary marketplace.

They could have bought the eBook.

Authors are fretting that the pricing strategies employed with eBooks are putting the pinch on their ability to make a living. What was once a $75,000 advance has turned into a $15,000 upfront slug, and some are now questioning whether their creativity must now be supplemented by a W2 plus dental insurance. The price gap between the tangible and intangible delivery is supposedly the cause, but in economic terms the responsibility for success is being spread further across participants in the system.

Dollars and sensee-books

Based on Wall Street Journal estimates, a large publishing house takes 50% of the retail price of a debut literary fiction. After paying the author their cut, the publisher still has to cover costs for editing, design, marketing, and the printing itself.

Under the eBook scenario, the price drops by 54%, but the publisher and author are now taking a bigger piece of the pie. The publisher’s share is down five dollars per book, but printing costs are no longer in the picture. We’ll assume that other publication costs fall too, but it’s likely the lion’s share of it was absorbed during the first printing. The publisher and author reap more of the rewards, but all players must work harder for success. At the writing level, selling 10,000 print editions is roughly equivalent to 18,500 eBooks1, as far as feeding the family goes. The retailer’s gross margin, however, is cut in half2, so you have to think they (i.e. Amazon) are in it for the volume.

Moving to small publishers, the outlook changes. Retail prices are lower across the board, but smaller print runs means higher distribution costs, hence a smaller percentage for the publisher and author. Call that a cost for being discovered, particularly where access to major publishing firms doesn’t exist. When you move to eBooks, however, you are now dealing with an organization bearing less overhead – it stands to reason more of the retail price of the book could be passed on to authors. If you (again) assume that editing, layout, and other fixed costs of production are absorbed during a first printing, it’s a slam dunk – with 20% of the retail price going to authors, 10,000 now equates to only 12,500 in digital form3.

(more…)

Amazon quashes the mongol hoard

Colorado HB 10-1193 motioned for the voluntary collection of sales tax by online retailers. Most probably didn’t pay much attention to it because it was “voluntary”, meaning law makers had visions of sugar plum fairies and passive-aggressive search engine optimizers dancing in their heads when they offered up the punch line.

Of course legislators and the administrations who sign their work rarely take into account the Law of Unintended Consequences, and in this case all the Colorado residents who made their living through the Amazon affiliates program are now hitting the bread line.

Dear Colorado-based Amazon Associate:

We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.

We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.

There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.

You may express your views of Colorado’s new law to members of the General Assembly and to Governor Ritter, who signed the bill.

Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.

We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.

Best Regards,

The Amazon Associates Team

Thankfully I’ve made about two bucks off the Amazon Associates Program since engaging in it circa 1972 1971. But now instead of spending that $2 on a cup of coffee at Starbucks, I’m going to sock it away for my next dirtbaggish fly fishing adventure.

In Wyoming.

Around the world in nine paragraphs flat – 03/30/09

World MapTechnology

– Jeff Bezos spent a week working in one of his own warehouses. When I first heard about it, I thought he was making a shift from strategic to operational, with an eye to cutting some costs. I was right. But I admire the man and the company enough that I can only believe those that were cut were treated right. If they weren’t, I’m assuming those cut couldn’t cut it themselves. I have a couple of friends working their, and have, on occasion, wished I could join the fun.

– Google layed off some sales folks in the past few weeks, and I imagine it’s all for the better. Their top dog of sales, Tim Armstrong, is gone. New blood replaces, and cohesion will be key to Google’s finding their next growth spurt. Will the next chapter in Google’s story be charging full steam into the enterprise? They don’t want to suffer the curse of eBay, but I hope they don’t listen to BusinessWeek either – those guys suggest they first buy Twitter and then get better at acquisitions.

– On that note, Twitter and Facebook are capturing so gosh darn much attention I’d usually be willing to bet that they’ll fizzle out in the blink of an info tech eye. But I don’t actually think that’s going to be the case.

twitsearch

I’m bullish on Twitter and Facebook – just wholeheartedly bearish on all the media who can’t find another story.

facesearch

And, I’m feeling sorry for the folks on the job hunt after they get their master’s degrees in social networking, as well as those businesses that try hitching a ride based solely on advertising. This is one godawful hype brawl, and plenty of folks are going to get knocked out.

Finance

– The S&P has been on a tear the last few weeks, but now it has the Quadruple Confirmed Evil Knievel Formation to contend with. If that technical analysis wizardry isn’t enough for you, there’s another economic bubble about to rear it’s ugly head. It’s called the budget deficit.

– In the luxury goods department, modern art prices are getting slashed and burned as collectors run to the masters. I’m not surprised – tossing a couple of cans of paint on a 20′ X 20′ canvas and calling it a million bucks was bound to fizzle on the business model front. The art world is certainly not without it’s scammers. Top shelf wine lovers are getting a bit more cautious now too – cult wine lists, space on which once sold to the highest bidder (yes, before you got your first bottle), are now looking for the last sucker too. Once the lists start including grape juice in a box, I’m in.

– This morning’s Asian markets were closing on an ugly note, with the Nikkei and Hang Seng off over 4.5%. Meanwhile, some commodities prices are on the skid as well. US markets have been on a tear as of late, but Nouriel Roubini was also saying a few weeks back to expect a bear market rally. I thought he might just be a little tired from all the media attention, and yet things are shaping up for him to be right. Again.

Fly Fishing

– There’s a recession in fly fishing – interest is down and nobody seems to have a solution yet. Still, there are a few folks keen on catching a big trout on the fly – my only suggestion is that instead of putting that goal on a list of things to do before dying, why not try making a habit of it. Easier said than done, and probably a significant part of the reason fly fishing is taking a hit – it’s less instant gratification than constant aggravation. Neverthless, I am, and shall remain, a glutton for punishment.

– Thomas McGuane wrote what is easily my favorite book on fly fishing, The Longest Silence: A Life in Fishing. And this last weekend he took aim at shotguns, dogs, and dinner. I’m all for dogs and dinner, as long as the dogs aren’t begging for mine. As for the shooting, I’m pretty sure I’ll be spending more time at the clays course this summer, and I’ll credit the story as well. As for my dog, he’s a herder. Anyone have some spare sheep?

And finally…

– Speaking of the Wall Street Journal, there’s been a lot of hype about ‘brownlining’ over the past few weeks, and with Denver’s urban South Platte on center stage. Fly fishing history is being rewritten, and there’s even a new ‘nation’ for those who’ve been busted scratching rocks with their cleats and are now banished from the clear stuff. Even wholly unprofessional (at fly fishing) jokers such as myself have been fielding inquiries as to how it’s done, as well as a few more that say “great going Gracie…now the the joint is going to be packed all summer.” I don’t know how it’s done (I’m just lucky), and as for the crowds, well the flows looked docile in that WSJ video, but said water level won’t be a crowd pleaser for much longer…

South Platte Flow

MG signing off (to get some more coffee)

Where’s the financing risk in Bill Me Later?

Amazon just made an undisclosed investment in Bill Me Later.

I’m simply wondering who is providing back-end financing for “no payments for six months” and “no-interest financing.” It’s one step below credit card debt, which already looks ugly.

Is this really a wise move on Amazon’s part?