Excellent article from the estimable Randall Stross:
Trying to Get a Read on Amazon’s Books - New York Times
The Amazon experiment has been under way since 1995, and its core business is taking a good while to fulfill its promise. It has grown from books to products in 35 categories, but most of the original elements of the business model are intact: attract customers with a deep inventory that no retail store can match, offer discounted prices, provide easy navigation and whisk customers through a trouble-free checkout process that is the best in the business.
One important assumption has fallen by the wayside: unburdened by the weight of a network of retail stores, the company was supposed to enjoy low operational costs and good margins. Geography turned out to be a spoiler. A single centralized distribution center in Seattle meant that many customers found that a speedy one-click purchase online would be followed by a frustrating wait offline for the order to arrive. To reduce delivery times, Amazon had to make colossal investments building a network of distribution centers — 15 in North America alone. Amazon “is not as efficient” as the most efficient offline retailers, said Scott W. Devitt, an analyst at Stifel, Nicolaus in Manassas, Va.
Amazon has turned out to be an expensive operation to run, not only because of those distribution centers but also because of heavy subsidization of shipping that insulates customers from the actual costs. Quirky consumer psychology makes this necessary.
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Tags: Store, What's New for Book-Lovers
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