Sunday, April 27, 2008

Globalization and Amazon.com

I had a The World Is Flat moment the other day. Some random synapse in my brain decided that I should read the old Alistair MacLean cold-war thriller Ice Station Zebra. I've always been a fan of the movie (me and Howard Hughes) and the soundtrack by Michel Legrand, but had never read anything by MacLean. So I hied me over to Amazon.com to order the book.

I was a little surprised to find it was out of print. But thanks to Amazon's Marketplace service, several used and even new copies were available from any number of sources. I'm no stranger to this service, in which independent booksellers use Amazon as a storefront. In Outsourcing Technical Services for Small Businesses, I wrote about how this service was a great way to get barely used copies of expensive or out of print technical books (the only thing that depreciates as quickly as high tech is fresh fruit). Nearly instant gratification was only a few clicks away.

It was only after I got the verification e-mail that I realized I had ordered the book from a bookstore in the U.K. Well, okay, I'm no stranger to that either. It seems that many of my favorite authors these days are Scottish: Iain Banks, Ian McDonald, Ken MacLeod, Charles Stross. I discovered that I can order one of their books a year in advance of it appearing in the U.S. by getting it through Amazon.co.uk, which is no more click-distant for me than its U.S. counterpart. (Note to U.S. publishers: the cover art on the U.K. editions is far superior too.)

It wasn't until the MacLean book arrived at the Palatial Overclock Estate (a.k.a. the Heavily Armed Overclock Compound) in an envelope covered in Deutsche Post stickers that I discovered that it came from a warehouse in Germany.

Man, you just gotta love the web. It isn't just that these things are possible. It's that they're so easy that you don't even realize that they're happening.

But it isn't just the web. It's the huge number of independent vendors who use the infrastructures provided by Amazon and eBay to reach out and e-touch someone. It's the amazing international shipping services that somehow transport tangible goods almost as fast as the Internet transports intangible bits. And, in the case of my book, they can do it all for under ten bucks.

I'm amazed. But apparently, some bean counters are disturbed.

The April 28th issue of BusinessWeek had an article on "The World's 50 Most Innovative Companies". Jeff Bezos was on the cover, Amazon being #11. Web services developers are already quite aware of the infrastructure Amazon can provide, quite cost effectively, to e-commerce web sites.

A week later, in the feedback section of the May 5th issue, a reader identified by the screen name "Beejat" writes:

If e-retailers like Amazon are offering computing on tap, doesn't it indicate that they have overinvested in technology? ... I am convinced Amazon has too much firepower - more than it needs to run its business. Its emphasis on its corporate computing market looks like a positive spin on a rather poor capital investment strategy.

Beejat, I know where you're coming from. You're coming from a bottom line, quarterly results, improving shareholder value, reducing costs point of view. The point of view that makes investors money in the short term, while eliminating any vision of the long term.

But Beejat, here's where you're confused. Selling books isn't Amazon's business. Creating the future of e-commerce is their business. Selling me stuff is just the way they unit test it.

4 comments:

demian said...

Hopefully I don't take your thoughts on a tangent but this reminds me of early Amazon lore. Apparently amazon always intended to sell everything under the sun. They just started with books because the form factor was easy to get going in a somewhat repeatable fashion. In that sense, they used books to prove out the concept and then moved onto most everything.

Chip Overclock said...

Around nine years ago, I recall chatting at an SF convention with a software developer who was working for Amazon.com. He remarked that, at that time, had Amazon stuck to books and CDs, they would have been profitable. On the flip side, had they done so, perhaps they wouldn't have been the e-commerce powerhouse they are now. You gotta wonder: luck, or vision?

Anonymous said...

I heartily agree that Amazon has a good strategy for a far-reaching business model.
By enabling a transparent network of e-commerce, Amazon is pitching to be the default shopping site for many people. The incremental revenue of purchases made through them by individuals who just go there to "get it done" will more than justify their investment.

Who knows, it could get common enough that Amazon becomes a verb,
like google, but meaning to purchase through e-commerce.

Ken

Chip Overclock said...

I hate it when I sound like the cranky old man that I am. But I frequently buy over the web, and typically from Amazon.com, simply because the item is available there, and because the customer experience is so much better. My friend Tamarra was just telling me yesterday of her experience trying to buy a digital television tuner from one of the big box stores. It was terrible. She had to call several stores to find what she wanted; once she got there, the person on the floor didn't know anything; she got the device home only to discover the box had been opened and there were pieces missing. In my case, I usually can't even find what I want at the local MegaTechnoMart. But more often than not, Amazon.com has it, along with photographs, customer reviews, and a reasonable price. I'm sure part of the problem is the Long Tail. But that's me: hanging out on the fringes of both technology and commerce.