Amazon and business week

[John Gregory]

Amazon (http://www.businessweek.com/technology/content/feb2007/tc20070202_693191.htm?chan=technology_technology+i ndex+page_today%27s+top+stories)

Interesting article. I found this on another forum and thought it was interesting to those of us that buy from them.

[Lars Thomas]

If the way Amazon ships clamps (for free) is any indication of their overall ability to control cost on the dock, things will continue to be rocky.

For those of that don't know, Amazon tends to ship ONE clamp in a huge sub-refrigerator sized box. Imagine coming home to an order of a half-dozen of these boxes filling your porch.

[Tim Malyszko]

I'm an Amazon.com Prime member and I cannot figure out how they make anything off of me. For instance, I recently purhcased a Delta Mortiser for $199 with free 2-day shipping with my Prime membership. When it arrived, the UPS sticker said it weighed 71 lbs. If I were to ship a similar package via 2-day UPS shipping, the shipping alone would run nearly $145 for the package. I know Amazon.com gets a discount on shipping thru UPS, but it cannot be enough to still turn a significant profit.

I do also buy a lot of books and I'm sure they make a bit off of those even with free shipping, but their profits have to be razor thin.

I wonder how much longer it will be before that $79 prime membership increases substantially. If I go back and look at all my invoices over the last 9 months, I've probably saved in the neighborhood of $500 on shipping (I purchase a lot of other stuff for my business also).

[Dan Stuewe]

(I haven't read the article)

Do mail-order companys get paid to put half a dozen fliers for all sorts of other products/companys in the shipping boxes?

That's the only way I've been able to guess that allows the shipping to be so cheap/free.

[John Gregory]

(I haven't read the article)

Do mail-order companys get paid to put half a dozen fliers for all sorts of other products/companys in the shipping boxes?

That's the only way I've been able to guess that allows the shipping to be so cheap/free.

I don't know if they do or not. BUT my guess is that they do get a fee

[Jim Becker]

We are also Prime members...and I also cannot figure out how they make money on us...

[Al Willits]

""""""""
For those of that don't know, Amazon tends to ship ONE clamp in a huge sub-refrigerator sized box. Imagine coming home to an order of a half-dozen of these boxes filling your porch.
"""""""

Must be when you buy seperate clamps, I've gotten three of the cabinetmakers (?) sets, two reg and one long set and they all came as a set, in one box.
Haven't bought seperate clamps yet.

Al

[Bryan Somers]

If I'm correct Amozon does'nt directly handle alot of the products we buy through them just the paperwork and money transactions. Assuming thats true one thing about business I learned from someone I used to work for years ago was that if you dont actually have to handle the product then almost all the profit from the sale goes striaght to company profits.

I am certainly no business guru so if I am wrong feel fre to correct me

[Scott Vigder]

In the last 14 months I've ordered Bessey K-clamps from Amazon three times (all at unbelievable prices with shipping and tax included). The packaging variations are amazing.

Five 60" clamps came with cardboard wrapped around the jaws and the posts were bare.

Then a batch of 24" came in individual boxes with those nice airbags loaded on top.

Last week I received three more 60" and they came with some sort of really cheap do-it-yourself corrugated cardboard wrapped wround the jaws and posts.

Wait! This sounds like a clamp gloat!

[David Wambolt]

Amazon wastes a lot of revenue on their poor shipping habbits. From insufficent packaging to shipping every other piece in a different box. I have bought a lot of tools from Amazon (over 10k) and many of the larger items have arrived damaged. Things that come to mind as damaged:

28-348G Delta Bandsaw
DC1100RCK Jet Dust Collector
C10FSH 10" Hitachi SCMS
Kreg Bandsaw Fence
32" Samsung LCD TV

I'm not sure who packages their products but part of the problem is item A ships from NV, item by ships from PA, etc. The biggest joke of a packaging job came with the Bessey clamps - like mentioned above. Last week I had a Kreg bandsaw fence arrive and the box was completely empty. The packaging was very poor.

I have received most of my smaller items damage free and usually on-time. Amazon is good about fixing problems, and recently they started cutting discounts on damaged items if you agreed to keep them. For example when I bought my Samsung 32" LCD HDTV it was $1259 or so. The first one was stollen by an Eagle Global Logistics employee once it reached the Sacramento Depot. After a few days of my TV not arriving, they admitted it had been stolen. Amazon sent another one, but it had a minor cosmetic ding in the bottom right corner. They offered me 10% off which was basically $129 and I took it since you could hardly see it. At the time it made a great deal a really awesome deal.

In the past week my Delta bandsaw arrived with some paint rubbed off on the upper wheel cover and a small ding. My Jet arrived with a ding from a fork-lift fork. Amazon gave me $139.99 back on the Bandsaw ($699) and $90 back on the Jet dust collector ($449). So they cut me much more significant discounts than I had seen on the TV. The damage was light on the cosmetic side, but it still takes away from the value of the tool. I'm pretty sure Delta and Jet would replace the parts, but Amazon didn't want to do that.

I like Amazon, but they could certainly do better with shipping. Especially when everything is almost 'Free', you'd think that they would want to maximize their dollars. I'm a Prime member as well, and like most others, I don't see how they make their money back. I had my 12" Bosch CMS shipped 2 day air. The one plus to Prime is that when using it on larger items, they tend to arrive in MUCH better condition than ground shipments.

[Dave Hale]

Wait! This sounds like a clamp gloat!


Not without pictures! :)

[James Reichman]

If the way Amazon ships clamps (for free) is any indication of their overall ability to control cost on the dock, things will continue to be rocky.

For those of that don't know, Amazon tends to ship ONE clamp in a huge sub-refrigerator sized box. Imagine coming home to an order of a half-dozen of these boxes filling your porch.
I bought 16, 40 clamps. You should have seen my front porch!:D

[Greg Funk]

I for one would like to personally thank Amazon shareholders for continuing to subsidize my clamp purchases...

[Dewayne Reding]

I for one would like to personally thank Amazon shareholders for continuing to subsidize my clamp purchases...

And I would like to thank all the tax paying members of this board for subsidizing the shipping of military repair parts. I supervise an Army equipment maintenance facility. Virtually all of our parts arrive in Amazon style packaging. One of my favorites was an order for 50 M16 bore brush tips. Shipped in packs of five in 10 large boxes. One box would have easily held a thousand of the little brushes. Fed Ex overnight and there was no war going on at the time. Glass is often shipped in a flat unpadded box. :confused:

Seriously though, I highly suspect Amazon contracts are constructed in such a manner that the package size doesn't greatly affect the price. They've done the math, and if they could save 65% of shipping costs they surely would make some attempt. I'm confident they don't pay what I do to send a box cross country. All that said, their free shipping is surely the main reason their margins are slipping. And my employer, well that's another matter. I don't think we're going to make a profit again this year. :)

[Bill Weiher]

Regarding those box inserts and the money Amazon makes on them, the answer is yes, it costs to include those in their packages.

My day job is marketing for a Fortune 100 Co. and I've been pitched-to on that program from Amazon. With all of the inserts, etc it probably doesn't completely cover their shipping costs though it is certainly a way for Amazon to subsidize them.

There are a variety of different cost structures they offer based on the size, goals of your program. We passed on the program but if you look at the companies that participate, they are usually pretty big, well known brands (Citibank, etc).

People buy stuff from those inserts, if they didn't Amazon couldn't continue to sell the program. We don't use informecials either (probably not right for our produducts/service) but people buy tons of crap through informercials all the time, consumers say they hate them but then they buy... it's almost like they can't help it, strange.

[Tim Malyszko]

If I'm correct Amozon does'nt directly handle alot of the products we buy through them just the paperwork and money transactions. Assuming thats true one thing about business I learned from someone I used to work for years ago was that if you dont actually have to handle the product then almost all the profit from the sale goes striaght to company profits.

I am certainly no business guru so if I am wrong feel fre to correct me

You are correct. Amazon, along with many other companies, contract out the warehousing, distribution and shipping duties. As an example, recently, I ordered some Pony clamps from Amazon.com and my wife ordered some clothing from another on-line store and according to the shipping material, they came from the exact same warehouse in Tennessee.

With that being said, I use to work for a very large food company and we use to contract out all our speciality pack packaging. If any of these items were damaged in transit or in their warehouse, we back-charged the vendor for the shipping and distribution issues. This is probably the case with Amazon.com also. Amazon.com and the 3rd party warehouser/distributor share the cost of the damage, with the majority of it being backcharged to the 3rd party.

While I've had damage problems with larger, heavy items, I often feel the packaging for books, clothing and other smaller items are sufficient and sometimes overkill. Shipping a single book in cardboard is fine, but often it comes in a box 3 times the size of the book with the book being covered in those inflatable bags.