nickshanagher

“Twenty years ago I was driving boxes to the post office in my Chevy Blazer and dreaming of a forklift,” says Jeff Bezos in his most recent letter to shareholders. A blink later and he points out that the company has grown from 30,000 employees in 2010 to 230,000 now. But his ambition is the same. “We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness and risk-acceptance mentality that is normally associated with entrepreneurial start-ups.” Amazon is great at disruption because of its customers focus and the fact that the internet means it needs none (or very few) people between its warehouses and the shopper. The threat of Prime, its membership service, is the biggest challenge facing the UK retail market and the wholesale market by extension. It is both a direct threat and an indirect threat in that is inspiring countless numbers of othe...

Ben Thompson's Stratechery site is a constant source of inspiration. Last week he was tackling the development of Amazon and speculating that it could sell lots of products at a loss by adopting a Costco model. "Consider Costco: last year the wholesale retailer had net income of $2.3 billion on sales of $114 billion to its over 81 million members; the total sum of membership fees was $2.5 billion," he wrote. "In other words, Costco’s 11% gross margin didn’t even quite cover the cost of running the business; the difference, along with all of the profit, came from a “tax” levied on Costco customers." For retailers in the UK unhappy with paying a "tax" to news wholesalers to get their newspapers and magazines, this makes uncomfortable reading. The UK's regulators, now the competition commission, have gamed the system so two companies can make a profit out of "carriage service charges" for wholesaling newspapers and magazines in exclu...