The Costs of Surviving in Ecommerce

Ecommerce Knocked it Out of the Ballpark this Holiday Shopping Season, But Investments by Retailers Are Huge & Will Get Huger.

By Wolf Richter for WOLF STREET.

Online retail sales during the holiday shopping season, from November 1 through December 24, soared 18.8% compared to 2018, according to Mastercard SpendingPulse report today. Over the same period, sales at brick-and-mortar department stores, which have been falling dismally since 2001, fell 1.8%.

This growth in ecommerce sales “depends on ever faster and more convenient modes to reach the final mile and yard in suburban and urban markets, as well as share in rural areas,” said IT consultancy ABI Research forecasts in its 54 Technology Trends to Watch in 2020, released today. “This includes the increase of one-day delivery and seven-days-a-week delivery in 2020 to reduce ‘click-to-door’ time and combat the Amazon effect.”

“Retailers need to address their increasing costs and consumer expectations through new business models and optimized transportation and logistics methods,” ABI Research said.

“Amazon already felt the financial pressure in 2019, with North American margin compression, as it grew investments in its next-day Prime delivery, expected to impact Walmart as well. Other retailers have been pushed into offering expanded shipping options and reverse logistics in order to compete.”

And the sums involved in trying to not get run over by Amazon are huge.

Walmart, Macy’s, Best Buy, and other major retailers that don’t want to get crushed by Amazon have all been spending vast amounts to keep up with Amazon drive to push same-day and one-day deliveries.

These retailers have been announcing these efforts and the costs in their quarterly filings. This includes adding new fulfillment centers where orders can be processed, filled, and shipped with delivery on the same day or the next day. These fulfillment centers are being automated to an ever-larger extent, and this is a huge investment each time too.

Walmart, for example, disclosed in its third quarter 10-Q filing with the SEC earlier in December that its allocation of capital expenditures in the US to “ecommerce, technology, and supply chain” rose to $3.9 billion over the first three quarters in 2019. This was over twice as much as its capital expenditures on store remodels and new stores ($1.9 billion) over the same period.

Walmart is still woefully behind Amazon, in terms of ecommerce. But Walmart US’s ecommerce revenues have been soaring at a rate of around 40% year-over-year in recent quarters, to $5.0 billion in Q3. Over the past three quarters, ecommerce revenues totaled $14 billion. Just revenues – not counting the costs of the products, the cost of shipping, the costs of returns, etc. And over the same period, Walmart US has spent $3.9 billion – 28% of revenues – on capital expenditures to advance its ecommerce technology and infrastructure.

Then there is the delivery infrastructure itself. Amazon, over the last few years, has pioneered a whole new armada of delivery vehicles that it totally controls, but that are owned by 800 delivery companies whose sole customer is Amazon, and they’ve come into existence by the grace of Amazon, and that totally depend on Amazon. They’re Amazon’s way to reduce its dependence on UPS, the US Postal Service, FedEx and other carriers – and to push the new frontier: same-day and one-day delivery and seven-day-a-week delivery.

In its post-holiday shopping season hoopla announcement today, Amazon said that “Over 100 million items” sold by the independent third-party sellers on its platform “were shipped with Prime Free One-Day Delivery over the holidays in the U.S.”

And it added that during this holiday shopping season, “the number of items that were delivered with Prime Free One-Day and Prime Free Same-Day Delivery nearly quadrupled compared to the same time period last holiday season.”

And this is the new challenge: same day delivery, one-day delivery, seven days a week, and building out the huge infrastructure and logistics system necessary to accomplish this. This is an entirely different ballgame from brick-and-mortar retail, and there is not a lot of overlap outside of pick-up and drop-off locations. And in terms of pick-up and drop-off locations, conveniently located automated lockers (access via code sent by text message) would and already do that job just fine too without all the costs of a huge store.

Amazon has shown the way, ranging from increased automation at fulfillment centers to cloud-based software that runs the whole thing, from the initial order to routing the delivery vehicle to the customer’s home.

Retailer budgets are going to get further refocused on advancing the system, as ecommerce becomes an even tighter business proposition with thin profit margins due to global competition and easy price comparisons online, and with the increasing trends to cut out the middlemen, including the retailers themselves, by connecting manufacturers directly to consumers via platforms such as Amazon, eBay, Alibaba, and others. And this system comes with investments that are gobbling up billions of dollars year after year, by each of the top ecommerce retailers, such as Walmart, if they want to continue to play.

On a personal note: The result of all this is my ability to not ever have to go into another brick-and-mortar store (outside of buying groceries) only to waste time and get frustrated. Even before the internet came along, I used to buy much of my stuff by mail-order (calling their 800-numbers) for those reasons.

I bought my dress shirts, some furniture, and many other things that way. It was slow and cumbersome, and price comparisons were tough to make. Furniture delivery could take months. Even shirts took weeks. But it beat the waste of time and frustration of driving to the mall and then going from store to store to find what I was looking for. For me, there were always better things to do in life that shopping – and in that respect, ecommerce has improved the quality of my life. And as these numbers show, I’m likely not the only one.

Amazon takes over the last mile and everything else. Read... How Amazon Gains Control & Domination

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  94 comments for “The Costs of Surviving in Ecommerce

  1. roddy6667 says:

    I wonder how much of the huge Christmas shopping season is made by people who make the minimum monthly payment on their credit card.

    • Trinacria says:

      Indeed, buying stuff we don’t need with money we don’t have and paying 21% interest for the sizzle – which apparently is the average interest rate out there per my quick search. After all, the banks need to get their pound of flesh as well.

      • Mark says:

        Getting their “pound of flesh” is a given in the USA , thanks to their best buddy the Fed. Maybe not in China, though.

        CEO Of Chinese Bank Sentenced To Death For Stealing $100 Million

        ask Dick Fuld about his “slap on the wrist”. He’s laughing

        • Happy1 says:

          The corruption inside state-owned Chinese companies dwarfs anything in the United States. People only go to jail or get fines when they cross party leadership.

        • NBay says:

          Dick Full didn’t cross leadership because he’s a “party” member.

      • joe saba says:

        dilemma – need special part for plumbing problem
        all stores know what it is – saddle tee
        one store had one – just $78 + tax – thankfully it was way to big
        then I found one on HOMELESS DEPOT website(not in store)
        I ordered it – then 3 days later got notice OUT OF STOCK and on re-order – cancelled it
        back to INTERNET – finally found one – $15 – just got it
        maybe PROBLEM is we’re not going to be able to find proper inventory for many items

        • 2banana says:

          I still have a long time plumbing supply house near me.

          Old crusty guys at the front counter with a massive warehouse behind them.

          Has every plumbing part known to man. Even pre WWII stuff.

          And the staff know where every part is and know how to exactly use it/install it.

          Take that Wolf and your love for ecommerce retail!

          (Fyi – that last part was satire)

        • Wolf Richter says:

          2banana,

          How often in my life have I had to buy pre-WW2 plumbing parts, or any plumbing parts? Zero times.

          We’re talking “retail” here, not supplying plumbing companies with rare parts that they don’t get through their normal channels. When a plumbing company installs the plumbing for a house or a high-rise, or puts plumbing into trenches — these big jobs are where the big plumbing dollars are — they don’t go to a brick & mortar store to get the parts. They order them by the pallet or truck-load.

        • fred flintstone says:

          I may be wrong………someone told me that e commerce makes up 15% of total sales. If this is true then sales this year are horrible. Adjusting for a cola of 1.8 sales are actually down year over year.
          Someone help me with this.

        • Wolf Richter says:

          fred flintstone,

          Glad to help you with this. Total retail sales include the biggies: sales at new and used vehicle dealers, gasoline stations, and grocery stores. Combined those three are over 50% of total retail sales. For different reasons, these three categories have not been impacted much by ecommerce. The remaining less-than-50% of retail sales are getting decimated. Some categories, such as album/CD stores (remember them?) have already mostly disappeared.

          Total retail sales have been up in the 3% to 4% range. Ecommerce sales have been up in the 15%+ range. B&M sales of clothing and other categories are collapsing as they’re now being switched to ecommerce. B&M music sales collapsed to near-zero years ago. B&M consumer electronics sales have been collapsing, but are booming on line. B&M software sales have already collapsed to near-zero and have totally switched to online. Video games are now going through that process. It goes category by category.

          Here is more on it, including charts:
          https://wolfstreet.com/2019/11/22/ecommerce-sales-jump-by-most-in-history-brick-mortar-melts-down/

        • R Hughes says:

          Mac master-Carr, grainger, menards, home depot, lowes, ace, American plumbing supply, amazon etc.. plumbing items are the absolutely easiest to order on line especially stuff the big boxes will not stock, ditto electrical, welding, hardware. Should have been half hour on internet and had it 1 to 2 days later.

        • California Bob says:

          re: “Total retail sales include the biggies: sales at new and used vehicle dealers, gasoline stations, and grocery stores.”

          We already have car and grocery delivery services, how long before Amazon will send a fuel truck to your house to fuel your vehicles? If they sell beer and cigarettes, they could put the local mini-marts at the gas stations out of business.

        • Wolf Richter says:

          EVs will be the game-changer for gasoline stations, as you “fill up” (charge) at night in your garage, instead of at the gas station. So yes, this business is moving “online” also, though it may be the power line, not broadband :-]

        • Trinacria says:

          To Happy 1: re Chinese vs USA corruption….ok, but that’s like saying thank goodness I only have cancer and not ALS (Lou Gehrig disease).

  2. ML says:

    Why shouldn’t retailers be at our beck and call? For decades, customers have been required to do all the running. Walk or drive to shop, carry the purchases home, etc, Take it back to the shop if something is faulty or needs changing, etc. Put up with shoddy service.

    Now it’s the turn of retailers to serve us.

    • Otishertz says:

      The reality is that suppliers, employees, and governments all serve these mega retailers by assuming their business risk and not the other way around. This risk shifting is the new model of e-commerce and it is predatory. At least we get cheap stuff delivered but what is the true cost?

      Amazon rents “shelf space” to its suppliers, shifting inventory risk onto them. They have built a delivery network based on captive “partners” who assume all business risk for amazon. It reminds me of the Sears-Glidden paint case study from the 90’s where glidden became captive to sears as thier only customer, then sears crushed them and bought them out.

      Ride share companies offload insurance and financial risk onto their “contractors” as well as the payment of payroll tax, social security, and medicare. Even scooter rental companies are offloading their risk onto the public by using public rights of way and private property as their showroom floor.

      Wal-mart shifted significant compensation of its own employees onto the government when one considers how many of their employees are on some form of government assistance.

      It’s the make it someone else’s problem business model. The externalization of risk onto suppliers and employees.

      • Degobah Smith says:

        Excellent point.

        • Yes and the internet as government property is the grand example, handed over to the mercantile class, through NeoLiberal policy. What’s next? Billboards in our National Parks?

      • Happy1 says:

        This is all true, but the consumer convenience of online shopping is the real driver. The difference in cost structure is pretty trivial compared with the ability to have what you need delivered to your home.

        • Otishertz says:

          The difference in cost structure is more efficient societally because it makes more economic sense for a company to deliver 100 packages a day than for 100 people to drive to a store that requires a huge fallow inventory to make most trips to the store worthwhile. No one goes back to a store when they don’t have what you need.

          The convenience is a real driver. Like Jello Biafra said, “Give me convenience or give me death.”

          Maybe it would be more apt to say, “Give me convenience, doesn’t matter who dies.”

      • Wisoot says:

        Otishertz – externalization of risk/cost onto customers.
        How many of you readers have paid for a computer, software for computer, computer security, computer connection?

        If you want it on paper, you need to print the sent email.
        Is it an option to come off the internet now, close down the computer and go back to living without it? Could you? Would you? Instantly you are at a disadvantage so you either take the cost of running your own ecommerce access facility at home, or you nip around to your neighbours or local community access point to do your banking, buy your DIY supplies or order your home shopping.

        When governments expect you to use Facebook, Twitter, LinkedIn, Youtube to become informed about issues aligned with citizen legalities and societal processes, you know the giants of ecommerce are wrapping Govs around their fingers, rubbing their hands in advertising glee.

        I’m not sure I buy in to the either /or scent of this article. There is the business model which has both, retail in bricks and mortar and runs the ecommerce enterprise from there also. Spreading the risk while we traverse the boomers spending retirement cash as the target market and the younger generations which spend cash they dont have.

        There is a tightening ahead. The business model of masses of deliveries has increased road traffic, which has driven up Gov incomes on fuel, while leaving the buyer sitting in gridlock on the roads trying to get to work. Environmentalists will be challenging how efficient this is going forward.

        • Javert Chip says:

          Wisoot

          “…I’m not sure I buy in to the either /or scent of this article…”

          Doesn’t matter what you buy int; couple hundreds million of Americans have already bought into e-commerce (that’s why e-commerce equals B&M).

          “Masses of deliveries has increased road traffic” also highly suspect: a few delivery trucks easily and more efficiently replace hundreds of individuals drivingto/from the mall.

        • Briny says:

          Sorry, but my experience in experimental design and network analysis says quite the contrary. One driver delivering to multiple, nearly sequential addresses, rather than multiple individuals going each and everyone to a B&M, should result in much less traffic. Further, given the delivery drivers follow optimized routes should result in less CO2 emissions, by a long shot.

          You have to look at life-cycle issues rather than one-shots. I deal in the Real World.

        • americaISdead says:

          When people say “traffic”, they usually mean rush hour traffic in cities, which will usually be times when little B&M shopping takes place.
          So it seems possible e-commerce creates more rush hour traffic.

  3. Sammy Iyer says:

    Recent delivery initiatives that Amazon has perfected in India & rolling out globally.
    1) Total Pin codes in India are 19100, which are serviced by 154797 post offices. When Amazon started operations in 2013 they used post office for delivery heavily +Fedex+DHL etc couriers. Now Amazon Transport services “last mile delivery ” mechanism is fully rolled out in all states. Amazon’s own pay roll employees are only afew ops managers in each city hub HQ but established “Private Delivery Contractor” System for every 3-5 pincodes cluster who will have their own vans/scooters (but with amazon logo) & will employ delivery boys/girls at bare minimum wages with zero benfits.Practically all amazon delivery agents are hired by contractor with minumum salary.(poor youth um employemnt is very high) There is no Govt mandated Social security benefits ,Welfare , Food stamps , Medicare ,Medicaid etc in India.One does not medical insurance to go to a walk in GP in the street (5$)

    2) 70% Amazon fulfilled delivery orders are cash on delivery ( means actual cash + delivery boy will have debit/credit card payment phone mobile app + amazon sends a sms link to pay the order online via Amazon Pay APP when order is “out for delivery”). Most amazon customers keep some positive balance in Amazon Pay wallet . Buyer can pay for the Amazon order via Amazon pay link when the delivery boy is at your door even. This assures practically negligible theft. no such things such as package left at the porch & stolen by porch thieves.

    3) “Amazon Pay” wallet payment system (Govt mandated KYC compulsory with TAX No+ Voted iD or Passport or DL) is well extablished with average Amazon customer uses Amazon Pay for paying Power bills/cable Tv/ satellite tv/ water / Gas / flight tickets/ train tickets/ online pharmacies/ movie -event tickets /bus tickets / uber car / all Food delivery &all sorts of other ecom sites/services. This is apart from using Amazonpay for paying for Amazon orders(general merchandise+ “dry/ fresh grocery 2 hour Amazon Prime delivery” in big metros !

    4) To solve the problem buyers not being at home during office hours day time (only for pre paid orders) , Amazon has roped in neighbourhood stores in every pincode in India where buyer can go & collect their amazon delivery parcels “at their convenience”. Amazon delivery agent may drop off say 5-10 parcels to the “amazon partner shop” dsetined for delivery for a 1-2 km area, for buyers who have opted to collect from the neighbourhood store instead of waiting at home to collect. Amazon gives a small discount incentive & option to collect from “neighbourhood amazon partner collection point “while ordering prepaid.
    5) In USA (for Prime customers+ buyers with good buying history) – I forsee amazon rolling out “Cash on Delivery ” payment option for both general merchandise +dry/fresh groceries where in the buyer can pay via cash/card/ sms order payment link via phone at the door (Amazon having accquired “last mile delivery ” mechanism)
    open box delivery :Buyer can inspect accept/reject at the door but can not apply for a Return/Refund later. (this has been rolled our laptop/printer etc electronic & white goods like fridge/A/C ,washing machine etc- service warranty by the respective brand may apply but can not return article saying i dont like it.

    • ThePetabyte says:

      This is literally the definition of vertical integration. It’s amazing what the world is letting one company do for the sake of convenience.

      • CRV says:

        If there is only one company willing to do this it wil have a monopoly, ‘voted’ on by it’s customers. If other company’s are willing to compete they are not stopped by customers or law.
        Here in The Netherlands there are some good competitors for Amazon To name some: bol.com (all kinds of stuf), fonq (luxary goods), coolblue (mainly electronics), zalando (shoes and clothes) and many more small ones. And of course there is the Chinese competitor Alibaba/AliExpress.
        I’m for choice and convenience so let them compete.

        • char says:

          PostNL would be the main competitor of Amazon if they would operate* in Holland. They do the warehousing and delivery. Bol.com is the amazon-like internet-department store

          *Amazon only sells ebooks in Holland, you can order from Amazon in Germany or the UK but that is “complicated”

      • Unamused says:

        It’s amazing what the world is letting one company do for the sake of convenience.

        It’s also amazing what the electorate will let the political establishment do for phony security and phony prosperity, despite the documented historical precedents.

        One imagines that cattle herded to the stockyards all believe they’re going to a party.

        • The expansion of the monetary base assumes that liquidity has an end destination. Greenspan was first to recognize consumer demand leads the economy. No longer a question of producers competing for fixed demand numbers. The internet accomplished that, opening up consumers to new products. Secondly that money goes into consumer products which disappear. You buy the crap, use it once, wear it once, send it to the landfill, where the green police add more value by processing using ecosafe methods. This opens the gate for crypto which is money written in disappearing ink. How do you keep putting money into consumers pockets? We are 8B worldwide, most of us without a dime. Wall St sees the possibilities.

      • Happy1 says:

        I would guess that the average person is even more dependent on Google for internet search and Facebook for social network. When someone builds a really good mouse trap it generally will be a monopoly for a while.

    • Nicko2 says:

      Amazon is genius. Of course, such a revolution is badly needed in India, they are a good two decades behind China development wise.

      • sierra7 says:

        Nicko2:
        Like all other “new fangled processes” of the past Amazon will be “genius” until they faced true competition. Or, until the FED finally says, “No more free money”!

  4. Randy Padal says:

    I’m with you Wolf as I also do all the shopping I can online. But in our house we also use Amazon grocery Delivey which turns the need to go into a grocery store an occasional trip to her a specialized item not sold online or for the one thing we forgot to order. Online grocery delivery certainly covers all the repeatable staples.

  5. MC01 says:

    Walmart’s moves, from spending over a quarter of their yearly revenues to shore up their online presence to buying Jet.com (for a cool $3.3 billion), hint clearly they are just chasing Amazon. They are not trying to build up a different online business model, nor to bring their brick and mortar success story (like it or not Walmart is a success story and I am a huge Sam Walton admirer) to the Internet. They are just another online store cashing on the popularity of the Walmart name. That’s fine for now.

    Right now the online pie seems big enough for everybody, but like Amazon has long proven the margins are thin and likely to get thinner as more retailers with deep pockets or backed by billions in dumb money hop onto the bandwagon… at least a decade late and by using the same model as everybody else, which is basically the same as Walmart’s: try to catch up with Amazon.
    Shareholders don’t care and likely won’t care at least until next November (with perhaps the usual Summer pause) but public companies are just a small fraction of those chasing the online sale pie.
    All these hopefuls look a whole lot like the underworld during the Dot.com Bubble, all those private companies big and small that tried to get a hold of the latecomers’ cash during the last six months before the Bubble burst. Some of those companies had good ideas and survived, the rest evaporated taking their investors’ money with them, including a ton of cash from my relatives, one of whom recently lost a huge sum during the cryptocurrency burst. Yes, I come from a family of financial alchemists who love get-rich-quick schemes so that goes a long way towards explaining my cynicism and bad manners towards wide-eyed hopefuls and idealists in general.

    And speaking of hopefuls, all these new online sellers will come under scrutiny when they will have to explain why they adopted the Netflix/Uber business model (big growth financed by big losses) without being, well, Netflix and Uber. Stock markets are not the real world: out here we expect results.
    Big growth figures are all fine and well but if big profits don’t follow I fully expect the slow grilling to start in the earnest.

    • Unamused says:

      Big growth figures are all fine and well but if big profits don’t follow I fully expect the slow grilling to start in the earnest.

      If a firm’s directors feel they need profits they can just lobby for a handout, provided they’re up to date on their tribute payments – er, campaign contributions.

      Unicorns prove that profits are unnecessary when their business models promote the advancement of corporate hegemony. As you say, big growth figures are all fine.

      Absent big growth figures just lay off 10%, borrow some money at NIRP rates, and buy back stock. The market will love it, so just sell into the bull and Bob’s your uncle.

    • Unamused says:

      I am a huge Sam Walton admirer

      Discounting the opinion of his groveling minions, of course, not that anyone’s interested.

  6. John says:

    Happy Holidays Wolf! Amazon! Missed the boat on this one.

  7. Lance Manly says:

    I wonder what the magnitude of returns are on eCommerce vs. B&M will be for the season.

    • Wolf Richter says:

      One thing is for sure: B&M department stores aren’t going to have a lot of returns because they don’t have a lot of sales either. They’ve been completely left in the dust.

      • MCH says:

        Naw, B&M returns are driven by e-commerce. My wife for example loves buying stuff from online and then returning it to B&M, she doesn’t do it often, but when she does, it’s like a semi periodic pulse of purchases.

        Although I have to say some e-commerce infrastructure are much better built out than others. My wife was quite frustrated with Uniqlo’s rather crappy in store pick up experience where their system insisted that the second package was on site and their real life employee insisted it wasn’t. That would have been very amusing from afar except I had experienced it in the front row. So, Uniqlo, you have alienated the potential customer in me forever. Although I have to say, the odds of me ever being a customer was quite low on the first place.

      • cd says:

        Nordstrom is doing fine…..

        so are the shares I bought after the bigboys took it down like every symbol in the market…..

        Cycles my friends…

        • Wolf Richter says:

          cd,

          Wishful dreaming.

          “At Nordstrom, ecommerce sales already accounted for 34% of its total sales in Q3. When it reported earnings yesterday, it was held up as the shining exception among the recent batch of retailer malaise-reports that included Home Depot and Macy’s. But even at this shining exception, total revenues in Q3 fell 2%. It also disclosed that its “digital” sales grew 7%. But its brick-and-mortar sales fell 7%.”

          Quoted from my article on Q3 ecommerce and B&M retail:

          https://wolfstreet.com/2019/11/22/ecommerce-sales-jump-by-most-in-history-brick-mortar-melts-down/

          Nordstrom is shutting stores left and right, including a store in San Francisco (at the Stonestown Galeria):

          https://wolfstreet.com/2019/12/24/what-options-do-mall-landlords-have/

          And yes, indeed, there are still people today who believe that a once-in-a-generation structural change in how Americans are buying is just a “cycle.” Here are B&M department store sales, including Nordstrom’s, just in case you missed the article linked above:

    • Rcohn says:

      Implications of more internet shopping and fewer people going to stores.

      Accelerated trend of stores closing and malls closing.
      Rising unemployment among retail workers , both at the local and the executive levels. With this unemployment comes more unemployment compensation by the states
      Loss of local taxes for cities and states
      Less need to own a car
      This obviously has some environmental and time benefits , but it also has negative economic effects for the entire car and oil industry

      More dependency on the Internet.
      More economic power centered among the biggest and richest players

      I am are sure that posters can think of many more.

  8. Paulo says:

    The big concern for me is how far I have to scroll to get past the Amazon adds and Google filters.

    For online searches that are an attempt to either buy a new product, or use a different supplier, I always type in + Canada. It usually does the trick. You may have to look on the 2nd page, though. There are two reasons for this. Customs can be real BS and sometimes there are hidden brokerage fees. But more importantly for our family, after Trump imposed steel and aluminum tariffs on Canada we simply never buy American made products anymore and won’t until issues return to normal one day. That is 180 degrees different than our past practices by the way. If I am forced to order another heavy heavy power tool online I will sign up for Prime and hold my nose for the free delivery, then cancel Prime when the product arrives and everything is working. I last did this several years ago when I ordered a planer and dust extractor. I haven’t used Amazon, since. A local Canadian Tire store supplies Chinese made tools under their store brand and for non precision work (like the compressor I just bought) it is as good as anything else available.

    Our family always supports local business whenever possible. For example, we just bought two new laptops as an overdue upgrade. We purchased from a local computer store (repairs and new sales) as opposed to a chain or online. This is a one person operation. It was slightly more expensive, (less than $100), but we know if there are problems with either hardware or software, follow up service will always be there. If you buy from a cheaper big box store you get some kid and they ship your machine out for repairs. Plus, going to a best Buy etc requires extra driving, time, crowds, etc and ends up being pretty much the same in the end.

    • Wolf Richter says:

      Also, if you search for a specific region and use Google, you can filter your search results. For example, Google for Walmart, then under the Google search bar, you see “Settings,” click on it and choose “Advanced settings,” which then opens up a page where you can choose geographical regions (country or other regions), results in particular languages, and many other things to narrow down your search. Works pretty well.

    • IslandTeal says:

      Paulo…. I’m with you re the local guy for computers. Buying refurbished Dells is the way to go. He’s a great guy and stands behind his work. Have a good 2020. Was in your neighborhood last January. Picked up a used car in Sequim.

  9. Jeff Relf says:

    2020 is the height of the largest tech-bubble ever seen.

    No matter what laws are passed,
    “progressive” unions will continue
    their 40 year losing streak.

    Their idea of a “win” can be seen in
    Cuba, Venezuela, and Argentina,
    where the de facto currency is the US dollar
    ( 1.00 “Cuban Convertible Peso” = $1.00 USD ).

    • Unamused says:

      No matter what laws are passed, “progressive” unions will continue their 40 year losing streak.

      Now that mass social control is technologically feasible labor unions can be banned with little fuss. They’re already small enough to be drowned in a bathtub.

      Once you’ve turned the New Deal into the Raw Deal you can then reverse the Enlightenment and the Renaissance and everything will again be as it should. And the people will thank you for it. Or else.

      • Javert Chip says:

        Jeff Relf

        “Progressive unions” also have a robust history of stealing their members retirement investments.

        UAW officers are currently being indicted for spending member dues on cigars ($60,000/year), and other luxury amenities.

        Yea, businesses don’t like unions, but neither do their prospective members.

      • NBay says:

        That last paragraph is on the wall in gold at the Heritage Foundation.

    • 2banana says:

      Who really killed private unions?

      “Greedy” corporations or consumers who choose to pay $10 less for a pair of shoes that are made in China?

      Note. Public unions are still extremely powerful and are not shrinking. And are the all time largest campaign contributors in history. And give 99-1 to dems.

      • Jeff Relf says:

        2banana replied ( to me ):
        > Public unions are still extremely powerful
        > and are not shrinking. And are the all time
        > largest campaign contributors in history.

        No one ever said:
        ” I wish the DMV ran my grocery store “.

        Since 2015, UK’s Royal Mail, est. 1516,
        has been fully private.
        US Mail is nearly a subsidiary of Amazon.

        NASA once dominated commercial cargo,
        then ESA, now it’s SpaceX ( Falcon Heavy ).

        P.S., the Logitech g635 headset I ordered
        last night arrived this morning;
        I’m using it now.

        An Amazon shirt (phone) CALLED me;
        so there was no chance of losing the package.

        ” Back Door Only, call 206 555 1234 ”
        is now part of my “address”,
        so the deliveryman sees it.

        • char says:

          Nobody ever said wish that PostNL was still a state company, except probably their customers and for sure their workers.

          In America state companies don’t work well because of the American constitutional order. Don’t assume this is the case globally

  10. Iamafan says:

    What’s up or down around your town? A Kentucky Fried, Boston Market, and a big Ace hardware just closed down over here. An old family owned wine shop, too. Changing tastes?

    • Unamused says:

      Changing tastes?

      “Is there any other point to which you would wish to draw my attention?”
      “To the curious incident of the dog in the night-time.”
      “The dog did nothing in the night-time.”
      “That was the curious incident.”

      Of course, the dog wouldn’t bark if it knew the horse thief.

      How to account for your own curious incidents? Perhaps it’s ‘changing tastes.’ Or perhaps the present ‘prosperity’ is phony and decades of systematic wage suppression and impositions of debt are taking their toll. The dog didn’t bark, but the horse is gone.

      • Iamafan says:

        Many huge houses here are hundred year olds or more. Old wealth laughing at Peak Prosperity.

  11. EternalSkeptic says:

    Costco seems to have their segment market really cut-out. After-all it’s a grocery store disguised as a one-stop shop.

  12. Kk says:

    Brave new world. I could previously open a small shop and compete with Walmart on service and convenience for a few thousand now I’d need a few billion. Oh well, wage slavery it is then…..

  13. MCH says:

    Thus E-commerce has provided Wolf and others with the hedonic quality improvements in their lives that will eventually justify the rising costs of same day delivery for all.

    Or alternatively, those same improvements will spur an ever increasing investment into automation that eventually give rise to Skynet. Either way, someone will benefit.

    Though I have to say my experience in shopping for furniture online has been less than satisfactory so far, where do you guys go for that? Finding a quality desk for cheap is not easy when there is no prior experience or trust with some of these organizations. Same is true with pillow casing and stuff. How would you avoid the cheap quality crap and frauds that is leaking from everywhere on the internet. Seems to me that those issues are as difficult as going to a brick and mortar when considering the time needed for the research.

    • Unamused says:

      Though I have to say my experience in shopping for furniture online has been less than satisfactory so far, where do you guys go for that?

      The Amish make furniture and cabinetry in the US and ship nationwide but there are numerous individual cabinet makers who can make anything you like, mostly east of the Mississippi. You should be able to google up a local list or make inquiries at an independent kitchen remodeling firm. Eschew chain stores.

    • JK says:

      I bought furniture during the holiday by going in the store. Some things I buy online and some I buy at stores. Just depends on the product. I’m short on time as well, but I still like to see things sometimes in person before I purchase. Also, I’m trying to spread my purchases around and not only Amazon. I think it’s healthy to multiple retailers.

  14. c1ue says:

    Sounds nice, except there is very much a question whether the infrastructure can sustain so much delivery.
    Record number of miles driven and gasoline consumed in 2018 – 2019 likely another record.
    Traffic congestion worse by 2% to 4% in 2018 vs 2015, according to TomTom.

    • 2banana says:

      You really think that is all due to ecommerce?

      Folks not driving around to B/M stores might actually cancel the delivery trucks traffic (as their routes are designed to be as efficient as possible).

      How about deporting 30 million criminal illegal invaders? That would certainly clear up some traffic congestion.

      • Unamused says:

        How about deporting 30 million criminal illegal invaders?

        Native Americans would prefer deporting 300 million criminal illegal invaders.

        • cb says:

          as they were conquered and subjugated, they don’t have that option.

          that’s what happens when timely action is not taken.

        • illumined says:

          @Unamused – And for all the virtue signalling about this I have yet to see a single one of these “enlightened” individuals donate their homes to a native american family and move to Europe. Money walks, BS talks.

        • Unamused says:

          @illumined

          Giving away your home and moving to Europe have nothing to do with ending centuries of oppression.

          You’re just looking for a way to deflect the blame for that oppression onto the people who are trying to end it.

          That’s vicious.

        • cb says:

          @ Unamused

          Because Native Americans failed to deport criminal illegal invaders, are you suggesting that Current Americans should do the same?

      • c1ue says:

        The answer would be the average number of items per trip/mile for individuals buying from stores vs. delivery. There isn’t such data that I have found, but we do know a few things:

        1) Much as when Uber was enabling 3-block rides for $5 (in its early years), I guarantee that people are buying things in much smaller groupings. Where before people would buy things in a trip to the mall or store, now they can order one at a time, anytime. An obvious Jevons paradox situation – except the efficiency isn’t clearly better (delivery optimizes customer convenience, which is totally different).

        But the Jevons greater consumption may be offset if the delivery drivers are driving less per package delivered than individual people making fewer trips, theory. The distribution center and the store are not much different in distance, so that’s a wash.

        2) The question is likely answered in the routes: delivery drivers are driving every day, delivering packages while individuals drive to buy only at need and tend to cluster purchases because of the relative inconvenience.

        I don’t believe on demand delivery is more efficient, though.

        I base this on pricing. UPS is faster and more convenient (like delivery), but you can’t send a letter for $0.50 via UPS.

        UPS has a delivery model vs. the Post Office’s routes (a bus model), so it isn’t a perfect comparison, but the USPS should have the most efficient routes possible since they also have the lowest cost.

        UPS and USPS are similar scale, so that shouldn’t be a factor.

        • Mars says:

          Don’t forget AMZN has announced investment in Deliveroo (UK) food delivery a few months ago. This is being challenged as UK regulator prefers AMZN to start its own service and compete with existing delivery companies (“better” for consumer) instead of gobbling up a potential competitor.

        • c1ue says:

          I haven’t looked at Deliveroo, but none of the US food delivery companies make money.
          That entire sector looks exactly like Uber/Lyft in ride share: selling $1 for 60 cents.

  15. Bob Prechter (Two Jaguars) assumed it would end when everyone had two of everything. Does Amazon want control of transportation, or do they just want to wring cost synergies out (Lyft and Uber?) Amazon can’t escape fuel costs, and Bezos might have to run for president and control global energy policy to achieve that goal. I think he and his wife divorced so they could split up the operation, and they are still kanoodling.

  16. Powell’s lies about inflation seems to have done the trick. Conned the feeble minded and uninformed into buying before prices “apparently” rise. Just like prices rose the last 20 years in Japan!!

    • cb says:

      Has there not been continuous inflation in America the last 50 years?

      • NO, but the explanation is lengthy, and the laws of physics as it applies to economics (a social science) allow for similar outcomes under different circumstances. I want to tell you the exact moment the stock market stopped going up because we were adding wealth to our economy, and started going up because the dollar started making a huge sucking noise. Imagine a world where the stock market goes DOWN even while real economic growth is improving, and in that instance real inflation (vs asset inflation) is probably also rising, which implies, and PCE confirms this, we have been in a deflationary economy.

  17. RD Blakeslee says:

    Sociologists may one day (if they haven’t already) note that increasing delivery of sustenance directly to abodes increases social isolation.

    The advent of the automobile did that, too (open horse-drawn carriages didn’t isolate) and it’s of interest, I think, to consider all the societal changes tending toward isolation of the individual.

    • Jeff Relf says:

      (Willful) “isolation” is very expensive, Blakeslee.

      You can really save on rent if you
      don’t mind having 20 bunkmates.

      Despite my best efforts, here in Seattle, I’m
      face-to-face with plenty of people, every day.

      That said, I must admit that I’m not getting
      nearly enough exercise these days,
      thanks to all the modern conveniences.

      • RD Blakeslee says:

        “(Willful) “isolation” is very expensive, Blakeslee.”

        Wrong!

        I’ve been living on less than $40K (continuously adjusted) in the middle of 700 acres, for 42 years.

        • Jeff Relf says:

          Blakeslee replied ( to me ):
          > I’ve been living on less than $40K
          > in the middle of 700 acres, for 42 years.

          For 9 years now, I’ve been spending 3k$/year
          to live in North Seattle, immediately above
          the University of Washington.

          Becoming “isolated” is the least of my worries.
          I hear songs about people being “lonely” and
          I wonder ” What is that all about ?! “.

          “Lonely” is what I aspire to but never reach.

    • paul easton says:

      Public transit is wonderful in that regard. On a subway or a bus I might not talk to strangers much, but I see a lot of strangers that I like. When I read the news I think Americans are weird, but a trip on Amtrak has the opposite effect.

    • Dave Kunkel says:

      About 45 years ago in my wild youth, I used to quit my job every spring and ride around the country on my Triumph motorcycle. I was always surprised at how much more casual contact I made with people while on my bike.

  18. Mars says:

    In the e-commerce catch-up game Michael’s (craft supplies) announced just hiring the WalMart exec in charge of US merch and e-commerce starting 2020Jan6.

    Look for similar head-hunting among top 10 e-commerce retailers.

  19. raxadian says:

    [And in terms of pick-up and drop-off locations, conveniently located automated lockers (access via code sent by text message) would and already do that job just fine too without all the costs of a huge store.]

    Until people starts to vandalise lockers to steal the stuff inside them.

    They can add all the alarms and security cameras they want, but unless those lockers have a few actual people guarding them things will go wrong.

  20. Janus says:

    For the holidays I treated myself to 9 pairs of good underwear, ordered online. Great black friday deal or whatever they call it these days.

  21. Kaleberg says:

    Where I live, Amazon uses the USPS for the last mile, but Amazon has its own carriers to get stuff to our PO. Amazon and other online stores use their own services, and that increases traffic in places like Manhattan. People there rarely drive, but they have been able to get anything they wanted delivered since the early 19th century, maybe the 18th. Adding new delivery categories for home delivery – commercial entities already had almost everything delivered – means more delivery vehicles. It’s very inefficient. There’s talk of limiting delivery vehicles and allocating on street – the only kind – loading slots.

    The USPS used to have multiple daily deliveries in big cities. You’d send a letter in the morning, get a reply, then meet for lunch. I suppose they could bring this back. It’s not as if Amazon avoids using the USPS for the last mile when it suits them, and others could do so as well. A few daily delivery slot might work out well, especially for people who only want evening deliveries, that is, they commute to work and don’t have a doorman.

  22. paul easton says:

    There seems still to be room for smart local offline retailers. In Hartford I get all my clothes from a store right near a major bus stop. I get to look at the stock and try it on and it is cheaper than shopping online. They are starting to carry their own designs with their own label in them. As far as I know it isn’t part of a chain. Why should this be exceptional? Is Hartford somehow unusual?

    • paul easton says:

      Maybe the secret is that it is well made downscale merchandise. It wouldn’t be nearly as convenient if you drove there in a car.

  23. CtKahanamoku says:

    How about gas stations as part of e-commerce fulfillment? More locations available than everyone else combined and meant for easy access by cars. I knew those damn petro companies were going to get in on e-commerce.

  24. ft says:

    For the first time, holiday shopping this year in my household of six was all done thru ecommerce. Efficient and hassle free, we even managed to not get porch pirated. Well, we are drowning in empty cardboard boxes.

  25. Cold water says:

    Amazon barely breaks even in their retail business. It is heavily subsidized by their AWS / cloud business (a lot of which is 3rd party sellers, aka amazon competitors).

    What happens when AWS is no longer subsidizing Amazon’s retail operations? Amazon can’t survive on its own razor thin retail margins. There are zero barriers to entry in the cloud server business— IBM, Google, oracle and Microsoft are all jumping in and they won’t be the only ones.

    Prime delivery entities are like Uber/Lyft drivers. They are losing money day after day. Great for amazon short term, but those subsidies won’t last.

    Amazon is a company dependent on external subsidies that they don’t control. Amazon will collapse as its subsidies start to break down.

    That doesn’t take away from advantages of e-commerce, but the over emphasis on amazon weakens the general argument.

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