It increasingly appears that Amazon has chosen to split its second headquarters between Long Island City, NY and Crystal City, Northern VA — essentially locating a large portion of their upper management closer to the political and cosmopolitan classes (DC and NYC respectively). My favorite internet and business raconteur Scott Galloway – the author of the excellent The Four — had opined that it would always be New York. How did I do with my prediction? Earlier this year, my own guess was Nova/DC/Maryland area (although I had also hedged it with North Carolina). Amazon’s next biggest challenge is in running their AI platform. The biggest challenge for all platforms is regulation, which makes locating in the DC area as the perfect…
Leave a CommentTag: Amazon
Spectacles are back again. Earlier this year on this blog, I wrote about Snap’s disastrous over-commitment into Spectacles inventories, and subsequent difficulties in selling the items, as thousands of inventories piled up. I argued that their sales figures were in fact not terrible in comparison to the first generation iPods, but it was the capital expenditure on inventories that crippled Snap’s venture into hardware. So, after Snap is back again with Spectacles 2. I cannot really figure that if the new designs of Version 2 are any better, but Snap definitely seems to be making some better operations and retail decisions. Here is coverage from Verge: Both the Veronica and Nico styles are available starting today (ed: Sept 5,…
Leave a CommentIt has been slow at the Poiesis blog, as the end of semester duties draw to an end. Meanwhile interesting operations events have occurred at our horizon of interest. Notes will follow on this topics, but here are some quick thoughts. Amazon released its annual report. Now AMZ is a 177B company. Looking at Bezos’s letter, there is an emphasized continued focus on the e-commerce challenge in India. In fact, India is the only “geographic” bullet point among the highlighted bullet points in the report. Amazon has moved into India and my prediction remains strong that Amazon is likely to win this battle out and will soon be the biggest retailer in India. (Contrast this with China). An interesting tidbit: Bezos…
Leave a CommentIn 2013, a guy who was trying to pitch a company, called DoorBot, that sold security doorbells, went nowhere on Shark Tank, as the sharks rejected his offer. The founder Jamie Siminoff positioned the idea at $7M. Here is the video. Last year, the company was valued at $460M. Last week, the company, now called Ring, was acquired by Amazon for $1B. This is not a post to castigate the poor assessments of Ring’s original business idea: As ideas evolve they get better, and some cosmic confluence of interests can be helpful for a firm. — Ring, at one Billion USD, is a tremendously expensive acquisition for Amazon. In fact, Ring is Amazon’s second-biggest acquisition, after Whole Foods. Similar large…
Leave a Comment
For long time e-commerce and operations observers, it was no surprise that Amazon was opening its “shipping” business: It was as predicable as a bowling ball on the lane slowly rolling to the pins. Much earlier, in 2014, Amazon had invested in a British shipping firm, Yodel. In 2016, Amazon had purchased a 25% stake in the French parcel Delivery company Colis Prive. Through FBA (Fulfillment by Amazon), Amazon already handles “logistics and shipping” for third party sellers – currently at 51% of all sales units (in 2017 Q4). It has been at that proportion for several quarters now. So no surprise, really. However, let’s talk about who is absolutely critical for Amazon to compete with UPS and FedEx. Compared…
Leave a CommentAmazon’s HQ2 selection process has been described as a beauty contest, which misses the point. Amazon is definitely not going to pick a city based on popular opinion or consensus. An excellent theoretical framework to think about Amazon’s choice process for HQ2 is the idea of Innovation Tournaments. A good resource to learn more is the wonderful book Innovation Tournaments by my Wharton colleagues Christian Terwiesch and Karl Ulrich, which I highly recommend. Innovation tournament typically involves several contestants going through a series of rounds, as pictured above (under a selection-criterion and pre-announced rules), until a “winner” is chosen. American Idol is a TV-show that typified this idea. Innovation tournaments are a genuinely great method to brainstorm and generate new…
Leave a CommentIn my earlier post on the Brief History of Amazon Prime, I had mentioned about the stickiness of Amazon Annual Prime Pricing. An issue with scaling revenues this way is stickiness of prices. It took a whole nine years for Amazon to go from $79 to a more profitable fee of $99. (I thought the fees would be raised to $108 at $9 a month – closer to NetFlix rates – but the fees were stickier than I had thought). Prime subscription prices vary quite a bit geographically around the world. For instance, the annual subscription is $99 in the U.S., £99 in the U.K. (equivalent to USD 115), $22 in Italy, and about $8 in India. However, within certain geography…
Leave a Comment