Sears's History Predicts Almost Everything Amazon's Doing(theatlantic.com)
theatlantic.com
Sears's History Predicts Almost Everything Amazon's Doing
https://www.theatlantic.com/business/archive/2017/09/sears-predicts-amazon/540888/?utm_source=atlfb&single_page=true
168 comments
>In 1993 they closed their mail order division. In 1995, Amazon launched.
If one compresses the timeline, it does seem like Amazon killed off Sears when in reality, Sears was already getting killed off in the 10 years before 1995.
In the 1980s...
- Home Depot, Lowes, Builders Square, etc home improvement stores were taking away business from Sears power tools (Craftsman)
- Best Buy and Circuit City were taking the consumer electronics business and appliances. Less customers buy Sears Kenmore.
- Target, Walmart, Williams-Sonoma, etc were taking housewares (pots, pans, etc) business
- consumers (especially kids) didn't want "department store brand" clothing from Sears/JCPenney because they were "uncool". They wanted the boutique brands (Guess jeans, Calvin Klein, etc)
- peak mall traffic was 1986 and malls started dying off after that. An easy way for me to remember that point in time is the 1985 movie "Back to The Future". When you watch the DeLorean spinning around the parking lot of Twin Pines Mall, remind yourself that you're seeing "peak mall".
- credit-cards criteria were loosened and easy credit was expanded. Sears no longer had a captive audience with the Sears credit-card that kept shoppers within Sears' "walled-garden". Before 1990s, if a young person had zero credit history, one of the first credit cards one attempted to get was the "Sears department store credit card". Once one built up credit history with it, he/she could then try to get Visa/Mastercard. In the meantime, they used the Sears card to spend money at Sears. To contrast the difference, today an 18-year-old college student can get a Visa/MC without a parent as a cosigner. That type of easy credit approval for a person with no job was unheard of in the 1960s/1970s.
There were lots of competitive forces that Sears' management didn't respond to long before Jeff Bezos arrived on the scene.
If one compresses the timeline, it does seem like Amazon killed off Sears when in reality, Sears was already getting killed off in the 10 years before 1995.
In the 1980s...
- Home Depot, Lowes, Builders Square, etc home improvement stores were taking away business from Sears power tools (Craftsman)
- Best Buy and Circuit City were taking the consumer electronics business and appliances. Less customers buy Sears Kenmore.
- Target, Walmart, Williams-Sonoma, etc were taking housewares (pots, pans, etc) business
- consumers (especially kids) didn't want "department store brand" clothing from Sears/JCPenney because they were "uncool". They wanted the boutique brands (Guess jeans, Calvin Klein, etc)
- peak mall traffic was 1986 and malls started dying off after that. An easy way for me to remember that point in time is the 1985 movie "Back to The Future". When you watch the DeLorean spinning around the parking lot of Twin Pines Mall, remind yourself that you're seeing "peak mall".
- credit-cards criteria were loosened and easy credit was expanded. Sears no longer had a captive audience with the Sears credit-card that kept shoppers within Sears' "walled-garden". Before 1990s, if a young person had zero credit history, one of the first credit cards one attempted to get was the "Sears department store credit card". Once one built up credit history with it, he/she could then try to get Visa/Mastercard. In the meantime, they used the Sears card to spend money at Sears. To contrast the difference, today an 18-year-old college student can get a Visa/MC without a parent as a cosigner. That type of easy credit approval for a person with no job was unheard of in the 1960s/1970s.
There were lots of competitive forces that Sears' management didn't respond to long before Jeff Bezos arrived on the scene.
Ben Thompson goes all the way back to 1962 to chart the forces that would end up killing Sears:
1962 was perhaps the most consequential year in retailing history: in Ohio the five-and-dime retailer F.W. Woolworth Company created a new discount retailer called Woolco; S.S. Kresge Corporation created Kmart in Michigan; the Dayton Company opened the first Target in Minnesota; and Sam Walton founded the first Walmart. All four were based on the same premise: branded goods didn’t need the expensive overhead of mass merchandisers, which meant prices could be lower. Lower prices served in turn as a powerful draw for customers, driving higher volumes, which meant more inventory turns, which increased profitability.
Sears, which had introduced a huge number of those brands to America’s middle class, first through their catalog and then through a massive post-World War II expansion into physical retail, was stuck in the middle: higher prices than the discounters, but much less differentiation than high-end department stores. By the time Buldak gave his statement the company’s fate as an also-ran was sealed, even though no one at Sears had a clue: Buldak’s stated mission of being “an integrated, powerful specialty merchant, with brand names and our own lines of exclusive merchandise” failed to consider whether customers gave a damn.
https://stratechery.com/2016/walmart-and-the-multichannel-tr...
1962 was perhaps the most consequential year in retailing history: in Ohio the five-and-dime retailer F.W. Woolworth Company created a new discount retailer called Woolco; S.S. Kresge Corporation created Kmart in Michigan; the Dayton Company opened the first Target in Minnesota; and Sam Walton founded the first Walmart. All four were based on the same premise: branded goods didn’t need the expensive overhead of mass merchandisers, which meant prices could be lower. Lower prices served in turn as a powerful draw for customers, driving higher volumes, which meant more inventory turns, which increased profitability.
Sears, which had introduced a huge number of those brands to America’s middle class, first through their catalog and then through a massive post-World War II expansion into physical retail, was stuck in the middle: higher prices than the discounters, but much less differentiation than high-end department stores. By the time Buldak gave his statement the company’s fate as an also-ran was sealed, even though no one at Sears had a clue: Buldak’s stated mission of being “an integrated, powerful specialty merchant, with brand names and our own lines of exclusive merchandise” failed to consider whether customers gave a damn.
https://stratechery.com/2016/walmart-and-the-multichannel-tr...
>today an 18-year-old college student can get a Visa/MC without a parent as a cosigner.
FWIW, when I was 18 I had to get a secured card[0] and I was barely able to get it (I had to go to my bank twice to appeal the decision). It's definitely different from 40 years ago but it's not super easy for most college students, and a lot of it came down to the fact that I had a few grand sitting in a checking account and a job that paid $12.50/hr. Some of my friends who didn't have that got flat out declined multiple times (I have one friend who has applied for three different cards and she's been denied all three times, with no credit history at all).
[0]: Basically, the card had a $500 credit limit and you had to give the bank $500 for a year, after a year if you've made all your payments they give you your $500 back. It still sat in my savings account generating "interest", but I couldn't spend it
FWIW, when I was 18 I had to get a secured card[0] and I was barely able to get it (I had to go to my bank twice to appeal the decision). It's definitely different from 40 years ago but it's not super easy for most college students, and a lot of it came down to the fact that I had a few grand sitting in a checking account and a job that paid $12.50/hr. Some of my friends who didn't have that got flat out declined multiple times (I have one friend who has applied for three different cards and she's been denied all three times, with no credit history at all).
[0]: Basically, the card had a $500 credit limit and you had to give the bank $500 for a year, after a year if you've made all your payments they give you your $500 back. It still sat in my savings account generating "interest", but I couldn't spend it
When did you turn 18? I started college in August 1999 and nobody I knew had any trouble getting a credit card. Many fraternities and sororities used credit card applications to freshmen as fundraisers. It was typically a $1000-$1500 credit limit. Some people I knew had $10k in credit card debt by the time they graduated...
I turned 18 about two years ago. Things might be different now because of the credit CARD act of 2009 which makes it slightly harder to take advantage of younger people (giving a $1500 card to people who have never had credit before and don't know how important it is to pay off the balance in full seems particularly evil)
https://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009
>Consumers under the age of 21 must prove that they have an independent income or get a co-signer before applying for a credit card. The Act also prevents credit card companies from ... wooing students with T-shirts, free pizza and other free gifts at university-sponsored events
https://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009
>Consumers under the age of 21 must prove that they have an independent income or get a co-signer before applying for a credit card. The Act also prevents credit card companies from ... wooing students with T-shirts, free pizza and other free gifts at university-sponsored events
Well at least the interest rate was only around 30% </s>.
[edit] The end of the story for me:
The credit card I got from that was amazingly bad. I had a bill put in the wrong mailbox in my dorm, so didn't get it until 3 days before it was due. I called up customer service:
Me: I can mail this today, but it is unlikely to make it there by the due date, I've always paid my bills on time, can I get a 1 week extension
CS: We can do an ACH for $20 or you will pay a late fee if the check you mail is even a day late.
Me: Seriously?
CS: Yes
Me: Okay, do that and cancel my account.
CS: Okay.
It's like they didn't even want me as a customer if I was going to pay my bills every week. Not a single attempt to retain me when I canceled my account. At this point, I had a Discover card, the CS reps for which were very kind, and my bank had just gotten my debit card on the Mastercard network (previously it was only an ATM card), so I had no absolute need for their card. Had this happened a few months earlier I might not have been willing to cancel as so many places don't take Discover.
[edit] The end of the story for me:
The credit card I got from that was amazingly bad. I had a bill put in the wrong mailbox in my dorm, so didn't get it until 3 days before it was due. I called up customer service:
Me: I can mail this today, but it is unlikely to make it there by the due date, I've always paid my bills on time, can I get a 1 week extension
CS: We can do an ACH for $20 or you will pay a late fee if the check you mail is even a day late.
Me: Seriously?
CS: Yes
Me: Okay, do that and cancel my account.
CS: Okay.
It's like they didn't even want me as a customer if I was going to pay my bills every week. Not a single attempt to retain me when I canceled my account. At this point, I had a Discover card, the CS reps for which were very kind, and my bank had just gotten my debit card on the Mastercard network (previously it was only an ATM card), so I had no absolute need for their card. Had this happened a few months earlier I might not have been willing to cancel as so many places don't take Discover.
> It's like they didn't even want me as a customer if I was going to pay my bills every week.
I semi-suspect you know this, but if you pay in full every month, they don't get to bundle your debt up and sell it off as a security. Interchange fees are competitive enough that it's probably close to break even (and getting more so every year), but the securities are comparatively pretty sweet for the issuers.
I semi-suspect you know this, but if you pay in full every month, they don't get to bundle your debt up and sell it off as a security. Interchange fees are competitive enough that it's probably close to break even (and getting more so every year), but the securities are comparatively pretty sweet for the issuers.
While you're probably correct its worth remembering that credit-card companies get their money from both sides:
* They earn money via the interest people way if they don't settle their bills in-full, and on-time.
* But they also take money for handling transactions at terminals, etc.
* They earn money via the interest people way if they don't settle their bills in-full, and on-time.
* But they also take money for handling transactions at terminals, etc.
>Things might be different now because of the credit CARD act of 2009 which makes it slightly harder to take advantage of younger people
No "might" or "slightly" about it. It's significantly different now. When I was 18 you only needed a faint pulse to get 10s of thousands of dollars in credit. People would hand out credit applications in dorm rooms, at events, in front of classrooms, just anywhere and everywhere you could think of. It was a different time.
No "might" or "slightly" about it. It's significantly different now. When I was 18 you only needed a faint pulse to get 10s of thousands of dollars in credit. People would hand out credit applications in dorm rooms, at events, in front of classrooms, just anywhere and everywhere you could think of. It was a different time.
While I did not get woo’ed, sadly enough, to get an unsecured credit card with Bank of America, all I needed to do was enter my personal information and some notion of income (without verification).
In less than a minute, BoA’s automated credit card application approved me and mailed out a $1000 limit card.
In less than a minute, BoA’s automated credit card application approved me and mailed out a $1000 limit card.
Yea this stuff changed drastically over the last 10 years. I got credit card limit that were like almost half of my (very low) annual income in 2007 with almost no history, while 4 years later my coworkers pulling >150k/yr couldn't get any credit card without doing the secured bullshit.
My brother-in-law got his first card in his early 20s, and around 2009. He had to go the route of getting a secured credit card, too. In his case, the issue was probably that he was trying to go for his first credit during the recession. He married my sister in 2010; they got their first apartment based on his income, but on her credit rating.
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There was a change back in like 2006 or something that made it harder for college kids to get credit -- have to demonstrate income, which as we know most don't. Conversely, when I was in college creditors were mass calling dorms to get signups. One kinda tricked me into "allowing them to send me an application in the mail" and a pre-approved credit card showed up instead. I never used it till a few years after I got a paying gig, but it did kinda work as a means of building credit via account age.
Had you taken on college loans? I know that's how I established my credit and, once I had that in my history, they were all to happy to give me a card with an absurd limit (for me, at the time, with only a work-study job) with little more than my name and SSN.
It seems strange that taking on a ton of unsecured debt would make creditors think it's more likely that you'll be able to pay off even more unsecured debt, but that seems to be how the system works, or at least worked two decades ago when I was in school. Perhaps the emergence of for-profit colleges that don't really offer their graduates the kind of post-schooling opportunities that traditional colleges do has changed the way that college loans are perceived since they no longer reliably predict future earnings the way they used to.
It seems strange that taking on a ton of unsecured debt would make creditors think it's more likely that you'll be able to pay off even more unsecured debt, but that seems to be how the system works, or at least worked two decades ago when I was in school. Perhaps the emergence of for-profit colleges that don't really offer their graduates the kind of post-schooling opportunities that traditional colleges do has changed the way that college loans are perceived since they no longer reliably predict future earnings the way they used to.
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Anecdotally, when I went appliance shopping 8 years ago I went to Sears not Best Buy. When I went tool shopping I preferred the lifetime guarantee of Craftsman. I wasn’t a pre-existing customer. I live within ~30 minutes of three large malls that all seem to be doing well. There is a Sears Hardware store that just closed in the last couple years.
I bought a pretty good mattress and also a good vacuum from Sears. They're not high-end but they're pretty damn good.
The only reason I had a vacuum at all in college was because Sears still stocked parts for 10 or 15 year old vacuums so I was able to repair someone's broken vacuum.
The only reason I had a vacuum at all in college was because Sears still stocked parts for 10 or 15 year old vacuums so I was able to repair someone's broken vacuum.
Sears owned Orchard Supply Hardware from 1996 to 2012. They never branded it as "Sears", though. "Sears Hardware" is a franchise, like Ace Hardware.
I went appliance shopping there too, around the same time. Cheap-ish fridge that's still going strong, and an LG washer and dryer (LG repaired the washer under warranty last year). The Sears I bought them from was razed a couple of years ago.
There are some "Sears home appliance showrooms", and an actual Sears about half an hour away, but there used to be 3 or 4 in that same area.
There are some "Sears home appliance showrooms", and an actual Sears about half an hour away, but there used to be 3 or 4 in that same area.
The "lifetime guarantee" of Craftsman just doesn't have much sway anymore. All of their tools are made in China junk that breaks if you look at it funny. The quality is just non-existent these days. Might as well just go to Harbor Freight if that's the kind of tool you need.
> consumers (especially kids) didn't want "department store brand" clothing from Sears/JCPenney because they were "uncool"
FWIW all my clothes were from Sears and JCPenney, my taste be damned. I know a lot of other kids my age (grew up in the 90s and 00s) were the same way, at least until quality tanked in the mid 00s.
FWIW all my clothes were from Sears and JCPenney, my taste be damned. I know a lot of other kids my age (grew up in the 90s and 00s) were the same way, at least until quality tanked in the mid 00s.
I still buy my jeans from JCPenny. Of course, I never was cool and still ain't.
These days, a store brand of clothes with respectable cachet is "Kirkland" from Costco. Basics like Kirkland jeans, underwear, sweatshirts, etc. I don't know if the kids like them, but a lot of adults wear Kirkland with pride. (Sort of like a billionaire driving an ecogreen Toyota Prius... an adult wearing Kirkland as a badge signaling "I shop at Costco which means I can afford Ralph Lauren but I'm smart enough to know that Kirkland is better quality for the money.")
You might not have been 'cool' but you were a step above the kids who's "mommas shopped at Kmart"
Actually (I got clothes there too) I wouldn't say the quality was much worse. The shirts, underwear, socks, etc were all fine for a kid.
Nonetheless, I had those quality jeans—you're absolutely right.
Nonetheless, I had those quality jeans—you're absolutely right.
> peak mall traffic was 1986 and malls started dying off after that.
One of my American relatives worked for Sears mail order business from the early '80s till it closed. They were saying in the '80s it was an awesome place to work, good benefits, there was so much potential there it seemed.
One of my American relatives worked for Sears mail order business from the early '80s till it closed. They were saying in the '80s it was an awesome place to work, good benefits, there was so much potential there it seemed.
Discover is still the easiest card for a student / young person to get without a cosigner. I used one to build up credit to get an Amazon Visa.
there were credit cards in 70-ies?
Yes
MasterCard (then known as Master Charge): http://i.imgur.com/BzZONEG.jpg
Visa (then known as Bank Americard): http://creditcardforum.com/blog/wp-content/uploads/2010/10/b...
AMEX: https://i.pinimg.com/236x/15/6c/5d/156c5d0e135a6f2014a95608e...
Fun fact, American Express still to this day uses the name Charles F Frost (usually written C F Frost) for all their credit card ads. He was an advertising executive in the 60s.
MasterCard (then known as Master Charge): http://i.imgur.com/BzZONEG.jpg
Visa (then known as Bank Americard): http://creditcardforum.com/blog/wp-content/uploads/2010/10/b...
AMEX: https://i.pinimg.com/236x/15/6c/5d/156c5d0e135a6f2014a95608e...
Fun fact, American Express still to this day uses the name Charles F Frost (usually written C F Frost) for all their credit card ads. He was an advertising executive in the 60s.
Sears is a textbook case of the evolution of a company. As the Atlantic points out they were really successful at capturing trends, but what Sear's secret was they were building infrastructure that let them respond to changes quickly.
Then sometime between 1975 and 1985 they seem to have started thinking they were successful because they were 'the best' and took their eye off the core competencies that made them nimble (logistics, accountable management practices) That is according to people who worked there at that time. Suddenly people who should not have been promoted (they weren't 'Sears people') were being promoted, and things were focused less on operations and more on public image.
The challenge is that you start managing to the effect rather than the cause. It is like companies that spend all of their time doing 'market research' and spend their time trying to be better than their perceived competitors at what their competitors are doing. They lose sight of why they were doing so well in the first place. "chasing your tail", "following the followers", lots of names for it, but they were being challenged by many up and coming brick and mortar competitors (K-Mart, Target, Walmart, Montgomery Wards, Etc.) By worrying about those threats they forgot to watch for the changes in the market, and that led to a lot of what would be difficult pain.
And yes, it is "easy" to see that looking backwards in time at their choices, but even in the 70's and 80's there were voices telling them that they were not focused on the right problems.
Then sometime between 1975 and 1985 they seem to have started thinking they were successful because they were 'the best' and took their eye off the core competencies that made them nimble (logistics, accountable management practices) That is according to people who worked there at that time. Suddenly people who should not have been promoted (they weren't 'Sears people') were being promoted, and things were focused less on operations and more on public image.
The challenge is that you start managing to the effect rather than the cause. It is like companies that spend all of their time doing 'market research' and spend their time trying to be better than their perceived competitors at what their competitors are doing. They lose sight of why they were doing so well in the first place. "chasing your tail", "following the followers", lots of names for it, but they were being challenged by many up and coming brick and mortar competitors (K-Mart, Target, Walmart, Montgomery Wards, Etc.) By worrying about those threats they forgot to watch for the changes in the market, and that led to a lot of what would be difficult pain.
And yes, it is "easy" to see that looking backwards in time at their choices, but even in the 70's and 80's there were voices telling them that they were not focused on the right problems.
They also moved from their old headquarters to the Sears Tower in 1973/74. Uprooting the whole physical social dynamic of a company to move to a new headquarters often does not go well. Good luck Apple.
My father (economics professor) said you can date the start of a company's demise from when they build a palace for a headquarters.
For one thing, the design of the palace becomes a huge distraction for top management. Once they move in, they start to believe they are the godlike businessman the palace suggests they are.
Yeah, the Apple saucer is a big risk.
For one thing, the design of the palace becomes a huge distraction for top management. Once they move in, they start to believe they are the godlike businessman the palace suggests they are.
Yeah, the Apple saucer is a big risk.
Is there a name for the phenomenon of companies building themselves a headquarters right as they begin to fail? I've heard that idea before, but haven't been able to find either a name for it, or any data on it.
"Edifice complex"
http://www.urbandictionary.com/define.php?term=edifice%20com...
The urbandictionary link refers specifically to college presidents & universities, but there've been a few articles about how it applies to corporations as well.
http://www.urbandictionary.com/define.php?term=edifice%20com...
The urbandictionary link refers specifically to college presidents & universities, but there've been a few articles about how it applies to corporations as well.
I seem to recall hearing that myself. Steve Blank has "The Curse of the a Building":
https://steveblank.com/2009/05/15/supermac-war-story-11-the-...
There's the economy-wide skyscraper curse:
http://www.chinadaily.com.cn/bizchina/2009-03/16/content_758...
https://steveblank.com/2009/05/15/supermac-war-story-11-the-...
There's the economy-wide skyscraper curse:
http://www.chinadaily.com.cn/bizchina/2009-03/16/content_758...
In the German Language you'd say "Buddenbrooks syndrome". The phenomenon is as old as the ages.
https://en.wikipedia.org/wiki/Buddenbrooks
https://en.wikipedia.org/wiki/Buddenbrooks
The thing Apple has going for it is that they already build a headquarters a long time ago, and also outgrew it a long time ago. Their employees are already used to working in buildings near but not in the headquarters, and being moved around in and out of the HQ campus.
Also, the new HQ is only a mile from the old one and they're going to keep the old one too.
So it's not the huge cultural shift of a new HQ -- it's more like just a new set of buildings.
It's true, they spent a lot of money making a nice new HQ, but not even 1/2 the employees will move into it.
Also, the new HQ is only a mile from the old one and they're going to keep the old one too.
So it's not the huge cultural shift of a new HQ -- it's more like just a new set of buildings.
It's true, they spent a lot of money making a nice new HQ, but not even 1/2 the employees will move into it.
You mean that the actual physical habits of people are factors to consider ? And if those aren't recreated, the work won't go as well ?
I read an article about it many years ago. Who you bump into and are physically near can create and maintain certain workflows and company culture. This was probably more important before personal computers and the internet. You are likely to have lunch with people you see and different business units can cross fertilize with greater ease. Moving from an organically grown bunch of buildings near each other, to a huge building with only elevator access to each floor, will change how people interact quite a bit.
https://www.thisamericanlife.org/radio-archives/episode/241/...
"Act 14" on this This American Life episode tells the story of what happened when the Vienna Sausage Company moved production to a new, purpose-built facility. If you'd rather read than listen, scroll down to "Act Fourteen" here, https://www.thisamericanlife.org/radio-archives/episode/241/...
It arguably exemplifies precisely what you're saying, except in a much more literal fashion.
"Act 14" on this This American Life episode tells the story of what happened when the Vienna Sausage Company moved production to a new, purpose-built facility. If you'd rather read than listen, scroll down to "Act Fourteen" here, https://www.thisamericanlife.org/radio-archives/episode/241/...
It arguably exemplifies precisely what you're saying, except in a much more literal fashion.
Then sometime between 1975 and 1985
See also: https://en.wikipedia.org/wiki/Early_history_of_private_equit...
See also: https://en.wikipedia.org/wiki/Early_history_of_private_equit...
You mean that easy money was the problem?
I've read this point in a few places as well, but it doesn't really explain why they closed the catalog.
Here I found an article from 1993 describing the move: http://www.nytimes.com/1993/01/26/business/sears-eliminating...
This was the same time the company was leaving the Sears Tower. I think Sears faced a number of bad decisions over the decades leading to its early and later decline.
Edit: Here is another article of the decision to cut the catalog - http://articles.chicagotribune.com/1993-01-26/news/930317224...
It ends with the extremely ironic, "Sears on Monday wasn't interested in the past. It was positioning itself for the future."
Here I found an article from 1993 describing the move: http://www.nytimes.com/1993/01/26/business/sears-eliminating...
This was the same time the company was leaving the Sears Tower. I think Sears faced a number of bad decisions over the decades leading to its early and later decline.
Edit: Here is another article of the decision to cut the catalog - http://articles.chicagotribune.com/1993-01-26/news/930317224...
It ends with the extremely ironic, "Sears on Monday wasn't interested in the past. It was positioning itself for the future."
I wonder if the seemingly shortsighted decision was influenced by the desire to appease stock analysts (who are more interested in next quarter's results than next decade's) by shedding costs quickly. Analysts seemed to think the company was heading in the right direction... few companies (aside from Amazon) have the luxury of telling analysts "We're forgoing profits now so we can build up our business"
A quote from that 1993 article:
Still, most analysts hesitated to say that the revamping alone would put Sears back on its feet. "Put it this way: They're off their knees," said George A. Ashur, director of corporate bond research at Chase Securities Inc. "This is without a doubt good medicine for the company, but I have to see a few quarters of good returns before I'm ready to ditch the conservative show-me attitude."
A quote from that 1993 article:
Still, most analysts hesitated to say that the revamping alone would put Sears back on its feet. "Put it this way: They're off their knees," said George A. Ashur, director of corporate bond research at Chase Securities Inc. "This is without a doubt good medicine for the company, but I have to see a few quarters of good returns before I'm ready to ditch the conservative show-me attitude."
At the time, mail order shopping was dying. Montgomery Ward and JC Penny were also bailing on mail order. The Sears model was for a pre-car America, where it was either Sears or some local overpriced retailers with no selection. By 1993, the US had malls everywhere there were people, Wal-Mart was taking on the job of servicing small towns, and the customer base of people reachable only by mail had shrunk.
Sears had the first good fulfillment system, but it was geared to the postal system and rail transport. It took about two weeks to get delivery on something from Sears, and you never knew what was out of stock until the package showed up. That allowed malls to beat them on convenience.
Sears had the first good fulfillment system, but it was geared to the postal system and rail transport. It took about two weeks to get delivery on something from Sears, and you never knew what was out of stock until the package showed up. That allowed malls to beat them on convenience.
Really interesting nytimes article.
> The operation, which also published 50 small specialty catalogues, only recently began accepting Visa and Mastercard for purchases, and for many years, customers had to pick up their purchases at a Sears store even though other catalogues would mail items directly to homes.
Its easy to be nostalgic but it really sounds like sears had already fallen significantly behind by the time they shutdown their catalog.
> The operation, which also published 50 small specialty catalogues, only recently began accepting Visa and Mastercard for purchases, and for many years, customers had to pick up their purchases at a Sears store even though other catalogues would mail items directly to homes.
Its easy to be nostalgic but it really sounds like sears had already fallen significantly behind by the time they shutdown their catalog.
> Its easy to be nostalgic but it really sounds like sears had already fallen significantly behind by the time they shutdown their catalog.
It's not unique to Sears either.
I know a few people who work at the Target HQ in Minneapolis and have heard stories in the past of executives being astounded by online shopping, especially the idea that people would do comparison shopping while in the store. Target has significantly increased their digital offerings since then but it's still far from the experience of Amazon.
It's not unique to Sears either.
I know a few people who work at the Target HQ in Minneapolis and have heard stories in the past of executives being astounded by online shopping, especially the idea that people would do comparison shopping while in the store. Target has significantly increased their digital offerings since then but it's still far from the experience of Amazon.
I know a few people who work at the Target HQ in Minneapolis and have heard stories in the past of executives being astounded by online shopping, especially the idea that people would do comparison shopping while in the store.
I look at Barnes & Noble as another company that is screwing the pooch by not doing a better job with Internet sales, and a better job integrating internet and meatspace (aka "click and mortar"). I do a lot of business with B&N but I almost never buy books from their online store. Why? Partly because their site sucks, looks & feels dated and klunky, lacks the selection of Amazon's site, and doesn't offer good recommendations like Amazon does.
And if I go into a B&N store and want to special order a book, I can get free shipping, if it goes to my home. But if I want them to ship it to the store so I can pick it up there, it costs extra. WTF? And if memory serves correctly, you can't return items bought online to a physical B&N store.
There's just so many ways that they are missing the boat and nobody seems to care.
I look at Barnes & Noble as another company that is screwing the pooch by not doing a better job with Internet sales, and a better job integrating internet and meatspace (aka "click and mortar"). I do a lot of business with B&N but I almost never buy books from their online store. Why? Partly because their site sucks, looks & feels dated and klunky, lacks the selection of Amazon's site, and doesn't offer good recommendations like Amazon does.
And if I go into a B&N store and want to special order a book, I can get free shipping, if it goes to my home. But if I want them to ship it to the store so I can pick it up there, it costs extra. WTF? And if memory serves correctly, you can't return items bought online to a physical B&N store.
There's just so many ways that they are missing the boat and nobody seems to care.
Don't get me started on B&N. As ridiculous as it sounds, I want to support B&N because at least they employ people who are somewhat local vs. an Amazon fulfillment center X miles away. Plus with that story of fake/reprinted books on Amazon, I'd rather buy directly from the retailer instead of a commingled pile.
My ideal B&N experience: go to their site, find the book I like, purchase it for the same price as Amazon (usually the prices are the same), then go pick it up at the store. But no, I can't do that. If I want to pick it up in store, I have to pay the "in store" price (which is often at 10-20% higher). No thanks.
My ideal B&N experience: go to their site, find the book I like, purchase it for the same price as Amazon (usually the prices are the same), then go pick it up at the store. But no, I can't do that. If I want to pick it up in store, I have to pay the "in store" price (which is often at 10-20% higher). No thanks.
I'm with ya. I kinda like supporting B&N and I do to a point. I live near a store and I go in the cafe for coffee all the time, and I do wind up buying books and magazines there. But I just find nothing at all appealing about shopping on bn.com, even with my member discount and whatever.
Whoever is running their e-commerce operation really ought to be fired. Or if the lack of awareness is coming from higher up, somebody (CEO?) ought to be fired.
Whoever is running their e-commerce operation really ought to be fired. Or if the lack of awareness is coming from higher up, somebody (CEO?) ought to be fired.
But they are very different experiences. Amazon is the grand prize winner in the contest of looking up something you already know you want to buy, bundling it up with some shampoo you forgot to pick up at the grocery store earlier, and having all of that on your doorstep in two days.
Amazon's Achilles Heel is browsing. Their selection may feature 100,000 relevant items to my search but I seem to only find shitty versions of products, or at too high prices, regardless of how I mess with the search filter.
Target is great when you have an idea of what you might like to buy: you can try on shoes, sit on furniture, feel the bedsheets - you get the idea.
Sometimes the hassle of not getting the right size/feel of a product bought online, and having to repackage it and wait for another delivery simply isn't worth it compared to driving out to your local Suburban Mall Hell to just go and buy things like mom and dad used to do.
Amazon's Achilles Heel is browsing. Their selection may feature 100,000 relevant items to my search but I seem to only find shitty versions of products, or at too high prices, regardless of how I mess with the search filter.
Target is great when you have an idea of what you might like to buy: you can try on shoes, sit on furniture, feel the bedsheets - you get the idea.
Sometimes the hassle of not getting the right size/feel of a product bought online, and having to repackage it and wait for another delivery simply isn't worth it compared to driving out to your local Suburban Mall Hell to just go and buy things like mom and dad used to do.
> Amazon's Achilles Heel is browsing. Their selection may feature 100,000 relevant items to my search but I seem to only find shitty versions of products
I would say their major problem is the lack of curation. The Amazon Marketplace brought all the garbage of eBay sellers to Amazon, and mixed it in with everything else.
As a result, you have to carefully watch out for things fulfilled by third parties (often subject to high shipping and strange return policies), and items with sketchy review histories. I can't find an article on it now, but I've come across items where it seems like the manufacturer pulled a bait-and-switch. The initial reviews are all very positive, and all the recent reviews are low and talk about poor product quality -- yet the item still has a reasonably high score. Did they seed reviews themselves? Did they actually change to a lower quality product? Who knows.
There's certain categories of products that I find to be an an utterly frustrating shopping experience on Amazon -- cell phone accessories is the one that immediately comes to mind.
I would say their major problem is the lack of curation. The Amazon Marketplace brought all the garbage of eBay sellers to Amazon, and mixed it in with everything else.
As a result, you have to carefully watch out for things fulfilled by third parties (often subject to high shipping and strange return policies), and items with sketchy review histories. I can't find an article on it now, but I've come across items where it seems like the manufacturer pulled a bait-and-switch. The initial reviews are all very positive, and all the recent reviews are low and talk about poor product quality -- yet the item still has a reasonably high score. Did they seed reviews themselves? Did they actually change to a lower quality product? Who knows.
There's certain categories of products that I find to be an an utterly frustrating shopping experience on Amazon -- cell phone accessories is the one that immediately comes to mind.
Also now long-dead Borders; linking this post I'd come upon years ago because it has links to all the relevant posts in the first paragraph (even though one of them is more focused on the online shopping aspect): http://theferrett.livejournal.com/1641949.html
> only recently began accepting Visa and Mastercard for purchases
Looks like they got so used to having a monopoly that even after they lost it they couldn't let it go.
Looks like they got so used to having a monopoly that even after they lost it they couldn't let it go.
When I was a kid my mother had a dozen different department store charge cards, and you could only use them at that store. What a nightmare that must have been when it came time to pay bills.
It's really crazy when you look back and think about it.
It's really crazy when you look back and think about it.
They actually tried a diversification strategy by discontinuing the big-book and spinning up specialty books. The idea was that they could get a higher $/book by targeting specific interests. This helps in the world of prospecting (i.e. buying names from co-ops like Epsilon). It was also a strategy that would allow them to take advantage of bundling innovations at USPS like co-mailing. Obviously, none of it worked which was more of a function of merchandising than anything else.
Why was leaving the Sears Tower a bad decision? What ramifications did it have?
Building the Sears Tower was a bad idea. It ended up being a waste of money. Reading those articles it's clear that they were hemorrhaging money in 1990, compared to being profitable 20 years earlier.
They weren't hemorrhaging money at the time. Sears was profitable from 1980 to 1990, including fiscal 1990.
1990 is approximately the year when their earnings started to plunge toward losses. Earnings nearly got cut in half from 1989 vs 1990. At the time Walmart was still the #2 retailer, having just passed Kmart (for the curious, Walmart went from $32b in sales for 1990 to $485b by 2015; now Walmart is in a position where their earnings are falling and sales growth has been flat for years as Amazon starts to eat into them).
This NY Times article from January 1991, describes the atmosphere well:
http://www.nytimes.com/1991/01/28/business/big-change-is-exp...
1990 is approximately the year when their earnings started to plunge toward losses. Earnings nearly got cut in half from 1989 vs 1990. At the time Walmart was still the #2 retailer, having just passed Kmart (for the curious, Walmart went from $32b in sales for 1990 to $485b by 2015; now Walmart is in a position where their earnings are falling and sales growth has been flat for years as Amazon starts to eat into them).
This NY Times article from January 1991, describes the atmosphere well:
http://www.nytimes.com/1991/01/28/business/big-change-is-exp...
The Sears Tower was built in 1970-1973 though? I'm still not seeing what it had to do with the profitability of the company in 1990. And you originally said that leaving it was a bad idea, not constructing it.
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By the 80's, Service Merchandize had green screen "Silent Sam" terminals in all their stores you could walk up to, order what you wanted, pay right there, then walk to the back of the store and pick it up from a conveyer belt from the warehouse area, a bit like picking up your luggage.
Imagine if this kind of system went through a dial-up and the items were simply shipped to you. We would have had mass e-commerce in 1985. The French did actually have something like this via their minitel system, fwiw.
In the end, open-ish standards and SSL won the race, which is probably a good thing. I'd rather be stuck with a broken-ish web than locked into these various proprietary designs controlled by one corporation. Even if Sears/Prodigy would have delivered these services, they would have been crushed by the web.
Imagine if this kind of system went through a dial-up and the items were simply shipped to you. We would have had mass e-commerce in 1985. The French did actually have something like this via their minitel system, fwiw.
In the end, open-ish standards and SSL won the race, which is probably a good thing. I'd rather be stuck with a broken-ish web than locked into these various proprietary designs controlled by one corporation. Even if Sears/Prodigy would have delivered these services, they would have been crushed by the web.
For some reason I really hate the name "Service Merchandise". I'm only familiar with it from Wheel of Fortune, I don't know where the stores were located. Something about the name, though, like "soft serve". Grammatically ambiguous is the best way I can describe it.
It was a regional company, so depending on where you're from, it's not surprising that you never saw any of their showrooms. In other areas you had places like BEST (not to be confused with Best Buy). In my region (Northwest), there was a similar company named Jafco, which was purchased by BEST, along with a number of other chains.
Yup, I am from the Northwest and remember Jafco and then BEST.
In the 1980s the number of people who had dial-up online services at home was tiny. It wasn't anything close to mainstream until the mid/late 1990s -- well after the start of Sears' financial difficulties.
Yes, in 1993, when Sears decided to close their catalog, much of the internet was still considered off-limits for commercial purposes [1]. We take today's use of the internet for shopping (and other commercial uses) for granted, but in 1993 it was not at all 100% clear that such a use would be allowed.
[1] Business Use of the World-Wide Web, 1995, http://www.informationr.net/ir/1-2/paper6.html ("Commercial activity on the Internet has only recently been possible.")
[1] Business Use of the World-Wide Web, 1995, http://www.informationr.net/ir/1-2/paper6.html ("Commercial activity on the Internet has only recently been possible.")
Everyone in this thread is forgetting 1 thing:
PHONE shopping.
Yes. Where you have a phone and call someone to place an order.
Digital switching and the 1800 (nationwide toll free) number developed in the early/mid 1980's I'm sure had an impact here...
PHONE shopping.
Yes. Where you have a phone and call someone to place an order.
Digital switching and the 1800 (nationwide toll free) number developed in the early/mid 1980's I'm sure had an impact here...
Toll free numbers were developed in the 60s - https://en.wikipedia.org/wiki/Wide_Area_Telephone_Service
But home computer adoption was skyrocketing at the time. My argument here is that once people saw the utility of this then they'd buy modems, the same way they saw the utility of printing and bought printers for their computers.
At the time, a modem was the same price, if not cheaper, than a printer or a floppy disk drive. It wasn't exactly a luxury expense.
At the time, a modem was the same price, if not cheaper, than a printer or a floppy disk drive. It wasn't exactly a luxury expense.
Ah, you're suggesting Sears could have run their own dial-up shopping service? Maybe, but I think it was too early. It would have been a text mode system (home computers, such as they were in the 1980s, were systems like Apple II or Comnmodore or TRS-80 or maybe CP/M or DOS if you had a "business" computer at home).
Macintosh computers were available, but expensive and not a typical home computer. And bandwidth on dial up at that time was maybe 2400 baud, way too slow to send any kind of detailed images of products that consumers would want in a catalog.
It might have gained some adoption, but in that era I think most consumers would have found filling out an order form and faxing or mailing it in easier.
Macintosh computers were available, but expensive and not a typical home computer. And bandwidth on dial up at that time was maybe 2400 baud, way too slow to send any kind of detailed images of products that consumers would want in a catalog.
It might have gained some adoption, but in that era I think most consumers would have found filling out an order form and faxing or mailing it in easier.
I was active in the BBS scene during that time. What could be done over 1200-2400 baud was fairly impressive considering the technical limits. Especially when ANSI and RIP graphics became the norm. Later 4800 and 9600 modems became cheap. By the late 80s these were the norm.
Ordering systems would have been trivial to implement if the political and commercial will was there. Not too long after this you had Prodigy, Compuserve, and AOL offering these kinds of services. I remember they let you order flowers, buy software, etc from their online systems.
The web and tcp/ip internet replacing it all didn't come until much, much later. From 1983-1995 online services were ruled by non-TCP/IP dial-up BBS services and proprietary services like Prodigy. Home internet didn't take off until 1995-1996 and even then it was fairly limited.
>Apple II or Comnmodore
On top of all the PC clones running DOS and Windows (Windows 1.0 was 1985), Amigas, Macs (as you mention), Timex/Sinclair, etc.
Macs were home computers, there were just less of them. Back in those days people paid large prices for home machines, so the pricetags might seem high today but the utility/novelty factors made up for it.
Ordering systems would have been trivial to implement if the political and commercial will was there. Not too long after this you had Prodigy, Compuserve, and AOL offering these kinds of services. I remember they let you order flowers, buy software, etc from their online systems.
The web and tcp/ip internet replacing it all didn't come until much, much later. From 1983-1995 online services were ruled by non-TCP/IP dial-up BBS services and proprietary services like Prodigy. Home internet didn't take off until 1995-1996 and even then it was fairly limited.
>Apple II or Comnmodore
On top of all the PC clones running DOS and Windows (Windows 1.0 was 1985), Amigas, Macs (as you mention), Timex/Sinclair, etc.
Macs were home computers, there were just less of them. Back in those days people paid large prices for home machines, so the pricetags might seem high today but the utility/novelty factors made up for it.
RIP graphics was like magic in its day!
In the mid-eighties to mid-nineties home computers still cost several thousands of dollars. Installing a modem was no small feat either in computers from that time.
Some were cheap. The TI 99/4a was almost being given away in the mid-80s. But I don't ever remember it being popular for accessing dial-up. Its Terminal Emulator implemented a proprietary protocol and was actually more popular for its text-to-speech capability.
My high end 486 dx2/66 was 2000 usd, in 1993, plus monitor.
The failure of Sears is really the success of Chinese manufacturing and the rise of disposability and dramatically lower prices that followed. Craftsman used to be tools that would last you for decades, but you paid. Now it’s the same crap everyone else is selling with a different logo thrown on.
> Craftsman used to be tools that would last you for decades, but you paid. Now it’s the same crap everyone else is selling with a different logo thrown on.
Only certain items. They certainly have fallen victim to slapping the Craftsman label on cheap plastic "things" out of desperation which has definitely impacted their reputation as of late, but for those of us who can't pay Snap-on prices for everything what remains of Sears' actual tools are still light years better than the malleable/rusty junk Lowe's, Home Depot, Amazon and Walmart sell.
Only certain items. They certainly have fallen victim to slapping the Craftsman label on cheap plastic "things" out of desperation which has definitely impacted their reputation as of late, but for those of us who can't pay Snap-on prices for everything what remains of Sears' actual tools are still light years better than the malleable/rusty junk Lowe's, Home Depot, Amazon and Walmart sell.
http://pressurewashr.com/tool-industry-behemoths/
Here's a list of which companies own which brands. A lot of them probably come out of the same assembly lines with different names slapped on.
Here's a list of which companies own which brands. A lot of them probably come out of the same assembly lines with different names slapped on.
Dewalt, Makita, Milwauke, etc are 'malleable/rusty junk'?
The only Craftsmen tools I see on job sites now are wrenches and screwdrivers.
The only Craftsmen tools I see on job sites now are wrenches and screwdrivers.
No, I didn't have power tools in mind when I said that. Anything with a motor or more than a few moving parts is worth shopping around.
The basic hand tools and precision instruments are the Craftsman products I find are still worth using. The wrenches, torque wrenches, calipers, hammers, screwdrivers and the like. Nothing electronic or mostly plastic.
The basic hand tools and precision instruments are the Craftsman products I find are still worth using. The wrenches, torque wrenches, calipers, hammers, screwdrivers and the like. Nothing electronic or mostly plastic.
Those are the durable ones that craftsman makes.
Sears sold the Craftsman brand this year to Stanley Black & Decker (who also own DeWalt, Porter Cable, Bostich, and Mac among others).
This is a problem with software as well -- someone creating quality long-term-viable systems has to fight harder than someone creating shaky facades. Everyone wants long-term-viable systems, but it is an easier, faster, cheaper task to build junk that lets you meet/beat this quarter's numbers.
I wonder if that mentality just grew beyond the point of no return.
I wonder if that mentality just grew beyond the point of no return.
If you watch DIYers, technicians or engineers on youtube you'll see that.
You also get to see differences between product you cannot see. I just saw a super glue benchmark and well loctite won, but some "neat" brands failed early.
You also get to see differences between product you cannot see. I just saw a super glue benchmark and well loctite won, but some "neat" brands failed early.
Sears was such a dominant player at EXACTLY what Amazon does that at one point... more Americans had Sears catalogs than indoor plumbing.
It use to be normal to take the Sears catalog out to the outhouse and use it for toilet paper.
Retail is flat circle, you just move the counter between the seller and the customer. Some generations like picking out the products, some generations like having someone pick it out for them. Some like it getting delivered, some like picking it up.
Not much changes... people need goods... but no one makes all the goods they need.
It use to be normal to take the Sears catalog out to the outhouse and use it for toilet paper.
Retail is flat circle, you just move the counter between the seller and the customer. Some generations like picking out the products, some generations like having someone pick it out for them. Some like it getting delivered, some like picking it up.
Not much changes... people need goods... but no one makes all the goods they need.
Sears had 120 years of experience selling stuff to people through the mail. It's unbelievable how they managed to not parlay that into what amazon is now.
> co-founded an ISP (Prodigy)
Famous for being one of the least competently-managed joint ventures of all time.
Famous for being one of the least competently-managed joint ventures of all time.
Prodigy was truly awful. As I recall, it attempted to appeal to non-techies with a graphical interface at a time when computers really weren't fast enough and color graphics sucked (CGA). Just terrible in comparison to commercial services like CIS as well as BBSs (both paid and free).
Weird, because I was on Prodigy and it worked beautifully for me; and it's the only reason I'll even give online gaming a marginal glance nowadays.
I often wonder what the story of Sears means for Amazon. I think at first, my thinking was that what did Sears in was not noticing the shift to e-commerce like Amazon did, and that to unseat Amazon, it will take another shift that an upstart sees that they don't. Then however, I start to wonder what shift might that be? Voice assistants, it seems like Amazon is leading the way, not that it will be taken by surprise. Logistics? Seems like they are a logistics first company. I guess I can't see the future though, like everyone else.
I think for now I've settled on that the similarities are just that, similarities. Two things with some common history don't have to share the same fate. And looking for lessons in the history of one to apply to the other might be more of a false equivocation than we think. The times are fundamentally different, so perhaps though their stories echo each other, they are fundamentally different companies.
I think for now I've settled on that the similarities are just that, similarities. Two things with some common history don't have to share the same fate. And looking for lessons in the history of one to apply to the other might be more of a false equivocation than we think. The times are fundamentally different, so perhaps though their stories echo each other, they are fundamentally different companies.
Amazon is actually obsessed with NOT becoming Sears. Internally, companies like Sears are referred to as "Day 2 companies." Day 2 companies are trying to maintain the status quo. Day 1 companies, like Amazon, are constantly trying to be disruptive and innovative.
Being called "Day 2" is one of the worst insults within Amazon.
Being called "Day 2" is one of the worst insults within Amazon.
So if and when Amazon is blindsided, their disruptor may come from such a derided direction?
The only constant is change. Until it isn't.
More likely though, Amazon gets complacent eventually.
The only constant is change. Until it isn't.
More likely though, Amazon gets complacent eventually.
There will be a day 0 company along soon enough, there always is
Yeah, I'm usually pretty quick with my upvote, even for articles that appear interesting at a glance, or articles that might spark interesting conversation, but I didn't do upvote this article. While I found it okay to read, the comparison between Amazon and Sears, fundamental to the whole thing, just feels like too much of a stretch to me.
I think the comparison between car insurance and AWS was the breaking point for me.
I think the comparison between car insurance and AWS was the breaking point for me.
Logistics? Seems like they are a logistics first company.
Perhaps we should be looking at logistics companies instead of retail companies as a model.
(P.S. "False equivocation" is a tautology. http://www.dictionary.com/browse/equivocation )
Perhaps we should be looking at logistics companies instead of retail companies as a model.
(P.S. "False equivocation" is a tautology. http://www.dictionary.com/browse/equivocation )
You learn something every day, thanks!
The article didn't mention that Sears almost sunk itself with overwhelming logistical challenges in the early mail order days. It was a close call; if they didn't get a handle on those challenges back then, the capital inefficiencies would have erased them. This article alludes to the problems [1], but there was one article I can't find now that gave some specific examples of the astounding inefficiencies they successfully grappled with. When starting, it was far from obvious that mail order would succeed, just like it was far from obvious that general retailing over the Net would be successful in many categories when Amazon started.
> Then however, I start to wonder what shift might that be?
Not possible, but what I would like to see as a shift: Much deeper logistical integration with stakeholders that involve sophisticated, complex, ever-evolving, and hard-to-impossible-to-reproduce trust relationships between manufacturers, the retailer, the transport infrastructure the retailer depends upon, and the end-consumer. Turns the Net retailer into an end-consumer's direct-from-producer supply chain manager, cut out vast swathes of distribution middle layers, and pass savings directly to the end-consumer, in exchange for embedded preferences shared by the end-consumer over a long period of time (decades). There is yet to emerge a retailer I would trust with sufficient monitoring capabilities to deeply embed within my household, auto-manage all the various supplies, lifting the cognitive load of that aspect of household management. Even if one did emerge, they wouldn't have the history established that I would trust they wouldn't change to monetize that trust later on, because existing incentive structures make that trust very difficult to maintain.
On a concrete scale, I'd be happy to establish that kind of relationship to auto-monitor and auto-order direct from producers various groceries and consumables, for example. And let machine learning pick up enough data from my habits to establish my preferred level of BIFL-ness/value/zero-wastage (or other quality axes), combining with others in my same selection criteria strata to crowdsource the selection results, and auto-suggest best-fit matches, with accompanying explanations, reviews, and historical reviews (an area Amazon currently has a gap at systematizing---very difficult to find out how many products do over long periods of time). For the producer and retailer, this shifts constant fighting for consumer attention to a vast steady demand that they can plan around and address in many ways logistically; if a producer knew the consumer trusted the product that came in the package was X brand dishwasher soap for example, then the packaging can be plain, completely recyclable, and perhaps even reusable, and even delivery routes can be optimized. However, the way the market currently structures incentives, many metrics are excessively gamed by the producers or it outright goes-to-the-highest-bidder, or producers and retailers work together to dilute initially-high-quality offerings over time. The Holy Grail of many marketing execs is this kind of locked-in preference that simply exists as a consumer's background radiation; I'd be happy to play along with that for specific strata of quality metrics, for an expressed explicit profit margin granted to that supply chain, if I knew I wouldn't get fleeced over time.
[1] http://www.searsarchives.com/history/history1900s.htm
> Then however, I start to wonder what shift might that be?
Not possible, but what I would like to see as a shift: Much deeper logistical integration with stakeholders that involve sophisticated, complex, ever-evolving, and hard-to-impossible-to-reproduce trust relationships between manufacturers, the retailer, the transport infrastructure the retailer depends upon, and the end-consumer. Turns the Net retailer into an end-consumer's direct-from-producer supply chain manager, cut out vast swathes of distribution middle layers, and pass savings directly to the end-consumer, in exchange for embedded preferences shared by the end-consumer over a long period of time (decades). There is yet to emerge a retailer I would trust with sufficient monitoring capabilities to deeply embed within my household, auto-manage all the various supplies, lifting the cognitive load of that aspect of household management. Even if one did emerge, they wouldn't have the history established that I would trust they wouldn't change to monetize that trust later on, because existing incentive structures make that trust very difficult to maintain.
On a concrete scale, I'd be happy to establish that kind of relationship to auto-monitor and auto-order direct from producers various groceries and consumables, for example. And let machine learning pick up enough data from my habits to establish my preferred level of BIFL-ness/value/zero-wastage (or other quality axes), combining with others in my same selection criteria strata to crowdsource the selection results, and auto-suggest best-fit matches, with accompanying explanations, reviews, and historical reviews (an area Amazon currently has a gap at systematizing---very difficult to find out how many products do over long periods of time). For the producer and retailer, this shifts constant fighting for consumer attention to a vast steady demand that they can plan around and address in many ways logistically; if a producer knew the consumer trusted the product that came in the package was X brand dishwasher soap for example, then the packaging can be plain, completely recyclable, and perhaps even reusable, and even delivery routes can be optimized. However, the way the market currently structures incentives, many metrics are excessively gamed by the producers or it outright goes-to-the-highest-bidder, or producers and retailers work together to dilute initially-high-quality offerings over time. The Holy Grail of many marketing execs is this kind of locked-in preference that simply exists as a consumer's background radiation; I'd be happy to play along with that for specific strata of quality metrics, for an expressed explicit profit margin granted to that supply chain, if I knew I wouldn't get fleeced over time.
[1] http://www.searsarchives.com/history/history1900s.htm
Probably reliant on a fundamentally new platform(?). If we do end up with a rich AR world (a la Rainbows End), perhaps it will simply be an instant purchase based on lived context (e.g. Run out of something? Instant order. See something you like? Instant order.)
That said, seems surprising that Amazon would miss that boat.
That said, seems surprising that Amazon would miss that boat.
I think you're right that Amazon won't miss this boat (but someone might be able to do it better than them). Amazon are already looking at printing instant-order dash buttons directly on products.
I think the things that could threaten amazon's core business one day are:
3D printing. Whether the designs are free or paid for, its not a given that you'll buy the designs through Amazon. You might get the filament through them, but that's a fraction of the value they currently capture.
Sharing, rental and communal ownership. Many of the things I buy from Amazon are never used full time. Whether at a local or national scale the norm could shift to communal resources rather than private ownership. Particularly as city apartments get smaller and have less storage.
Direct ordering from China or other producers. Amazon have already lost this to alibaba. If we started ordering more everyday things direct, this could hit Amazon.
Full AI Ascension. If we completely leave corporeal existence behind, it would put a dent in Amazon's business. Although, on second thoughts, we'd probably be running on AWS...
I think the things that could threaten amazon's core business one day are:
3D printing. Whether the designs are free or paid for, its not a given that you'll buy the designs through Amazon. You might get the filament through them, but that's a fraction of the value they currently capture.
Sharing, rental and communal ownership. Many of the things I buy from Amazon are never used full time. Whether at a local or national scale the norm could shift to communal resources rather than private ownership. Particularly as city apartments get smaller and have less storage.
Direct ordering from China or other producers. Amazon have already lost this to alibaba. If we started ordering more everyday things direct, this could hit Amazon.
Full AI Ascension. If we completely leave corporeal existence behind, it would put a dent in Amazon's business. Although, on second thoughts, we'd probably be running on AWS...
There are more mundane ends to Amazon possible.
1. If shareholders turn on the company for some reason, it could cause a chain reaction as the margins are so thin and operations costs growing.
Normal tech companies are more insulated from these kinds of problems as they don't require physical assets like traditional companies and take extremely healthy margins.
Amazon is balanced on a knife's edge, financially.
2. Actions by the US government could also be a threat worth considering as Amazon is a monopoly now. It currently is thought to not hurt the consumer. At the same time, the value in Amazon is the thought that they could 'turn on the profit faucet anytime' but when that happens, they'll almost certainly not be good for the consumer.
3. Jeff Bezos is also a single point of failure. He's amazing but probably still mortal. Amazon might not weather his absence well.
1. If shareholders turn on the company for some reason, it could cause a chain reaction as the margins are so thin and operations costs growing.
Normal tech companies are more insulated from these kinds of problems as they don't require physical assets like traditional companies and take extremely healthy margins.
Amazon is balanced on a knife's edge, financially.
2. Actions by the US government could also be a threat worth considering as Amazon is a monopoly now. It currently is thought to not hurt the consumer. At the same time, the value in Amazon is the thought that they could 'turn on the profit faucet anytime' but when that happens, they'll almost certainly not be good for the consumer.
3. Jeff Bezos is also a single point of failure. He's amazing but probably still mortal. Amazon might not weather his absence well.
This is a good list. But I'm wondering what makes you think Amazon has lost direct ordering from China to Alibaba? Amazon makes this process pretty smooth, where a Chinese vendor can directly compete alongside other marketplace sellers. For Alibaba, on the other hand, you're going to a special site based on the expectation of getting cheap stuff from China.
This means that at least for me, most of my direct-from-China purchases have been from Amazon. Though I'm also often happy to pay a little extra for FBA, which also seems like a great way to maximize value for both consumers and Chinese manufs.
This means that at least for me, most of my direct-from-China purchases have been from Amazon. Though I'm also often happy to pay a little extra for FBA, which also seems like a great way to maximize value for both consumers and Chinese manufs.
It is so much cheaper to ship an item from China then from within the United States. Shipping is subsidized in China and then the US Post Office will take the item and deliver it the rest of the way for free. If I can wait 4 weeks for an item I try and buy direct from China.
I would add:
airbnb like model for warehousing/fullfilment, for capital efficiency and closeness to customers.
In Europe: China's railway project.
Control of self-driving vehicles by Google for a few years , and insistence they'd be used to build a competitive network against Amazon.
airbnb like model for warehousing/fullfilment, for capital efficiency and closeness to customers.
In Europe: China's railway project.
Control of self-driving vehicles by Google for a few years , and insistence they'd be used to build a competitive network against Amazon.
Sear's, unfortunately, has become a sad shadow of its former self. In particular their CEO, Eddie Lampert, has enjoyed a nightmarish rein-of-power based on "Ayn Rand" principles that have been driving the once mighty store into the ground. (see http://www.businessinsider.com/how-eddie-lampert-set-sears-u... and http://www.pbs.org/newshour/making-sense/column-this-is-what...)
Thanks for those excellent links.
The descriptions of applied Randian Objectivism in Honduras are particularly... noteworthy:
"The greatest examples of libertarianism in action are the hundreds of men, women and children standing alongside the roads all over Honduras. The government won’t fix the roads, so these desperate entrepreneurs fill in potholes with shovels of dirt or debris. They then stand next to the filled-in pothole soliciting tips from grateful motorists. That is the wet dream of libertarian private sector innovation."
The descriptions of applied Randian Objectivism in Honduras are particularly... noteworthy:
"The greatest examples of libertarianism in action are the hundreds of men, women and children standing alongside the roads all over Honduras. The government won’t fix the roads, so these desperate entrepreneurs fill in potholes with shovels of dirt or debris. They then stand next to the filled-in pothole soliciting tips from grateful motorists. That is the wet dream of libertarian private sector innovation."
>They then stand next to the filled-in pothole soliciting tips from grateful motorists. That is the wet dream of libertarian private sector innovation.
Probably a more apt 'libertarian utopia' would be an entrepreneur buying land from consenting property owners (Converse to the government forcing people to move and not respecting their property rights via eminent domain), build a road (via a decentralized, competitive bidding process rather than a single point of economic co-option opportunity such as a state) and then charging access to the road (with guards in low-tech community, Toll-payment box in medium tech community, and a Bitcoin Lightning-Network payment channel in a high-tech society.) ;]
Probably a more apt 'libertarian utopia' would be an entrepreneur buying land from consenting property owners (Converse to the government forcing people to move and not respecting their property rights via eminent domain), build a road (via a decentralized, competitive bidding process rather than a single point of economic co-option opportunity such as a state) and then charging access to the road (with guards in low-tech community, Toll-payment box in medium tech community, and a Bitcoin Lightning-Network payment channel in a high-tech society.) ;]
Roads are built by competitive bids.
1) "In 1969, Sears, Roebuck & Co. was the largest retailer in the world, with about 350,000 employees. Sears executives decided to consolidate the thousands of employees in offices distributed throughout the Chicago area into one building on the western edge of Chicago's Loop. " [1]
2) "... Parkinson’s Law of Buildings. This he defines as follows; ‘a perfection of planned layout is achieved only by institutions on the point of collapse… Perfection of planning is a symptom of decay. During a period of exciting discovery or progress there is not time to plan the perfect headquarters. The time for that comes later, when all the important work has been done.’" [2]
3) "Amazon HQ2 will be Amazon’s second headquarters in North America. " [3]
Now this is not the beginning. It is not even the end of the beginning. But it is, perhaps, the beginning of the end.
[1] https://en.wikipedia.org/wiki/Willis_Tower [2] https://johannesdeberlaymont.com/2016/06/10/c-northcote-park... [3] https://www.amazon.com/b?ie=UTF8&node=17044620011
2) "... Parkinson’s Law of Buildings. This he defines as follows; ‘a perfection of planned layout is achieved only by institutions on the point of collapse… Perfection of planning is a symptom of decay. During a period of exciting discovery or progress there is not time to plan the perfect headquarters. The time for that comes later, when all the important work has been done.’" [2]
3) "Amazon HQ2 will be Amazon’s second headquarters in North America. " [3]
Now this is not the beginning. It is not even the end of the beginning. But it is, perhaps, the beginning of the end.
[1] https://en.wikipedia.org/wiki/Willis_Tower [2] https://johannesdeberlaymont.com/2016/06/10/c-northcote-park... [3] https://www.amazon.com/b?ie=UTF8&node=17044620011
> 2) "... Parkinson’s Law of Buildings. This he defines as follows; ‘a perfection of planned layout is achieved only by institutions on the point of collapse… Perfection of planning is a symptom of decay. During a period of exciting discovery or progress there is not time to plan the perfect headquarters. The time for that comes later, when all the important work has been done.’" [2]
It seems like this would apply more to Apple's campus than Amazon... but I haven't really seen anyone suggesting that.
It seems like this would apply more to Apple's campus than Amazon... but I haven't really seen anyone suggesting that.
Don't forget the real estate shenanigans.
1. Slowly but steadily run the retail operation into the ground.
2. Sell the real estate to your own REIT, and use the proceeds to prop up the stores - but now they're on the hook for rent.
3. Continue running the stores into the ground, and when they inevitably can't make the rent, shut them down. Your REIT now holds a lot of prime real estate that can be sold or rented to others.
1. Slowly but steadily run the retail operation into the ground.
2. Sell the real estate to your own REIT, and use the proceeds to prop up the stores - but now they're on the hook for rent.
3. Continue running the stores into the ground, and when they inevitably can't make the rent, shut them down. Your REIT now holds a lot of prime real estate that can be sold or rented to others.
So is Amazon going to start getting into the housing buisness next?
https://en.wikipedia.org/wiki/Sears_Catalog_Home
https://en.wikipedia.org/wiki/Sears_Catalog_Home
Muji in Japan does this. I would not be surprised if there's at least one 6-pager in Day One on housing in some shape or form.
I was impressed to see how small a space Panasonic/PanaHome could build you a house or apartment tower in Japan. The apartment itself was made from nice material and pretty livable for being 50 ft^2. (Meanwhile in California, no way to escape beige carpet and 80F interiors with no A/C.)
My Dad told me that the house he grew up in was ordered from Sears. They had to build a foundation to set it on, but everything else was shipped to them from Sears and they assembled it. That was about 90 years ago.
I wonder if Amazon will start selling prefabricated houses?
Go to Amazon and pick out the features you want in your converted shipping container. Pour a slab to set it on. Free 2nd-day delivery with Prime.
I wonder if Amazon will start selling prefabricated houses?
Go to Amazon and pick out the features you want in your converted shipping container. Pour a slab to set it on. Free 2nd-day delivery with Prime.
I think this article ignores some of the other tenants of Amazon's corporate strategy. While Amazon is an online shopping behemoth, they are also expanding in to AI, web hosting and Platforms as a Service, financing, robotics, logistics, and lord knows what else. I think if you want a more accurate foil to Amazon, you should look at Alibaba.
I think it's funny the author referred to Sears' "everything store" was a "genius marketing move." Back in the day, they used to call those "general stores."
This does sound ironic, but the scope of what Sears Roebuck offered was staggeringly greater than what you could get at any brick and mortar store. For a time you could even order a house: https://en.wikipedia.org/wiki/Sears_Catalog_Home
Well of course they did. We live in an industrialized society and they had an industrial offering of products. Actually, we live in a digitized society now and that's where Amazon stepped in. General stores existed in an era before branding, before supermarkets, before everything was made in a factories halfway across the planet.
You should read the history of retail, general stores used to be places you ordered goods from or where you had the counter person pick out your goods from the shelves behind them. Piggly Wiggly revolutionized this model by letting customers pick out goods and bring them to the front of the store, and Sears changed the whole economy by giving rural Americans (most people at the time) access beyond the monopoly of their local general store.
Piggly wiggly retail story always surprises me as much as the first Kentucky Fried Chicken franchise was in Utah!
https://www.deseretnews.com/article/700217162/Story-of-first...
https://www.deseretnews.com/article/700217162/Story-of-first...
>Well of course they did.
Somebody has to do initially remarkable things first. You act like it's no big deal!
Somebody has to do initially remarkable things first. You act like it's no big deal!
Yeah - it's hard to imagine a world where rail shipment, parcel delivery, industrial warehousing, and efficient processing of mail orders are recent technological developments. But they were! And bringing tech into the domain of consumer retail has been profitable throughout history.
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This is an interesting article, but it doesn't talk about the pitfalls of sears, or the failings that have lead sears to where they are at now.
The difference is that nowadays, information and insight is propagated and digested much faster than it was in the 80s. It is much easier for Amazon to detect and react to threats than Sears was ever able to.
In my opinion, there's a threshold of information absorption and digestion, beyond which a corporation can be sure to survive no matter what, as long as it doesn't cease to adapt.
In my opinion, there's a threshold of information absorption and digestion, beyond which a corporation can be sure to survive no matter what, as long as it doesn't cease to adapt.
> It is much easier for Amazon to detect and react to threats than Sears was ever able to.
True, but the competition of the 70s and 80s was also playing at the same speed. Sears was able to react to 80s-paced threats just as fast as anyone else could.
It might actually not be 'easier' today for anyone to keep up with and defend against as many potential threats as there may be today. Amazon, however, is mostly in a league of their own, and generally are the threat to other companies, not so much the other way around.
True, but the competition of the 70s and 80s was also playing at the same speed. Sears was able to react to 80s-paced threats just as fast as anyone else could.
It might actually not be 'easier' today for anyone to keep up with and defend against as many potential threats as there may be today. Amazon, however, is mostly in a league of their own, and generally are the threat to other companies, not so much the other way around.
So does this mean Amazon will soon provide a section of the mall that always have parking close to the doors? ;)
(In all seriousness, it does not bode well for Sears that my local mall, which seems to not be dead at all, always has spots 1-2 cars away from the doors outside Sears while people circle the lot out front)
(In all seriousness, it does not bode well for Sears that my local mall, which seems to not be dead at all, always has spots 1-2 cars away from the doors outside Sears while people circle the lot out front)
Title should be "Sears' History Predicts Almost Everything Amazon's Doing"
(or "The History of Sears Predicts Nearly Everything Amazon Is Doing" - the actual title of the article)
(or "The History of Sears Predicts Nearly Everything Amazon Is Doing" - the actual title of the article)
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Yeah SWS (sears web services) was revolutionary in its day
I'm ready for my Amazon house kit!
The Adblocker blocker made me block the article and read something else.
Just like complaining about paywalls, complaining about adblocker-blockers is pretty pointless.
Relevant C&H: http://explosm.net/comics/4729/
Except instead of $1, they just want to be able to display ads.
Relevant C&H: http://explosm.net/comics/4729/
Except instead of $1, they just want to be able to display ads.
If we must use that analogy, it's more like they answer "yes!" to "are they free?" but then a stalker follows you with binoculars, a camera, and a notebook for months because you took the cupcake, and if you show up with private security guards and ask for a cupcake they say they're free but only for people without private security because they want to have a stalker follow you around, which is obviously a weird and concerning thing for them to require and would tend to make one turn them down for being such creepy/threatening weirdos, and then tell other people that they're creepy/threatening weirdos so those others don't take their cupcakes and get followed around by a stalker as a result.
It would also tend to make one hope the business model of being creepy weirdos is outlawed or otherwise destroyed.
It would also tend to make one hope the business model of being creepy weirdos is outlawed or otherwise destroyed.
But for some reason comments complaining about paywalls never get down-voted to grey.
Unfortunately, The Atlantic doesn't work on the free web, where users control who gets to load content on _their_ computer, rather than having the website dictate who to sell out to before seeing the text requested. Is there a different source?
Read their ads, pay them money, or don't read their content. Seems like a pretty fair trade off.
The Atlantic doesn't actually provide the second as an option without interacting with JS. There's no way for someone to subscribe if they are running ghostery+noscript like I am.
It absolute is, but linking to "locked content when viewed with a normal browser that has sane security addons installed" on hacker news is always bad form.
You work at Mozilla, right? Use Pocket.
Or, you can use CURL. Then, view it offline if you don't want to see ads that it links to. Or, turn on no javascript/images in your browser. Or, use a text base browser.
I just tried it. It works great. Same content as what I saw on the open internet -- the one with ads.
Or, you can use CURL. Then, view it offline if you don't want to see ads that it links to. Or, turn on no javascript/images in your browser. Or, use a text base browser.
I just tried it. It works great. Same content as what I saw on the open internet -- the one with ads.
You mean reader mode? I have no idea how pocket would solve this problem.
TLDR: In 1985 Sears had vast mail order experience, co-founded an ISP (Prodigy), and had their own credit cards (Discover). All the components they'd need to dominate online retail. In 1993 they closed their mail order division. In 1995, Amazon launched.
[1] http://www.metafilter.com/62394/The-Record-Industrys-Decline...