Amazon: Prime Number Tweaking
February 15, 2012
Short honk: Not much interest in Amazon, but that’s because its A9 search system is consistently disappointing. Sleek MBAs find the company fascinating because it is moving from cost control to debt flood. After years of managing numbers and tweaking the ways in which the company reports activity, the chickens are returning to the roost. I never could figure out how “objects” were better than money when Amazon proselytized about its Amazon Web Services.
The most recent financial report suggests that cost control is a tough problem for Amazon, and its announcement that it is opening stores is another interesting cost signal. Apple sells high margin stuff and uses stores to deliver customer service. Amazon sells bulk personal paper products and pricey items such as faux diamond earrings.
Navigate to “Amazon Is Said to Have Fewer Prime Members Than Estimated.” What I learned is that the analysts (sleek MBAs) were off the mark. The guesstimates were wrong by millions. Yep, many zeros. Here’s the passage which caught my attention:
The slower adoption of Prime adds to concerns about Amazon’s revenue growth. The Internet retailer posted sales of $17.4 billion last quarter, trailing the $18.3 billion predicted by analysts. While the Prime service increases Amazon’s shipping costs, it’s seen as a way to lock in customers and prod them to shop more, according to ChannelAdvisor Corp. Fewer Prime users would mean there are fewer of Amazon’s most dedicated customers.
Fewer dedicated customers. Interesting. WalMart customers may share some of the attributes of the buyers Amazon is chasing. In a matter of months, Amazon has picked a fight with Apple. Amazon is getting into the sales tax business with the alleged retail stores. And Amazon is publishing its own books and sponsoring or whatever the Hollywood mogul word is for goosing independent films into its streaming video service.
Several observations:
- The cost issue is a big deal
- The fight with Apple is a big deal. Think money.
- The retail stores (if a “real” business action) is a big deal. Think Walgreen type costs for store fronts.
In short, perhaps Amazon should focus more on search, which is one way to get those visiting the site to buy more. Do you know how to find lists of books in a particular niche? Do you know how to winnow the cubic Zirconias from the diamonds? Do you know how to search the daily deals?
One number which is tough to tweak are those cost figures, which are, I suppose, “objects.”
I don’t.
Stephen E Arnold, February 15, 2012
Sponsored by Pandia.com
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