Inside Amazon - January 2nd, 2017

Inside Amazon (Jan 2nd, 2017)

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AMZN Stock Price: $749.87 (Friday), $740.34 (30 days ago), $836.74 (90 days), $636.99 (1 year) 
Amazon has begun testing a "Sell as Individual" option for its India site, in hopes of broadening its ecommerce business in that country. The website for the new service says customers in India can list and sell products, with Amazon handling packaging and delivery. The move will further differentiate Amazon India from Flipkart, the country's popular e-tailer and Amazon's "arch rival" in the region. – MASHABLE

A top trending YouTube video captures the moment a young boy fiddling with an Echo Dot unleashes a torrent of pornographic search terms from virtual assistant Alexa. The artificial intelligence apparently misunderstood whatever the boy was actually requesting, and instead attempted to connect him with some adult content. (The Daily Dot argues that Alexa was trying to fill a request for a comedy ringtone collection called "Porn Detected!") – DAILY DOT

According to startup ad tracker MediaRadar, Amazon outspent every brick-and-mortar chain on TV ads for both October and November of 2016. The company spent about $135 million on holiday TV ads, which represents a 76% increase in spending compared to the same period in 2015. And going back only five years to 2011, the company spent only $156 million for an entire year's worth of TV ads. – RECODE

By combining large- and small-business approaches, Amazon has succeeded at innovation in a variety of product categories, while most tech giants struggle to grow out of the area of their "core competency." Vox's Timothy V. Lee argues that Amazon has successfully combined their enormous finances with the "entrepreneurial culture" of a much smaller company. While a company like Google attempts to make huge technical leaps with its innovations, Amazon's business model seems more rooted in meeting user needs. – VOX


 
A flood of fraudulent seller accounts could harm consumer trust in Amazon's marketplace. Under the current rules, fraudulent sellers can very quickly set up a store and add popular items at a cheaper price than elsewhere on the site. Without any intent to actually fill the order, the fraud seller will immediately list the order as shipped, thereby releasing the customer's payment to Amazon into the seller's account. Then, by posting the estimated date of arrival as multiple weeks out, they buy the time to cover their trails before the customer realizes they've been swindled. – FORBES

Forbes contributor Jay McGregor tested the AI of both Amazon's Alexa and Google Assistant with a 24 question exam. McGregor noticed his own Alexa seemed to have a disproportionately high "miss" rate when it came to answering his questions, and decided to test it against Google's Assistant. He found that Alexa answered only 8.5 questions right compared to the Assistant's 12. (Alexa earned the half-point for a question about the amount of protein in two eggs; Alexa was able to correctly answer only how much protein was in a single egg.) – FORBES

WILLIAM'S CORNER

Amazon is world-renowned for their logistics: the company shipped more than a billion items this holiday season from November 1st to December 19th. As they grow, they are making a very conscious decision to handle more and more of their shipping themselves.  Though Amazon’s eventual desire to handle all of its own domestic shipping may be far away, owning their own freight liners may be well within reach.
 
Amazon knows that taking control of every step of the shopping/shipping experience is crucially important when trying to improve margins and customer satisfaction. One of the biggest complaints Amazon hears from its customers is about purchases that do not arrive on time.

If you are not in the industry, you may not be aware of how old school and antiquated the freight forwarding business can be. Here is Spencer Soper from Bloomberg explaining the potential benefits to Amazon owning their entire end-to-end logistics operation: “Amazon wants to bypass these brokers, amassing inventory from thousands of merchants around the world and then buying space on trucks, planes and ships at reduced rates."
 
One of their strategies is to work directly with the source. Amazon is working with merchants in China and India to help with picking and packing, and fulfillment to their customers all over the world. In this plan, tentatively named “Global Supply Chain by Amazon,” Amazon would be competing against longtime rival Alibaba in an attempt to win the cross-border ecommerce battle which could grow to a $1 trillion industry by 2020.

Amazon is also prepared to compete with DHL, UPS and Fedex. They went as far as formally announcing themselves as a competitor in early 2016: “Our current and potential competitors include ... companies that provide fulfillment and logistics services for themselves or for third parties," Amazon stated. - FOOL
 
This is not the first time Amazon had created a consumer product out of a service they use themselves. The inception of Global Supply Chain by Amazon is very similar to the inception of AWS. Amazon found a fractured market that they depended on for their business to grow and decided to take on building a new solution they can then sell to others. It’s an incredibly lean way to create new consumer products while saving money internally. Amazon is finding every shred of inefficiency and waste and destroying it at the source. 

William Tjernlund is an experienced Amazon seller and consultant. To learn more about him, check out this interview.

THE BIG QUESTION
What do you think about William's thoughts above? How realistic is Amazon's goal of owning every stop of their logistics process? 

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