For use: Friday, September 8, 2000 and thereafter

 

Future Shoes: "Up the Amazon Without a Paddle"

by Michael Finley

Copyright (c) 2000 by Michael Finley

For the past three years, I have been an "Amazon Affiliate." This means I have an arrangement with (www.amazon.com) Amazon.com, the online retailer, to sell their items from my site, picking up a few pennies on each sale. It has been a rewarding relationship. I reckon the arrangement has earned me about $500 per year.

So I was chagrined to get word this past month from Amazon that my privileges were being cut off. The reason? I thought I was entitled to the discount prices for my own purchases, as well as for the purchases of visitors to my site. I probably bought 50 items this way. But, I wasn't.

Here's Amazon's reasoning: They discount their materials extremely drastically. They lost some $10 million dollars on the new Harry Potter book, for instance -- as a loss leader, to get new traffic in the door. They simply can’t afford to give old customers, like their affiliates, similar discounts.

Consider that fact, and you realize that the dotcom revolution has a heckuvan uphill battle if it is to replace conventional retail. Conventional retail's nightmare is paying for fixed assets like real estate and lights. Dotcom retailers, or etailers, are supposed to minimize those costs, sell in enormous volume, and somehow make shipping costs disappear.

But it ain't working. Amazon's shipping costs keep going up, until they’re no better than a record club's. And its bottom line isn’t improving, despite chairman Jeff Bezos' demand that, henceforth, quarterly reports must show a profit (so far, they don’t). Last December, its stock price hit $106. As of this week, it’s bailing water in the low $40s.

The company's a mess. There appears to be no one it can put the squeeze on but itself (as with its loss-leader and affiliate promotions). Customers are abandoning it. Suppliers are nickel-and-diming it for a better deal. Even us affiliates are starting to say Hey.

Who'd of thunk a company with all Amazon's advantages, and the enormous head start it had over its competitors, would be so unable to make a dollar?

I will continue to operate as an affiliate, because it's an interesting way to guide readers toward deeper reading. But I, who have always enjoyed buying online, and who generally admires the Amazon concept of using technology to get to know and kowtow to a customer's taste, don’t have a much confidence that its billions of capitalization will be enough to buy it a clue.

To visit Mike, go to http://mfinley.com, or write him at mfinley@mfinley.com