Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000) • Hacker News Board

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#71

Post by amac » Sat, Jun 04, 2011, 10:11 AM UTC

podperson wrote: post #23

dlevine wrote: post #8

I actually though about Amazon when I saw people starting to rag on Groupon and its bottom line. Another important thing to remember is that Amazon actually figured out its business model later. For a while, it was pretty much just a dot-com that was hemorrhaging cash. I remember reading articles for years predicting that Amazon would go belly up any day. It wasn't until they cut costs and really dialed in their oper…

Even today, Amazon's position is surprisingly precarious. It relies on loopholes in tax laws for competitive advantage which, if they are closed, are predicted halve its income. And there are some analysts who argue that Amazon's "profits" are fictional, with all kinds of losses disguised as investments and hidden in other financial vehicles. Recall that even today, Barnes & Noble is simply unable to sell you a book…

Maybe excluding Apple, is anyone better positioned in the digital goods market than Amazon?

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#72

Post by bobds » Sat, Jun 04, 2011, 10:38 AM UTC

Why are we comparing everything to a ponzi-scheme lately?

"The essence of that critique is that Amazon is just buying customers, and that once it runs out of the money to do so the Ponzi scheme will collapse."

That makes no sense if you ask me.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#73

Post by creativeone » Sat, Jun 04, 2011, 11:19 AM UTC

Comparing groupon to amazon is like comparing a candy shop to an entire shopping center.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#74

Post by 46Bit » Sat, Jun 04, 2011, 11:39 AM UTC

jrockway wrote: post #59

46Bit wrote: post #20

Earlier quoted context omitted.

No. Of all the things you can describe the stock market as, rational is not one of them - and that's before you consider the amount of computer trading.

The computers are the most rational of all.

Not when they're programmed by people.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#75

Post by DaveRobertsAhoy » Sat, Jun 04, 2011, 12:04 PM UTC

marciovm123 wrote: post #3

"...when you consider that better than 60 percent of Amazon's sales come from repeat customers--which implies that they're loyal..." That seems to be the key figure missing from the Groupon discussion. If they are buying loyal users and customers, their mad-dash growth strategy would seem rational. If their retention is poor, it would seem more like a Ponzi scheme.

Neither consumers nor businesses are loyal to Groupon. And the moment deals start to decline in quality, consumers will hit 'Unsubscribe' or 'Report as Spam' and it's Game Over for Groupon. I've already tired of their endless emails and blocked them. I'd be interested in seeing their churn rate - acquiring new customers to replace those that leave is going to increase in cost exponentially.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#76

Post by alexandros » Sat, Jun 04, 2011, 1:21 PM UTC

The thing with Groupon is that it can't afford to keep it's implicit promise to merchants. It's a conflict over customer loyalty. If the customers become loyal to a couple of local restaurants, Groupon loses them and must 'purchase' new ones. If they remain loyal to Groupon's offers, then they will not be worth the merchants' expense to put out the offer. Based on this, Groupon must either keep spending to acquire new customers, or new merchants. Either way, the large marketing costs are here to stay (until they saturate the one market or the other and burn out). I don't think Amazon had any such fundamental conflicts to deal with.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#77

Post by krishna2 » Sat, Jun 04, 2011, 2:13 PM UTC

For every one amazon.com, there is a list of webvan.com, pets.com...etc.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#78

Post by nmueller » Sat, Jun 04, 2011, 2:20 PM UTC

To be fair, Amazon's stock tanked over 90% in the next 18 months: http://www.wolframalpha.com/input/?i=amazon+market+cap+from+...

Amazon is a great company now but anyone who invested when that article was written wasn't made whole until 2007.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#79

Post by mikecane » Sat, Jun 04, 2011, 2:35 PM UTC

kevinbluer wrote: post #38

mikecane wrote: post #31

Maybe I'm just out of the loop these days or I need to get into Manhattan more, but I can recall seeing actual Amazon ads in places like bus shelters and subway platforms and also hearing radio ads back in 2000. All I've heard of Groupon is from the Internet. Have I missed any big ad campaigns they've done or has their growth all been Net-based word-of-mouth?

They did a Super Bowl ad (at obviously significant expense): http://www.groupon.com/blog/cities/groupon-super-bowl-ads/ Wasn't regarded as a big success though: http://allthingsd.com/20110207/groupon-back-peddles-after-vi...

OMG. I'd forgotten all about those offensive and tasteless Super Bowl ads. Thanks (I think) for the reminder.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#80

Post by bonyt » Sat, Jun 04, 2011, 2:35 PM UTC

marciovm123 wrote: post #3

"...when you consider that better than 60 percent of Amazon's sales come from repeat customers--which implies that they're loyal..." That seems to be the key figure missing from the Groupon discussion. If they are buying loyal users and customers, their mad-dash growth strategy would seem rational. If their retention is poor, it would seem more like a Ponzi scheme.

When we talk about Groupon's "repeat customers," I wonder who exactly they consider to be THEIR customers, their merchants or their subscribers.