Guardian: "New Amazon Terms Amount to 'Assisted Suicide' for Book Industry"

[j.p.s]

Originally Posted by fjtorres

Not in the context of the discussion of NDAs by tech companies.

You just did it again.

You seem to have some extremely narrow definition of "tech".

[fjtorres]

One last time: the comments are about *NDAs* and how and why they are used in the tech world.
For anything else, make of it what you will.
(Shrug)

[j.p.s]

Originally Posted by fjtorres

(Shrug)

[WillAdams]

Originally Posted by mgmueller

18%?
That's "nothing".
I've mentioned it before, but to repeat it here:
Most corporates have ASG (Administration, Sales, General) costs in the excess of 20%. 15% are considered benchmark, I know a few companies with >30%.
Meaning:
Their Gross Margin is 18%.
But that's not their EBIT.
With 18% Gross Margin, they can consider themselves happy, if even a few percent should be left.
It's well known, that Amazon still doesn't generate much of a profit.

Okay, let's break it down:

- $73.94 comes in
- $61.11 goes out
- $12.83 is left and has to cover:
- credit card fee ~2--2.5% --- at most $1.85, so they have
$10.98 (or more) of potential profit which merely has to cover the expense of running a transaction on a server and sending some e-mail and storing some data and serving up some web pages (trivial cost of operation folded into the balance of their budget), maybe a banking fee on the $61.11, &c.

The merchantplace sales should be pretty much pure profit for Amazon for those sellers which don't pose problems (and even those expenses are minimal --- e-mail from a customer sales representative and maybe some chargebacks --- the onus is on the marketplace seller), so thus far, the only people making money on my book are:

- the printer (I don't mind, they worked hard)
- Amazon (annoying, and I wish there was an on-line service w/ better terms)
- the Abebooks reseller who has thus far convinced 3 people to pay his inflated prices when my copy was available for list price

[eschwartz]

Originally Posted by WillAdams

Okay, let's break it down:

- $73.94 comes in
- $61.11 goes out
- $12.83 is left and has to cover:
- credit card fee ~2--2.5% --- at most $1.85, so they have
$10.98 (or more) of potential profit which merely has to cover the expense of running a transaction on a server and sending some e-mail and storing some data and serving up some web pages (trivial cost of operation folded into the balance of their budget), maybe a banking fee on the $61.11, &c.

... running the servers themselves, spending countless man-hours developing the data models that effectively advertise the product, paying all their employees who do all the other work that Amazon needs done (the marketplace is part of a broader business)...

The merchantplace sales should be pretty much pure profit for Amazon for those sellers which don't pose problems (and even those expenses are minimal --- e-mail from a customer sales representative and maybe some chargebacks --- the onus is on the marketplace seller), so thus far, the only people making money on my book are:

- the printer (I don't mind, they worked hard)
- Amazon (annoying, and I wish there was an on-line service w/ better terms)
- the Abebooks reseller who has thus far convinced 3 people to pay his inflated prices when my copy was available for list price

All those "trivial cost of operation folded into the balance of their budget" need to be paid off somehow, and the whole Amazon system is what pays for it. So Amazon already has the system, therefore you should be able to use it for free?

Perhaps you should start an online service with better terms. Oh, wait -- you'd have to build the infrastructure, and it would end up being less-favorable terms.

[WillAdams]

I never indicated that they should provide it for free, I merely noted:

...18 percent.

Tidy sum for just running some servers and charging a credit card.

I'll grant adding a CSR for weeding out problem sellers and handling transactions gone bad, but those should be a very small percentage.

If merchantplace sales aren't almost pure profit for Amazon (not saying significant, meaningful, or big bucks --- just that each sale in-and-of-itself should be bringing them more than a tithe and certainly tens or even hundreds of times the per transaction cost), something is really strange. I'd be interested in an expansion of the numbers I've posted, or any sort of correction or addition.

I do not appreciate any effort to put words into my mouth or indicate that I made any statements / claims which I did not.

:: plonk ::

[eschwartz]

Originally Posted by WillAdams

I never indicated that they should provide it for free, I merely noted:



I'll grant adding a CSR for weeding out problem sellers and handling transactions gone bad, but those should be a very small percentage.

If merchantplace sales aren't almost pure profit for Amazon (not saying significant, meaningful, or big bucks --- just that each sale in-and-of-itself should be bringing them more than a tithe and certainly tens or even hundreds of times the per transaction cost), something is really strange. I'd be interested in an expansion of the numbers I've posted, or any sort of correction or addition.

I do not appreciate any effort to put words into my mouth or indicate that I made any statements / claims which I did not.

:: plonk ::

But you are assuming that merely because Amazon already has the system for their other business, it is somehow unfair for them to charge a "Tidy sum for just running some servers and charging a credit card."

They are charging a fee to help pay off their investment.

I assumed that meant you believe you should not be paying them for that, and therefore do indeed expect to receive the benefits of that infrastructure for free. (Which is different from saying you should be able to sell on Amazon without paying a penny; if that is what you thought I said... well... you are scarily eager to assume the worst of anyone who disagrees with you.)

Although as you say you have put me on your ignore list, I don't know if you'll see this...

[mgmueller]

Originally Posted by WillAdams

Okay, let's break it down:

- $73.94 comes in
- $61.11 goes out
- $12.83 is left and has to cover:
- credit card fee ~2--2.5% --- at most $1.85, so they have
$10.98 (or more) of potential profit which merely has to cover the expense of running a transaction on a server and sending some e-mail and storing some data and serving up some web pages (trivial cost of operation folded into the balance of their budget), maybe a banking fee on the $61.11, &c.

The merchantplace sales should be pretty much pure profit for Amazon for those sellers which don't pose problems (and even those expenses are minimal --- e-mail from a customer sales representative and maybe some chargebacks --- the onus is on the marketplace seller), so thus far, the only people making money on my book are:

- the printer (I don't mind, they worked hard)
- Amazon (annoying, and I wish there was an on-line service w/ better terms)
- the Abebooks reseller who has thus far convinced 3 people to pay his inflated prices when my copy was available for list price

I've had the very same discussion with my former employer (country CEO of the German organization) 10 years ago:
"I don't have additional overhead in my project, all is covered within my single project".
In this project, my Gross Margin had been 30%. And my assumption had been: No additional costs in my project = 30% net profit.
But that's not how a corporate operates.
There is a back office in place, whether it's needed for a specific project or not. Same for IT infrastructure, R&D, sales, marketing, .....
It's simply a mixed calculation. Total revenue vs. total overhead costs = SAG (Sales, Administration, General).
And like I wrote before: You won't find any big corporate, with a total SAG below 12% to 15%. And that's the rare exceptions, most having >>20%.

And btw: Look at the figures of Amazon. Their profit margin is pretty thin, they barely generate any profit (yet!). Same for Facebook.

BTW: The printer, on average, generates a Gross Margin of 28% (German printing association 2013). Still, more than 2/3 of those (in Germany) are close to chapter 11. 28% seems pretty steep at first glance, considering they only need some machines and people. But of course their equipment is financed over a period of 8 years. They may not do any invests for a few years, but still have to cover significant interest rates.

Brief anecdote:
One of my former colleagues tried to get approval for a deal:
2% Gross Margin.
His argument:
Average order size = € 1.000.
So the Gross Profit is € 20. This should be more than adequate for 2 mouse clicks and an automated email = 1 minute work for an operative with an hourly rate of € 20.
Of course the deal didn't get approval.
Not even for 10% did they approve.

[ApK]

Originally Posted by WillAdams

- Amazon (annoying, and I wish there was an on-line service w/ better terms)

As others have suggested, that sounds like you're saying you want Amazon's market share, audience, brand awareness, infrastructure, customer service, performance, etc, but don't want to have to pay the costs of creating and maintaining all that.

Good luck. If you have any idea how that can be done, there's probably a fortune out there for you. Well, maybe not a fortune if no one is paying....

Perhaps you mean something else by "better terms" but your attempt to pick apart the percentages and costs suggests otherwise.

[speakingtohe]

Originally Posted by WillAdams

Just to insert a datapoint, on the sale of a $69.95 book in the Amazon Marketplace by an outside seller, Amazon's commission is $12.83, over 18 percent.

Tidy sum for just running some servers and charging a credit card.

Sounds like the (idiots?) lament often heard from people working for a company who bills more an hour for their services than they get paid an hour.

They are getting $30 for me going on site, but I only get paid $20

The company pays their wages for a lot of unbilled or even unproductive time.
The company pays rent on premises.
The company pays for support staff like billing and accounting and secretarial.
The company pays taxes and often benefits, pensions etc. The company suffers losses in some areas and must make a profit in others to survive.

Business is a gamble and few have succeeded by selling everything at cost.

Helen