Amazon and the Big Box Stores

March/30/2018 18:12PM
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Amazon stock is down 4.3% for the month which is the worst monthly performance since November 2016. Trump said, “they pay little or no taxes to state and local governments, use our Postal System as their Delivery Boy and are putting many thousands of retailer out of business.” Is it Amazon’s fault the retailers are closing?

Most recently, Toys R Us closed. Consumers can buy any toy the retailer had on-line and can buy it cheaper and have it delivered to their home. Toys had no differentiation, not product , not inventory, not convenience, nothing.

Amazon is a technology business with countless employees who solve any issue to make the supply chain work smoothly. The big box stores try but just can’t get it done. But, let’s examine an exception, Best Buy. Many people want to buy electronics but don’t have the savvy or interest in installing the products. Best Buy has the Geek Squad which Amazon does not have. How does Best Buy utilize the Geek Squad? By making it impossible to use it. This is not a technology issue it’s a stupidity issue. Try it. I defy you to get an appointment with a Geek to come to your house and work on any product you bought from Best Buy or want to buy. They use a telephone system best designed for the last century. Soon, Best Buy will be going the way of Toy R Us for far different reasons.

Walmart struggles. Home Depot, Amazon is taking a chunk of  their business. Costco, the same. They can’t put together a quick and easy system for placing an order and to have quick delivery.

Meanwhile Amazon has no cost constraints for anything. They make no profit, hence pay no taxes. Cash flow comes from selling more stock that keep going up even though its  diluted by the greater number of shares outstanding. A legal Ponzi scheme. If shares keep dropping and more shares can’t be sold at higher prices the cash flow dries up. If it dries up the company goes broke.

But, weep not for the likes of Best Buy, for they deserve to fail. They have a unique advantage and fail to use it. It’s an internal incompetence and they should fail by their own choice.

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Comment (1)

  1. Bill Robertson says:

    Got an appointment notice from the Geek Squad: This is the content:
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