business news in context, analysis with attitude

Got the following email from MNB reader Joe Elledge, responding to our stories about Amazon getting into the package shipment business, which would put it in competition with the likes of FedEx and UPS:

Perhaps Amazon’s exploration of an entry into the package shipping business is an admission that its core business model is unsustainable?

I am a logistician.  Could it be Amazon’s speed, innovation, and executional excellence are indications of a frantic effort to make an unsustainable business model viable?   Amazon’s core operating model is the business equivalent of defying gravity.  Exploring an expansion that would have it competing with UPS and FEDEX smacks of desperation to me.

You have consistently refused to look beyond Amazon’s speed, innovation, customer focus, and executional excellence to the persistent failure of its core operating model to deliver competitive levels of profitability.  Until it delivers competitive levels of shareholder profitability, Amazon will be just an experiment as opposed to a viable business.

If I had a dollar for every time someone has said that Amazon's business model is untenable ... well, I'd have a bunch of dollars.

To be fair, it is possible that you're right. And I don't have a fancy title like "logistician," so I could be wrong.


I have to say that I think this is an old-world way of looking at things.

First of all, Amazon's lack of profitability can be traced directly to its constant and persistent investment in innovative technologies; they believe that they cannot let up on the gas for even a minute, because to do so is to risk being overtaken by the competition. If you invest in Amazon stock, you have to know that going in. It is a long-term play.

I think it is sort of ironic that in saying that Amazon does not deliver "competitive levels of profitability" (an analysis that depends, I think, on your definition of "competitive"), you concede the existence of "Amazon’s speed, innovation, customer focus, and executional excellence."

I've said this before, and I'll say it again. Realities of the modern world may demand a rethinking of how companies and investors define the balance between innovation and profitability.

Asked to make a bet, I'd put my money on Amazon being a viable business, not just an experiment.

But I could be wrong.

Last week we had a story about a smart refrigerator, which prompted the following email:

Yep, just what we need. One more piece of technology the increases the laziness of Americas and dumbs down society…Pretty soon Americans will be so lazy they won’t even have to drive their own cars. Probably a good thing. Without having to worry about driving their cars they can spend time on more important things like posting their thrilling lives to Facebook or texting their coffee orders to Starbucks.

I responded:

This strikes me as such an inaccurate, disrespectful and cynical reading of a tech-oriented generation ... and it doesn't even account for the possibility that a smart refrigerator will give people more time to read great books, go get exercise, cook great meals, play with their kids, enjoy fulfilling and even occasionally intimate relationships ... need I go on?

Smart technology doesn't make people dumber. It allows them the opportunity to be smarter and more fulfilled, and to do things that matter and have consequence.

Will everyone use smart technology this way? Of course not. But such generational cynicism, in my view, is far more poisonous to the culture than someone going on Facebook.

This prompted yet another email, from MNB reader Jim Mahern:

Good morning. I am a daily reader of MNB and do enjoy your perspective all of the time, even when I disagree with it. Friday 1/8/2016 is one of the latter.

For the sake of full disclosure, I am 72 years wise. Your description of the fellow who questioned talking to his refrigerator as "generational cynicism" and later as "poisonous to the culture" is interesting, and perhaps offensive to someone of my generation (read "me"). We are all entitled to an opinion, just as I respect yours.

I use email (obviously) as a form of communication, shop regularly on Amazon, occasionally download movies and was active in the food industry when scanners first arrived in the marketplace. I believe all of them have led to an exciting time in our industry in America. While I am not a Facebook user, I am on Linked In. I will probably never talk to my refrigerator either, unless of course my mind deteriorates.

When I was involved in business on a daily basis, I hired people who were smarter, and usually younger, than me. I was able to help them learn the business from my perspective and they helped me understand it from theirs. I believe it was helpful for each of us. We did have healthy disagreements, but I always listened.

While I understand the impact of millennials, and the changing aspects of retailing, I do have one caution.

At age 72, in good health and taking no regular prescription medications, it is estimated that I will live till at least the age of 88. If a retailer ignores my generation for those 16 years, they do so at their own peril.

Thanks for listening.

I certainly didn't mean to offend you ... and for the record, our ages aren't that different. You are 72, and I'm 61.

When I referred to that correspondent's attitude as cynical and culturally poisonous, I was talking about what I continue to believe is a stereotype of young people as being lazy and addicted to Facebook postings about their "thrilling lives." (I sensed some sarcasm there...)

In your business career, it seems, you didn't indulge in that. Which I respect. And it seems to me that you understand that characterizing young people in the way that the previous writer did only serves to heighten disconnections, as opposed to forging real and useful connections that can make businesses - and the culture - stronger.

I would never suggest that business ignore people your age ... or my age, for that matter. But I do think that business - especially retailing - are in the unique position where it has to figure out how to do that and still create strategy and tactics that will appeal to younger people as well.

Stereotyping and mischaracterizing them doesn't do that. It just creates the kind of echo chamber that Michael wrote about in his column this morning ... you listen to yourself and people like you, and lose connection to the world as it really is.

No offense meant.
KC's View: