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Old 03-15-2018, 06:31 AM   #141
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"If we assume Amazon sells their stuff for quite a bit less than WM, your numbers suggest Amazon buys it for a LOT less. No wonder they're disrupting all of retail!"

When we were building boats a store like Defender would usually get 40% off "list" price , so would sell at 20% to 30% off list and still make a profit.

As an OEM the discount was frequently 50% + 10% , with an extra 2% off for pre paid with free shipping.

With their huge volume I assume Amazon now does better than OEM ever did.
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Old 03-15-2018, 07:05 AM   #142
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I can't speak to other industries, only the one I work in, but Amazon does not buy product for less than most other retailers in my space. They get a small (max 7%) volume based discount on preseason orders (placed 6 months ahead of delivery) that is available to every other retailer as well. Some small retailers don't do enough volume to qualify for that discount but the vast majority do.

Most of the manufacturers I know in my industry are gradually pulling away from Amazon, not offering them better pricing. These are higher end brands, I can't speak for the low end.

Amazon cares very little about margin and will operate for long periods at BELOW their cost if they have to. They only care about winning the buy box.

It doesn't seem like a sustainable long term strategy to me, but they are succeeding despite it. There are other parts of their business that are very profitable.

They make 15% off of every third party sale on their site as well. That's where some of their profit comes from.

I personally prefer buying from third party vendors over Amazon direct. At least some sort of small business is making a little $ that way. And you get the same advantages as you get buying from Amazon direct.
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Old 03-15-2018, 11:11 AM   #143
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I can't speak to other industries, only the one I work in, but Amazon does not buy product for less than most other retailers in my space. They get a small (max 7%) volume based discount on preseason orders (placed 6 months ahead of delivery) that is available to every other retailer as well...

Amazon cares very little about margin and will operate for long periods at BELOW their cost if they have to. They only care about winning the buy box.

It doesn't seem like a sustainable long term strategy to me, but they are succeeding despite it. There are other parts of their business that are very profitable.
Interesting. So some of those numbers we batted around earlier may have been a bit high. If other retailers don't have a huge wholesale price advantage, it makes WM's notably higher prices all the more unjustified. Hopefully that's changing now. I personally see myself going there much more often now.

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I personally prefer buying from third party vendors over Amazon direct. At least some sort of small business is making a little $ that way. And you get the same advantages as you get buying from Amazon direct.
I'm just the opposite. I've learned the hard way to prefer Amazon direct, or secondarily, "fulfilled by Amazon," as the safest options for many things. Admittedly, sometimes I'll buy something that ships from China, if the price is right and I don't care so much about quality or quick shipping.

The third parties just don't seem to offer the same level of customer support as Amazon. Someone said that it seems they've all just ported over their eBay storefronts. And I've had bad experiences with those. Some are downright dishonest.

My final point is that I worked for a big company for decades. Nobody likes big companies. We went through a number of layoffs. I saw a lot of people's lives thrown into disarray. One mistake and my whole unit would have shut down overnight.

Here's the thing: NOBODY would have cared. Nobody would be on TV, or writing in forums or newspapers about the poor employees who lost their livelihoods because management couldn't keep up with market forces in their industry. You take a chance, and if you lose, you suck it up.

And yet I'm supposed to feel sorry for the people (like the "old" WM) who couldn't give me the quality, service and price that some other retailer (like Amazon) could?

I don't have to like the system, but I do have to look out for myself and my family, first. Believe me, I do support local merchants who I want to stay in business, and I don't shop on price alone. But neither do I throw my money away on sentimentality.
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Old 03-15-2018, 11:35 AM   #144
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It doesn't seem like a sustainable long term strategy to me, but they are succeeding despite it. There are other parts of their business that are very profitable.
That remains a real question regarding Amazon. There's a feeling that they are so dependent on the next market they enter, the next offering, that if they ever don't have a next, they have real trouble. You mentioned the fee for the sales by others, well one thing that has really become key to their profits is the fee for Amazon Prime. They're really trying to make it into a membership club.

As to the discounts they get, most may be available to others but only others who could buy in the same volume or store as much early and that eliminates most. The discounts are borderline legal/illegal and depend on walking a tightrope.

I think Amazon has one more thing to really fear and that is one day an employee revolt. However, Amazon is also working to replace as many of those employees as possible with robots while the ones it does have it expects to perform like robots.
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Old 03-15-2018, 12:15 PM   #145
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Toys R Us

You'll read stories saying online sales or Amazon saying Walmart and Target killed them. All false.

Why is it relevant to this thread? Well, what killed them was the debt they were burdened with after venture capital firms acquired them in 2006 and even before. When they were purchased for $6.6 billion they were saddled with debt of $5.3 billion. 11 years later, 2017, when they declared bankruptcy, they had debt of $5 billion and their debt service was over $400 million a year. This prevented them from maintaining their stores and improving their approach.

We don't know how much debt West Marine was saddled with. I hope not a lot, that it was a true equity investment, not based on borrowed money. If they have huge debt, I don't believe they'll survive as they won't build more larger stores and they won't increase inventories to service customers or increase pay to maintain and attract good employees.
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Old 03-15-2018, 02:24 PM   #146
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...As to the discounts they get, most may be available to others but only others who could buy in the same volume or store as much early and that eliminates most. The discounts are borderline legal/illegal and depend on walking a tightrope. ...

...I think Amazon has one more thing to really fear and that is one day an employee revolt...
Thanks again for offering your insight. This has become an interesting thread!

Funny you should mention the ability store inventory as an advantage. Seems every business nowadays is going in the opposite direction. Inventory is evil, and must be eliminated at all cost.

I think you may be onto something about the treatment of low-wage workers. I suspect the settlement with the unions following a nasty strike a few years back is what put Defender on the road to much higher prices. This is all pure conjecture on my part, but I did notice that they no longer had the lowest prices on the things I was looking for after that. I haven't really bought from them since. I have no idea who was right or wrong in that dispute, labor or management, just an observation, and not a very scientific one, at that.

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...what killed them was the debt they were burdened with after venture capital firms acquired them in 2006 and even before....
Again as a non-expert, my own suspicion is that this is a common theme. I've seen too many of what I considered "good" companies destroyed, bankrupted and in some cases split up and the pieces sold to the highest bidder, by outsider "experts" with no interest in the industry. Sure, these investors make a short-term killing. But no-one else benefits.
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Old 03-15-2018, 02:34 PM   #147
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I'm not even sure we should be calling Amazon a retail company anymore. One of Amazon's biggest sales is information. Their advertising busines is one of their fastest growing segments and highly profitable. The online ad market is huge and growing; and advertisers will spend with companies that have lots of current data. Amazon knows your address, your shopping habits, your brand preferences, how much time you spend online, what kind of credit card you have, etc, etc. The Amazon Music and Video services are just a way for them to sell your eyes and ears to advertisers. They are even producing their own TV series and movies to get more eyeballs to sell. They are the third largest online advertiser behind only Google and Facebook ( also massive data harvesting, eyeball collecting companies )

Their other fast growing, highly profitable revenue stream is from Amazon Web Services. They are a $20 Billion/year IT company selling cloud computing, software and storage and more. They seem to be fairly secretive about this aspect of their business though.

They are also a finance company with their own credit card, and this is just a guess on my part, but I'm sure their payment terms are such that when you buy something you pay at the time of purchase, and they will hold that money and pay their suppliers after a delay. Even if they had payment terms of 30 days, Amazon's monthly sales are around $20B. Holding on to that much money for a month is a buniness in itself.

With a stock price of over 200 times earnings, and a buy rating, the market seems to have a lot of faith in them.
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Old 03-15-2018, 02:43 PM   #148
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We don't know how much debt West Marine was saddled with. I hope not a lot, that it was a true equity investment, not based on borrowed money. If they have huge debt, I don't believe they'll survive as they won't build more larger stores and they won't increase inventories to service customers or increase pay to maintain and attract good employees.
For what it's worth, one of the stores here in Seattle (near Fisherman's Terminal and Lake Union) is being upsized to a new, larger location. I have to agree it's intended to increase inventory and decrease costs especially since we're in a $15/hr min wage city (or soon will be anyway).

For anyone interested this is a pretty good read and analysis of Amazon's overall business models: https://revenuesandprofits.com/amazo...s-2017-update/
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Old 03-15-2018, 02:45 PM   #149
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Funny you should mention the ability store inventory as an advantage. Seems every business nowadays is going in the opposite direction. Inventory is evil, and must be eliminated at all cost.

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It is for most. Then look at TJ Maxx and Marshall's. Nearly half of what they sell is last year's that they bought at the end of the season.
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Old 03-15-2018, 03:21 PM   #150
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For anyone interested this is a pretty good read and analysis of Amazon's overall business models: https://revenuesandprofits.com/amazo...s-2017-update/
By any normal measurement, Amazon would be considered a failure. Look at return on investment. Right now the market cap is $766 billion. Even the one profitable year only provided a 0.3% return. But we're in an age that return on investment is looked at by stock valuation and the increase in share value. I could never have led a company like Amazon. Perhaps that's a managerial weakness on my part, but not the way I learned to do things. I was in a public company but never looked at stock value in determining what we should do. I would have felt like I failed with Amazon results.

Now, the assumption is that Amazon will survive, these are growing pains, and one day they will be incredibly successful. I think perhaps they will but not based on their own retail. I don't know. Can a business built on undercutting on pricing and delivery be profitable long term? Does it depend on knocking everyone else out? Well, news for Amazon. Walmart and Target are not bending over and saying spank me.
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Old 03-15-2018, 03:48 PM   #151
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I sure wish I bought their stock a couple years ago. It is at the same lofty valuation as Tesla and other high flying companies traders are currently focused on. I figured it would eventually back down, but no signs of that. We shall see in the long term.
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Old 03-15-2018, 03:50 PM   #152
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For what it's worth, one of the stores here in Seattle (near Fisherman's Terminal and Lake Union) is being upsized to a new, larger location. I have to agree it's intended to increase inventory and decrease costs especially since we're in a $15/hr min wage city (or soon will be anyway).

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Our minimum wage is $13.50 and anyone with at least 6 months is at $15. Minimum wage is not going to make or break a business. I knew of their new super store.
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Old 03-15-2018, 03:51 PM   #153
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I sure wish I bought their stock a couple years ago. It is at the same lofty valuation as Tesla and other high flying companies traders are currently focused on. I figured it would eventually back down, but no signs of that. We shall see in the long term.
We bought some in 2012 but as it rises in value we do make sure we continue to sell a little off now and then.
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Old 03-21-2018, 01:30 PM   #154
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A few minutes ago I went to WM to check their price on a flat fender that I was interested in. Their shelf price was $104... and with my WM Pro card it came down to $87...here it is. Go to the 24x12x3 size.

https://www.westmarine.com/buy/west-...13?recordNum=3

Before going I found the fender below on Amazon for $34... I looks identical to the WM fender. I asked about price matching and they said that since it was a WM brand they could not price match. When I told the clerk I got a so what look.

https://www.amazon.com/Hull-Hugr-HH-...der&th=1&psc=1

It might even be this one for more money but I don't think so.

https://www.amazon.com/dp/B01HN8EDFY...v_ov_lig_dp_it
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Old 03-21-2018, 03:50 PM   #155
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A few minutes ago I went to WM to check their price on a flat fender that I was interested in. Their shelf price was $104... and with my WM Pro card it came down to $87...here it is. Go to the 24x12x3 size.

https://www.westmarine.com/buy/west-...13?recordNum=3

Before going I found the fender below on Amazon for $34... I looks identical to the WM fender. I asked about price matching and they said that since it was a WM brand they could not price match. When I told the clerk I got a so what look.

https://www.amazon.com/Hull-Hugr-HH-...der&th=1&psc=1

It might even be this one for more money but I don't think so.

https://www.amazon.com/dp/B01HN8EDFY...v_ov_lig_dp_it
They can't be expected to match other brands. They sell some Kwik Tek products themselves. They have a Kwik Tek fender for $12.99 although a smaller model. Norestar is also a cheaper fender, sold elsewhere cheaper than on Amazon.

I'm sorry, but just because fenders look the same doesn't make them the same. I don't know how the quality of the WM fender compares, but that's the point, we don't know as they're not the same.
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Old 03-21-2018, 04:54 PM   #156
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The wording on their website is:

If you find a lower price on an identical product at a competitor's retail store or website before you buy – or within 30 days of your purchase, we'll match it.

Identical would include the brand and model name. That is completely reasonable. I'm actually surprised their matching online pricing...some brick and mortar stores will only match other B&M store pricing.
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Old 03-21-2018, 05:02 PM   #157
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I'm sorry, but just because fenders look the same doesn't make them the same. I don't know how the quality of the WM fender compares, but that's the point, we don't know as they're not the same.
Actually they are the $34 fenders on Amazon. A few phone calls confirmed that WM buys the exact one from the company. It is an outrageous markup.
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Old 03-21-2018, 08:13 PM   #158
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I spent at least 300 there this weekend.everything I bought was buy one get one free.or 40 0/0 off . except for some wire and connectors they won that one.over half of it was dock lines

I saw them price match a finder for another coustomer
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Old 03-22-2018, 07:59 AM   #159
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Most people have amazon prime.. Which begs the question.

Why drive to west marine to haggle when you can get the "price match price" delivered to your home in 2 days or less?

Sometimes you just need something and i'm glad west marine is around for that. I also try to give them business when I can but like most people I shop for big ticket items before I buy.

They need to get a handle on their hardware markup(some bolts are 10x what they charge at ace for stainless).

Reign in the cost of in house branded stuff. Your West Marine ___ isn't worth 80% of lewmar anchors, taco marine or Penn reels.

Price your fishing gear aggressive.. People come in for the small stuff day to day and splurge occasionally. You need traffic.

More cheap inventory as filler. The store looks like a boat showroom when you walk in.

Focus less on clothing. Men rarely buy it and women don't just buy clothes.. They shop for it like anything else. You can't beat academy on clothing.

Stock common parts. I shouldn't have to order basic maintenance stuff for an optimax or etec outboard. This is where people will overpay to have it "right now".

Take trade in's on fishing gear. People love the idea of a used bargain and helps "fill the shelves". Most of the time the guys behind the fishing counter look bored. Cleaning up a used reel might be worthwhile. I'd take it a step further on other trade ins but I suspect vendors would hate it.

Get in a location mindset. A $1,000 anchor that would fly off the shelf in Miami will collect dust in North FL. A small windlass is more desirable in retirement aged communities than in "young towns"(talking about for center console sized boats/everyone wants one on a trawler). You're not selling dinghys to inland boaters... Put a small jon boat on display.
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Old 03-22-2018, 10:15 AM   #160
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Ladies and Gents - Welcome to the ever accelerating age of "Creative Destruction" [phrase coined by Alan Greenspan - previous chair at fed reserve]

During next several decades the rate of change [i.e. creative destruction regarding many forms of civilization/human developed existence parameters] will continue to increase at blinding speed.

AI will soon rule the roost. Unlike human brain capacity... self actuated intelligence-increase of computer-brain has no level of "Top". Sophistication of AI in computers and "robots" have now begun constantly leap frogging one another... ever getting the leaps taller and the "frogs" bigger... no end in sight!

Not too far in future [God knows when] teleportation of material objects will be reality. From its inception, due to speeds of process regarding computer-brain/intelligence-increase, teleportation should/could/will reach levels that completely alter nearly all and every procedure humans are accustomed to.

AI assisted accomplishments, such as successful material teleportation, will result in ramifications that tilt civilization on its ear. Out comes can only be guessed at currently.

Item that could suddenly and somewhat slow what I mention above... if/when Earth's ecosystem reaches "The Tipping Point". I.e. due to global warming its trade winds' and oceanic currents' trajectories greatly alter their previously established paths. This occurrence should rather quickly increase in velocity and inter active climate-change ferocity once the initial notable path-changes begin to occur. Only way to maybe avert these path changes is to stop and even somewhat reverse global warming. As well, and to do so, nearly 50% of CO2 currently in atmosphere MUST be very soon removed; so much depends on this. Once atmosphere and ocean waters become heated enough to get them into altering path circumstances there will be no thing that humans can do that will reestablish their currently feasible-for-life annual paths. climate confusion will be as never before.
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