Follow us:

Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Amazon.com
March 14, 2014 at 10:42 AM

Vote: Amazon’s Prime hike

As expected, Amazon.com raised the fee on its Prime service by $20 to $99 a year. Prime, with some 20 million members, offers two-day shipping for millions of items at no extra cost, as well as free access to its streaming video service. The move brings risks, chiefly that many members will go away. On the…

More

Comments | More in Amazon.com

January 22, 2014 at 10:08 AM

Citizen Bezos faces his first crisis at the Post

When Amazon chief Jeff Bezos bought the Washington Post for $250 million last year, there was much speculation and — dare I say it in my besieged calling — hope — about what new ideas he might bring to the newspaper world. His first test leaves big questions. Ezra Klein, the brains behind the Post’s More

Comments | More in Amazon.com, Media

August 8, 2013 at 10:47 AM

Bezos the businessman, a primer

Amazon.com CEO Jeff Bezos (Photo by Andy Rogers / The Associated Press)

Amazon.com CEO Jeff Bezos (Photo by Andy Rogers / The Associated Press)

NOAA reported that Arctic sea ice is disappearing at an unprecedented rate, but the story that has dominated the week’s news is the purchase of the Washington Post by Jeff Bezos, the head of Amazon.com. In the news business, we love to write about ourselves and this is indeed an important turning point. In addition, we’re dealing with the self-centered and blithely corrupt place rendered with wicked accuracy in Mark Leibovich’s new book, This Town. Two of the best pieces come from Pulitzer Prize-winner David Cay Johnston and an open letter to Bezos by Kara Swisher of All Things D. But this is more than a media story or a D.C. tale. So here is a primer for the Other Washington about the Seattle titan who is suddenly much a part of its life, based on my years of Amazon watching and what sources have told me.

1. Bezos is a data guy. It was data that caused him to see both the coming exponential growth of online retail and the niche for selling books online. And everything from there has been founded on his genius for seeing through the noise and identifying the right metrics. Among his critical insights has been using customer data to build relationships and brand loyalty. This makes him brilliant at turning vision into execution, the rocks upon which many good ideas by other entrepreneurs have been smashed.

2. Bezos knows Wall Street. Before driving west to found Amazon, he worked for the hedge fund D.E. Shaw (former Treasury Secretary Larry Summers is another alum). He knows how the playerz and investors think. So even though Amazon has razor-thin margins in many areas and keeps turning in disappointing profits, Bezos has persuaded investors of a big payoff to come. The stock has responded accordingly.

3. He’s a tech guy. Everything Bezos does, including at Amazon, has a super geek quality to it. Technology — making leaps and leveraging the advanced systems already available — is behind everything Amazon does, from its own sales and providing a platform for other sellers to cloud computing and fighting IBM, the embodiment of the establishment, over a contract with the CIA worth as much as $600 million. When most Americans think of Seattle and technology, they think of Bill Gates. Today, Jeff Bezos is the leading tech visionary in town, and perhaps, with the death of Steve Jobs, in America.

More

Comments | More in Amazon.com | Topics: Amazon.com, Jeff Bezos

July 30, 2013 at 11:01 AM

Digging into the ‘Amazon effect’

President Obama talks with Sarah Richey as he tours the Amazon distribution center in Chattanooga, Tenn. (Susan Walsh / The Associated Press)

President Obama talks with Sarah Richey as he tours the Amazon distribution center in Chattanooga, Tenn. (Susan Walsh / The Associated Press)

As President Obama tours the Amazon.com distribution center in Chattanooga, Tenn, today, he is partly celebrating the company’s announcement that it would add up to 7,000 jobs. Most of the media swallowed this announcement Monday without being bothered to use the “series of tubes,” as Alaska’s late Sen. Ted Stevens memorably called the Internet, to find my Seattle Times colleague Amy Martinez’s groundbreaking look at the company’s practices, including dismal working conditions at many of its warehouses. It is not a particularly apt place to trumpet middle-class wages, either. Amazon, which is not very forthcoming for such a large corporation, did not say what these jobs would pay. But the starting wage at the Phoenix distribution center in 2010 was $11 an hour; according to the MIT Living Wage Calculator, one adult with a child would need to make $19.87 in Arizona to stay out of poverty. The site warns, “The estimates do not reflect a middle class standard of living.”

Amazon has used its power over the supply chain and tax advantages to wreak great destruction in traditional retail. Former Labor Secretary Robert Reich (@RBReich) tweeted yesterday, “Progress on jobs front? While Amazon adds 5,000 warehouse jobs it destroys 50,000 retail jobs.” But does the “Amazon effect,” although real, risk being overstated? See this chart:

Retail1990_2013

It shows total retail employment in the United States over the past 20 years. As with many sectors, the decline was sudden and deep with the Panic of 2008 (aka “the Great Recession”). But with more than 15 million retail workers in June, employment has climbed back to 2004 levels. (And yes, dear reader: Amazon sells my mystery novels; so do brick-and-mortar stores).

More

Comments | More in Amazon.com | Topics: Amazon.com, Obama

July 9, 2013 at 10:26 AM

Kroger expands, with Amazon in its nightmares

An AmazonFresh truck arrives at a warehouse in Inglewood, Calif. (Photo by Kevork Djansezian / Getty Images)

An AmazonFresh truck arrives at a warehouse in Inglewood, Calif. (Photo by Kevork Djansezian / Getty Images)

Years ago, mighty Kroger tried a foray into the Southeast and had its head handed to it. This time, instead of trying to grow organically, Kroger is buying its position outright with the $2.44 billion acquisition of Harris Teeter Supermarkets. It’s a funny name, but in affluent markets such as Charlotte, N.C., Harris Teeter is the upscale store in competition against the likes of Food Lion, Bi-Lo, Publix and, increasingly, Wal-Mart. Harris Teeter has typically enjoyed better margins in this razor-slim business.

Kroger, headquartered in Cincinnati, will likely run Harris Teeter by its existing name, as it has Fred Meyer and QFC. Indeed, this is Kroger’s biggest acquisition since it bought Portland-based Freddy’s  in 1999 for $13 billion. But it marks further industry consolidation and more homogenization. Harris Teeter, founded in 1960 by W.T. Harris and Willis Teeter, employs 25,000 in 200 stores across eight states. There’s little overlap, but jobs will no doubt be clearcut at Harris Teeter’s headquarters in suburban Charlotte.

Seattle is among the fortunate cities with some choices that include chains but also local Metropolitan Markets and a number of individual stores, such as the upscale Ralph’s in Belltown and plenty of neighborhood bodegas along with a “buy local” ethos. Oh, there’s that market at the foot of Pike, too. But for most communities, it’s all chains, all the time.

More

Comments | More in Amazon.com | Topics: Amazon.com, grocery sector, Harris Teeter

June 12, 2013 at 10:12 AM

The secret life of Amazon.com

Amazon.com packages await delivery. (Photo by Paul Sakuma, The Associated Press, 2010)

Amazon.com packages await delivery. (Photo by Paul Sakuma, The Associated Press, 2010)

Nothing shows the evolution of Amazon.com from a cute online retailer to a technology giant than its competition against IBM to land a $600 million cloud computing contract for the Central Intelligence Agency. The Wall Street Journal reports, “Companies like IBM have long supplied the U.S. military and intelligence services with computers, software and the know-how to operate them. Now, new contenders like Amazon are getting into the act, drawn by a fresh source of revenue as business spending on technology remains sluggish and by the imprimatur of providing services to clients that have the highest security standards.”

If the Journal report is true, the competition comes at an awkward time, as revelations about the extent of national security spying on American citizens are the big story. But it also shows that Amazon’s appetites for competition in the technology arena are extremely large — and its expertise is substantial and growing. The Defense Department alone spent about $35 billion on information technology last fiscal year. Adam Selipsky, a vice president at Amazon Web Services, the company’s cloud-computing unit, told the Journal: “The federal government opportunity is enormous. We believe that will be a very significant business for Amazon Web Services going forward.”

There are risks. Even though a Pew Research Center poll shows that 56 percent of respondents are supportive of National Security Agency phone tracking as an anti-terrorism tactic, this could change as more people come to understand the proportions of the spying and how it affects their privacy — and they could turn on a company that wants it all, from selling books and groceries, to becoming a big player in the surveillance state.

More

Comments | More in Amazon.com

May 20, 2013 at 10:22 AM

Yahoo’s big Tumblr deal: a sign of things to come?

Ever since the end of the recession, analysts have been predicting a revival of mergers and acquisitions. While some big deals have been consummated — American Airlines and US Airways, Amazon.com and Goodreads, and the buyouts of Dell and Heinz — predictions of a broad M&A revival in the United States have mostly come to little. Global deals performed better. For example, a report from the Jordan Edmiston Group, an investment bank, showed the value of M&A deals in marketing and related sectors fell 38 percent from the first quarter of 2012 to the same period this year. Overall, deals were down 4.4 percent from a year ago.

Now, with Yahoo’s $1.1 billion deal for Tumblr, will more mergers become a part of the bull market? This deal is a gamble on the part of Yahoo CEO Marissa Mayer, the turnaround boss who came from Google. The social networking and microblogging site attracts 300 million visitors a month; it’s also unprofitable. You can’t acquire your way out of trouble. But Yahoo shares are up modestly this morning.

Some areas look promising, if M&A is your thing. For example, Vodafone Group, which could net $100 billion for selling its stake in its joint venture with Verizon Wireless, is seen in the market for new deals. Talk in the railroad industry has Kansas City Southern, which controls a lucrative line into Mexico and is the smallest Class I railroad, seeking a buyer. With corporations sitting on record cash and interest rates low, there’s plenty of means to do deals.

More

Comments | More in Amazon.com

May 17, 2013 at 10:28 AM

Poll: Your big economic worries

The Dow is over 15,000, corporations are sitting on record amounts of cash, M&A activity is picking up, the deficit problem is on track to being solvedinflation is nearly non-existent and the U.S. economy is performing better than that of almost all other industrialized nations. Metropolitan Seattle, with 5.5 percent unemployment, is getting close to what economists would consider full employment. On the other hand, millions remain unemployed, wages are stagnant and inequality is the highest we’ve seen since the 1920s and perhaps even at a historic record. It’s a recovery, but one very different from those seen in the post World War II era.

Consider that a recession comes along around every seven years or so. Also, the banking industry is as dangerous as ever, and so politically powerful that it was most recently able to push back meaningful regulation of derivatives. Federal austerity is holding back a more robust recovery. Recession in the eurozone, a slowdown in China and political tensions in east Asia are among many concerns. What has you most worried?

Read on for the best links of the week and the haiku:

More

Comments | More in Aerospace/Boeing, Amazon.com, Banking, Boeing, Deficit, Eurozone, Global economy, Great reset, Jobs/Unemployment

Next Page »