My favourite example is amazon.com and pets.com. In hindsight amazon looks like an obviously good investment and pets.com doesn't, however amazon was heavily invested in pets.com itself.
My favourite example is amazon.com and pets.com. In hindsight amazon looks like an obviously good investment and pets.com doesn't, however amazon was heavily invested in pets.com itself.
But the idea in early e-commerce was sane. Undercut retail on cost, increase profit. The ones that failed, failed on execution. Pets.com failed because you can't ship massive bags of food below cost and expect to make a profit.
Setting fire to cash to have the best model that anyone else can also do isn't a business model. They're never going to be able to stop setting fire to cash or they'll fall behind immediately. Their user base will not pay the bills. It's an obviously bad investment.
I don't see anything obvious about that at all for amazon in the book selling days.
dog food is heavy, and a repeat purchase that often requires its own store and brings no joy. Its the ideal thing to get delivered to your house on a schedule.
books are something you choose differently everytime, and the people that like them read recreationally.
Bezos was on another level, launching a successful company(online books) that was effectively just a way to boot strap into an everything store.
It was actually even smarter than that. People also forget about "media postage" rates that existed at the time. (They still exist, just fyi)
In 1999. To ship a book using media mail cost of $1.13 for the first pound and $0.45 for each pound up to 7lbs. It got cheaper per pound above that.
This meant even heavy books were relatively cheap to ship. Way cheaper than random goods.
Wasn’t one of Amazon’s biggest advantages over brick and mortar stores the fact that you could effectively avoid sales tax for a lot of the purchases?
I heard that's why Washington state was chosen. Close to tech talent (Microsoft was there) and fewer people living there than other tech-heavy states such as California, so the US tax-exempt market was larger from Washington state.
I believe ChatGPT or Anthropic are both trying to be the "everything store" - whatever that may look like - of this brave new world. Call it a "business OS" and/or "life OS", they're clearly aware that research alone won't win dominance, and signs have been cropping up for the last year: Cowork, Research to Artifact pipelines, Dots/Instinct/Muse-esque personal assistant alternatives.
But the counterpoint still translates here: Amazon did not start with 1000 warehouses (i.e. Anthropic's debt obligations) and _then_ race to build a marketplace that would fill them with everything under the sun. It started lean and mean, and I suspect the Anthropic-killer will do the same.
And despite all of that ... Chewy is successful.
CHWY is -7% per year since Sep 2019, while SP500 is +16% per year, and CHWY has 2% profit margins, give or take. I don’t know what success means, but I would not have wanted to buy CHWY stock anytime after IPO.
My favorite example is WebVan vs. Instacart. What a difference a decade makes.
Uber / gig economy seems to be the biggest difference
In some ways, the biggest "new form of business/commerce" that ubiquitous smartphones lead to was the entire gig economy.