The big deal about 3rd party sellers

Not too long ago in August, Walmart followed Amazon’s decade long lead by allowing third parties to sell products on their site. Now Sears is getting in the game.

Why are third party sales so important to online retailers? A few reasons.

Increased revenues at no cost

Every time you purchase something from a third party seller on Amazon.com, Amazon gets a cut. But, unlike with everything else on the site, Amazon didn’t have to purchase the item, store the item, account for the item as inventory, or fulfill the item once it was purchased. All they do is connect buyer and seller and take a cut. It’s your classic win/win/win situation. And what a win it is:

Amazon doesn’t break out the dollar value of third-party sales, but they made up 31 percent of the overall unit sales in the third quarter of 2009, according to a regulatory filing. Amazon said more than 1.8 million seller accounts were active on its site worldwide in Q3, up 24 percent from a year ago.

Think about that for a second. Amazon is making 31 percent of its sales from third party sellers for products they never need to touch. It’s all pure profit.

Of course, Amazon didn’t pioneer this model, eBay did. But, unlike eBay, which has lost its way entirely, Amazon protected the integrity of the retail experience. Bad sellers are punished ruthlessly and sellers are kept in line. Buyers are not a problem because Amazon handles payments directly. As long as sellers can make money they will stay with Amazon no matter what the terms, but once a buyer is disappointed or taken advantage of they may disappear forever. Amazon understands the leverage and priorities implicit in this three-way relationship.

More sellers create a deeper catalog

On its own, Amazon may not be able to anticipate every potential product a consumer may want. But, if you have 1.8 million sellers like Amazon you also have 1.8 million individual sources for ideas. Third party sellers may sell any number of things from small run specialty products to niche clothing brands and anything else that would be difficult for a giant like Amazon and its army of buyers to identify.

Likewise, the more products you offer from more sellers, the more opportunities you have to provide something a customer wants. And, the more opportunities Amazon has to appear in search for these more obscure items. By encouraging third parties to sell and by protecting the buyer’s retail experience Amazon has created a retail network that is larger and more vibrant than Amazon would be on its own. Third party sellers allow online retailers to sell literally anything that can be sold.

Third party sales provide valuable data

If you’re an online retailer, you want to capture any online transaction you can. Since third party sellers allow you to sell anything, you have no reason not to try to sell everything since you’re simply using your market power to connect buyers and sellers. One thing most people fail to account for is how much data you can glean from third party sales. For example, let’s say there is a brisk business in third party sales for kitchen utensils. If you were Amazon, you might look at the stats for this product category and decide to start buying more products to build out your kitchen utensil product line so that you could take advantage of the buyer interest in the category. Without the data from these third party sales you might never have gone after this category. So, such data is extremely useful in turning up non-intuitive findings.

The problem with the Sears’ and Walmarts of the online world is that no one wants to shop at Sears or Walmart. They do so with reluctance, either because they feel don’t have the financial means or because they have no other choices. With Walmart positioning itself as the world’s low cost purveyor of low quality products and nauseating retail experiences and Sears edging toward oblivion, Amazon is in perfect shape for growth with an impeccable reputation and a powerful brand that they protect at all costs. Amazon understands what Walmart and Sears have forgotten: people want value and value doesn’t just mean having the lowest price. It means making people feel like they got their money’s worth.

Plant life as dynamic

I read this article about new research on plant behavior that included the following paragraph:

Just because we humans can’t hear them doesn’t mean plants don’t howl. Some of the compounds that plants generate in response to insect mastication — their feedback, you might say — are volatile chemicals that serve as cries for help. Such airborne alarm calls have been shown to attract both large predatory insects like dragon flies, which delight in caterpillar meat, and tiny parasitic insects, which can infect a caterpillar and destroy it from within.

The idea that plants possess a certain awareness or at least a tactile sense perception is rather startling. Imagine walking through the woods among the trees who are dimly aware of you. We are used to thinking of trees as almost inanimate objects, pushing forth from the dirt in a blind process of life. But, if they can respond to attack and can signal one another then it brings them closer to possessing a certain being.

Apple Should Buy Twitter (and Facebook) to Take On Google

Google’s business model is more nimble than both Apple and Microsoft. Build superior software, make it free, and make sure you get onto as many devices as possible. As such, it is a danger to companies that just make hardware. Even if those companies make beautiful devices like the iPhone.

Google is also a business that requires fewer individuals. You can have engineering teams of 20-30 people supporting major development projects. So, why don’t more companies do something similar? Why have otherwise capable companies like Microsoft and Apple largely failed in the realm of web applications? It is likely a question of leadership. The people who run Microsoft and Apple are not web natives. They do not love and believe in the web the way Google loves the web.

So, if Apple wants to stay relevant they need to get Google on the defensive. To do so, they need to take on search and a good entry into search would be to acquire Twitter and / or Facebook. Take search and make it truly social. Take search and personalize it. This is something Apple might be successful with.

Multiple sources at Google tell us that in informal discussions with Apple over the last few months Apple expressed dismay at the number of core iPhone apps that are powered by Google. Search, maps, YouTube, and other key popular apps are powered by Google. Other than the browser, Apple has little else to call its own other than the core phone, contacts and calendar features. The Google Voice App takes things one step further, by giving users an incentive to abandon their iPhone phone number and use their Google Voice phone number instead (transcription of voicemails is reason enough alone). Apple was afraid, say our sources, that Google was gaining too much power on the iPhone, and that’s why they rejected the application. #

Fantasy vs. Science-fiction

I’m going to try something different now to help try to post more often. Namely, not worry so much about the result and just try to exorcise the ideas as they come. Without further ado…

I was thinking about how I typically enjoy science-fiction novels more than fantasy and I wondered why this was. Then it occurred to me that fantasy is typically regressive and nostalgic. It represents a longing for the child’s world and an escape from reality. Harry Potter is a good example of this, as is the Lord of the Rings. I would even say that Star Wars is a fantasy film, rather than a science-fiction film. The technology in Star Wars is rarely focused on or explained (compared to Star Trek, which does attempt to explain), instead the story is consumed with the magical metaphysics of the Force. So, Star Wars is a space fantasy. Complete with wizards (Obi Wan) and dark lords.

Fantasy is about a small, simple, magical world. This is the world of the child, but also the world of the past. Looking back things become simple and romanticized. The concept of the Golden Age is as old as we are.

Fantasy worlds operate as cartoonish backdrops for personal dramas and interpersonal narratives. There is often little explanation of how things work or any real consciousness of the larger objective reality. There is a narrowness of perspective that often dictates a flatness and reliance on cliche that relegates fantasy narratives to the ghetto of genre fiction. Fantasy narratives like The Lord of the Rings occasionally break out and do something impressive, but only by taking on greater reality and connection to the real world. Much of LoTR is inspired directly by Anglo-Saxon and Germanic history and much of its resonance is due to its connection to this world, also referred to as “Middle Earth” in Norse myth.

Science-fiction is about the future from the perspective of the present. It is not really about the future itself. This is why science-fiction often ages badly. Science-fiction seeks to enlarge the compass of the known. It is speculative. And, in speculating it is often laughably wrong. But, it also points the way and suggests possibilities for how the present could develop along its current course. Science-fiction is prophetic where fantasy is sentimental. Science-fiction, since it encourages a more broad perspective, is more creative and interesting. Fantasy is referential and narrow and as soon as it becomes unmoored from cliche it ceases to be fantasy and becomes science-fiction or speculative fiction.

Of course, many science-fiction narratives are so narrow as to resemble fantasy. Just replace the tableau of swords, elves, and magic with lasers, aliens, and advanced inexplicable science and you have the same uninteresting garbage.

The portrait of a doomed man.

Another argument for casting your net widely is that you learn about new and fascinating things that rarely pop up in daily conversation, especially in our cloistered workaday lives. Today by way of a diary entry by Samuel Pepys, the ‘Eikon Basilike’ (full text), the “Royal Portrait”, a purported autobiography by King Charles I published after his regicide following the English Civil War.

I am not so old, as to be weary of life; nor (I hope) so bad, as to be either afraid to die, or ashamed to live: true, I am so afflicted, as might make Me sometime even desire to die; if I did not consider, That it is the greatest glory of a Christians life to die daily, in conquering by a lively faith, and patient hopes of a better life, those partiall and quotidian deaths, which kill us (as it were) by piece-meales, and make us overlive our owne fates; while We are deprived of health, honour, liberty, power, credit, safety, or estate; and those other comforts of dearest relations, which are as the life of our lives.

Though, as a KING, I think My self to live in nothing temporall so much, as in the love and goodwill of My People; for which, as I have suffered many deaths, so I hope I am not in that point as yet wholly dead: notwithstanding, My Enemies have used all the poyson of falsity and violence of hostility to destroy, first the love and Loyalty, which is in My Subjects; and then all that content of life in Me, which from these I chiefly enjoyed.

Indeed, they have left Me but little of life, and only the husk and shell (as it were) which their further malice and cruelty can take from Me; having bereaved Me of all those worldly comforts, for which life it self seems desirable to men.