November 14, 2018--Amazonia

Most writers are so routinized that they often have fetishes about their writing instruments. 

The pens and paper they use, the typewriters they pounded on or still write with, and more recently their computers and word-processing software.

For example, Paul Auster will use only his Olympia SM9, Maya Angelou exclusively wrote with an Adler Meteor 12, and Philip Roth an Olivetti Praxis 48.

When it comes to pens and paper, Stephen King uses a Waterman Hemisphere; J.K. Rowling, as is her wont, formulated her initial Harry Potter ideas on paper napkins; Jack Kerouac (when he wasn't typing On the Road on a continuous roll of paper--Truman Capote once famously put Kerouac down by quipping he wasn't a writer but a "typist") wrote with a modest Bic Cristal pen; and a major piece in last Sunday's New York Times Style section noted that writer Ben Schott (whoever he is) uses only Jinhao pens (whatever they are--I assume something very fancy and expensive to qualify for mention in the glitzy Style section).

I confess to being equally compulsive.

When not typing on my MacBook Pro, I have insisted for more than four decades that I can only function on yellow legal pads with a Pentel Rolling Water, Roller Ball, Cushion Ball pen with black ink and a medium (.80 mm) tip. 

Since I periodically wake up shaking with anxiety that Pentel will soon stop making them, when most stressed, I order pens by the dozens and have stocks of them sequestered in both New York and Maine.

But there is a problem with this--I recently discovered they do not last forever but dry out after a few years. So it is a race in time to see what will expire first--my pens or me.

Nonetheless, I noticed recently that since my New York supply was down to just a few dozen I ordered a couple of boxes (12 in a box) to replenish my stash, holding my breath that they might no longer be available.

Reflexively, I went to Amazon and was relieved to find that they were available, but thought, before ordering them, that maybe I should shop around to see who was offering the best deal. Almost always that would be Amazon and what with Prime free shipping, why even bother. But being responsible I did.

Amazon was selling a box of 12 for $10.55, but Office Supply was offering the same thing, not on sale, including free shipping, for only $8.60, a nearly two dollar savings. So how could I say no. 

I didn't and ordered them from Office Supply. They arrived in less than two days, though it was hardly urgent as I already had at least a three-year supply.

While waiting for the Pentels to be delivered I thought about Amazon's business model. 

I know a little about this as we own a number of Amazon shares. In fact, in our mix of financial instruments and investments, it's the only individual stock we have since we prefer index funds. It has been good to us as well as to other early investors so I am a little worried that by talking about this I may spook my favorite investment. 

This of course is ridiculous. 

But with Chaos Theory suggesting that just one butterfly flapping its wings has an effect on things on the other side of the world couldn't I, by flapping my mouth, unleash global, macro-economic forces? Again, I know this is just the anxiety-ridden me talking.

The founder and CEO of Amazon, Jeff Bezos, seemingly the world's richest man (unless Vladimir Putin is), wants Amazon to become America's "everything store." He appears to be well on his way to realizing this goal. In fact just yesterday Amazon announced the location of its second multi-multi billion dollar corporate headquarters, joining the original one which will continue in Seattle. This move is so vast that they will split this new headquarters into two halves with one located in Long Island City, across the East River from Manhattan, and the other in Arlington, Virginia, adjacent to Washington, DC.

I know that many hate Amazon, feeling it already is an exploitative  monopoly and that its predatory practices have contributed to the decline of brick and mortar businesses, including independent bookstores. 

Though Amazon is valued at nearly $1.0 trillion, up to 10 percent of its employees are on food stamps and another large percent work part time or seasonally. Thus the company takes advantage of business regulations that enable it to get away with not providing benefits  Though just recently Amazon moved to pay all employees, including those who work for Whole Foods, at least $15 an hour.

So Amazon is riddled with contradictions. Like many capitalist enterprises.

But then there is Amazon and my Pentels.

The fact that on this small-ticket item Office Supply figured out a way to undersell the Bezos' behemoth suggests that perhaps Amazon is not on track to take over the world. 

Could this, like the chaotic butterfly, mixing metaphors, be a straw in the wind? If Office Supply can figure out how to sell pens cheaper than Amazon why can't they and others figure out ways to sell virtually everything cheaper and thereby give Amazon some well-needed competition?

I know, my stock. But, for the sake of the world, I'm OK with whatever happens to my Amazon. But about the Pentels, I'm not negotiable.

Philip Roth at His Olivetti

December 28, 2017--AMAZON

Streets here can be so crowded that there are times of the day when wobbly me is better off not venturing out. 

Forget the roadways. Traffic is at a perpetual crawl. I read in the New York Times a couple of days ago that the average speed for vehicular traffic is now 4.7 miles per hour, not much more than walking speed, down from 6.5 mph just five years ago.

Keep this up and we will soon descend into a perpetual state of gridlock.

What to do?

Some are calling for congestion pricing--charging cars and trucks for the use of the streets--we are charged for parking so why not for driving? 

They are doing this in London and other places and some claim things have gotten marginally better. Those calling for this in NYC say the city and state can use the money collected to fix the deteriorating subway system. If that system gets worse (and it will) think about the consequences for car and truck traffic.

Others of course are disagreeing. They think it would be bad for business just as tax increases cause businesses to leave town, move south, go offshore.

More objective analysts are attempting to understand what is happening, what is causing this accelerating crash of the city's infrastructure. For the subways that's easy--people who have responsibility for maintaining the system have ignored the deterioration, kicking the serious and cascading problem down the road. Or tunnel.

Others blame the exponential proliferation of Uber and other new for-hire car services.

Yellow cab licenses for decades have been limited to 13,600, whereas the new car services have grown to103,000 vehicles prowling the streets--often without passengers and this, some claim, is primarily responsible for the crisis. They note that things were better just four years ago when there were "only" 47,000 affiliated with Uber and other emerging ride-share companies.

There is one more thing not mentioned--Amazon. Amazon, the on-line e-commerce behemoth. 

I should be the last one to blame Amazon for anything. We have an array of financial investments, including in stock funds, but only one individual stock. Amazon. Some time ago I thought that Jeff Bezos, Amazon's founder and CEO might turn out to be the world's best businessman. All time best and now richest man in the world. Other than Vladimir Putin. And so. I said, "Let's get some. Amazon stock." That obviously turned out well.

But self-interest aside, I think Amazon is a major contributor to the traffic mess.

Here's why--

Their package distribution system, which at the last link in the supply chain, requires delivery men to get your order from the truck to the lobby of your building.

And that's a lot of packages that require a lot of trucks in a place as densely populated as New York. Our building, for example, which has about 215 apartments is being buried in packages. We needed to renovate the lobby last year, minimally to quadruple the size of the package room. The doormen say our building is getting about 200 packages a day. Including, I need to confess--for us at least one delivery a day.

Books, clothing, shoes, groceries, beverages, paper goods, cosmetics, vitamins, small appliances.

To expedite this flow of deliveries, about a year ago, along many blocks of lower Broadway, Amazon cordoned off parking spaces with red traffic cones and semi-legally moved a fleet of trucks into those spaces. 

Along with the trucks--many apparently hired from companies such as Enterprise (look for Bezos to take them over)--comes a platoon of delivery men who fill another lane of traffic with their unloading and stacking of packages more than six feet high onto hand trucks which then get pushed along the sidewalks, contributing to foot traffic congestion.

It is true that we do get either same day or overnight delivery for our bath salts and probiotics, but at some expense to other aspects of our daily lives--for example, not being able to drive or walk. 

In the meantime, CEO Bezos, as of yesterday, is worth about $100 billion. 

April 21, 2017--Dead Malls

I knew the culture had shifted when I needed AAA batteries, and rather than walking over to Kmart, which is less than two blocks from here, I ordered them on line from Amazon.

I wasn't looking to save money. The 8-pack of Energizers on-line cost all of $5.82 plus tax. And the weather was pleasant enough for the short walk and I wasn't being lazy. But, one-two-three, on semi-automatic pilot, I placed the order. They would be delivered the next day.

When I realized what I had done so reflexively, I thought it is no wonder that Amazon's founder and CEO Jeff Bezos is now the third richest man in the world as the result of selling AAA batteries, underwear, consumer electronics, and millions of other items. Of course, his success also comes from providing cloud-computing services.

If I had walked to Kmart, on Broadway, pulled up to the curb, I would have seen a truck and about half a dozen men unloading large plastic containers in which there were Amazon products for delivery to neighborhood apartment buildings. The next day, one of those containers would have my batteries and one of the Amazon workers would bring it to my building along with at least 50 other packages for residents.

So from the Amazon Website, to a huge fulfillment warehouse somewhere in central New Jersey, to lower Broadway, to East 9th Street, to my building's overflowing package room, my AAAs would find their way to me via Amazon's supply chain and Bezos would be a penny or two wealthier.

And in the process, aggregating this millions of times a week, the nature of retail business is shifting dramatically as more and more brick-and-mortar stores go out of business, including Radio Shack and, soon I am sure, my local Kmart. They cannot any longer do enough business to justify what it costs them in rent. I can see a bank or drug store moving in as they and restaurants are pretty much what Manhattan street-level commercial real estate is evolving toward.

The Department of Commerce projects that up to 100,000 retail workers will be laid off this year. Since October 89,000 already have been. Some of these, as economists put it, shifted from one sort of relatively higher-paying in-store retail employment to much lower-wage warehouse work, much of it part-time. And with fulfillment centers increasingly automated, the net number of retail workers of all kinds (including the delivery guys on Broadway) is falling at a significant enough rate to be of macroeconomic concern.

As Mark Cohen, director of retail sales studies at Columbia University's School of Business, says we are seeing a "slow-rolling crisis" rippling through the U.S. economy.

And then the malls themselves are dying. Macy's and Sears are going bankrupt. As they close their anchor stores in hundreds of malls around the country, shortly thereafter other shops that have depended on Macy's foot traffic are walking away from their leases and as a result the physical malls themselves are turning into ghost or dead malls.

On the other hand, as more people are leaving the suburbs to live in large and small cities, in many places downtowns are bouncing back. Small retailers, coffee shops, and restaurants are taking leases in recently boarded-up stores along Main Street.

But the bottom line still is a structural shift in the economics of retail as one in ten U.S. workers are retail workers. Along with traditional forms of manufacturing this is one more problem we need to address as it is yet another blow to the struggling middle class.

December 2, 2013--Cyber Monday

It was 5:30 yesterday evening when we pulled up to the house to unload groceries.

"Today's Sunday, isn't it?" Rona asked, actually knowing the answer. "So what's that mail truck doing delivering packages on Sunday?"

"It's because Amazon made a deal with them to deliver orders on Sundays."

"You mean the American people, the president, and Congress couldn't get them to do it but Amazon could?"

"What can I tell you."

"Let's get upstairs as soon as we can," Rona said, "I think 60 Minutes is doing a story today about Amazon. About Jeff Bezos. Your favorite."

"You know I can't stand 60 Minutes any more. They have descended basically to doing puff pieces. I stopped watching after Mike Wallace retired."

And, as predicted, the story about Bezos was mainly fluff. The interviewer was Charlie Rose who is a personal friend of the Besoses, Jeff and MacKenzie, his novelist wife. The whole thing was like an unpaid advertisement for Amazon.

But there were a few things of interest. Great interest.

One of Amazon's senior executives, I think the person responsible for Amazon's fulfillment operations--the people who round up, pack, and ship orders--when asked said that Amazon's long-range plan is to sell "everything to everyone."

He added, "I think." But I believed him since they seem well on their way to achieving their goal. Currently they have nearly 225 million customers worldwide.

A lot of the piece was shot in one of Amazon's one-million-square-foot fulfillment warehouses--one of, I think, 19 in the United States--with more under construction so that packages can get to customers quicker than the typical two days at present. Thus the Sunday delivery deal they struck with the USPS.

And Bezos, told Rose, they are working to get orders to customers even faster than that--they hope to be able to deliver 80 percent of orders the same day. Which is an enormous challenge since they get 300 per second.

When Charlie put on his faux-incredulent face, Jeff winked at him and indicated he was willing to let his friend in on a top secret project--he agreed to show him the drones--yes drones--Amazon is developing to deliver packages right to people's doorsteps within hours of their placing orders.

And sure enough 60 Minutes had video footage of these little drones with yellow plastic buckets attached to their underbellies hovering over a suburban home, using GPS coordinates--just like in Pakistan--before descending to the lawn, uncoupling itself from the yellow tub before lifting off to swoop back to the fulfillment center.

The still incredulous Rose, with his mouth still hanging open, could barely deliver a follow-up question, so Bezos, unasked, said that 85 percent of their orders could fit into one of those plastic boxes and so . . . He didn't need to finish his sentence.

Charlie, now recovered, asked how soon packages would be delivered that way.

Bezos laughed--he's worth about $25 billion and that makes it easy to chuckle at such things--that it wouldn't be for a few more years. They had to make sure the drones won't cause collateral damage, landing on people's heads on streets such as ours in Manhattan.

"So," Rona said, as we watched with our mouths also agape but for other reasons (everything to everybody?), "I guess that means the post office will be doing Sunday deliveries for quite some time."

"Good for them," I said, "I mean I suppose. Good for them."

"And it all started in his garage in Bellevue, Washington less than 20 years ago. Good for him . . . I suppose."

I said, "Too bad we don't have a garage."

"Maybe we don't, but tomorrow, I'm buying some Amazon stock." She wrote a note to herself.

Shrugging, I said, "Get me some too."

November 11, 2013--Amazonia

Is Amazon on a course to take over the world? The world of commerce? And who knows what else?

What started in 1994 as a small scale on-line book store has become a retailing behemoth--the world's largest cyber retailer.

In addition to selling virtually every book in print as well as millions of used books via AbeBooks, Amazon now offers almost everything. There is a recent book, the well-titled, The Everything Store, that tracks this remarkable and potentially ominous growth.

From books Amazon quickly moved on to sell DVDs, CDs, video games, and consumer electronics such as TVs and VCRs. After they, from Amazon one could purchase furniture, appliances, apparel, toys, jewelry, and food. In fact, I buy my cookware from Amazon as well as olive oil and even pine nuts!

And then there are other, more exotic goods and especially services that Amazon has been successfully marketing. Best known, through cloud computing, they have been offering infrastructural computer services to some of the nation's leading companies as well as the U.S. government. Clients include NASA and the CIA. Also, the Obama reelection campaign used Amazon's cloud services! Too bad they didn't ask Amazon to run the website for the Obamacare federal health care exchanges.

Amazon discovered that the computer, information technology, data, and storage systems they devised to service their own customers could be used by others such as Netflix. Rather than Netflix developing its own  system to serve its subscribers they in effect rent space on Amazon's enormous computer and data networks.

Beyond this, Amazon has been a leader in the field of big data. They know so much about anyone who logs onto to their website either to shop around or buy something (200 million annually by objective measure) that they are able to mine that data and use it to market other enticing products to us.

If, like me, you buy olive oil, pots and pans, and spices from them, they can easily determine that I might be interested in cook books and kitchen electronics. Or, if I looked for information about Doris Kearns Goodwin's new book about Teddy Roosevelt, they pitch me with information and special deals about the equally recent book about the 2012 presidential election--Double Down.

Some people find this to be helpful; others, me very much included, find it spookily intrusive. I do not like the idea that "they" keep track of what I read and other items I look around for on the Internet. But I guess we are living in a post-privacy world and I should surrender to it since living off the grid--not attractive to me--is the alternative.

As Amazon has grown in size and the services it offers, there is mounting pressure by investors that it begin to make money. Though income last year was in the $61 billion range, as in all the years since it began, Amazon has lost money. Because of increasing its investment in its e-reader, Kindle, in 2012 it posted a loss of $40 million. Thus they pay no dividends, reinvesting almost all their gross income to scoop up other companies such as Kiva Systems and Zappos and expand the range of its own products and services.

People have been wondering what founder and CEO Jeff Bezos has in mind as his long-range business plan.

I think the answer is simple--drive competitive bookstores such as Barnes & Noble and electronics giants such as Best Buy out of business by underselling them; and then, after they are gone or reduced in size, begin to raise prices and allow income to move into the black.

Home Depot put local hardware stores and lumber yards out of business and Walmart wiped out downtown merchants on their march toward market dominance; and then, after doing that with deeply-discounted prices, began to raise them as the competition evaporated.

But I've noticed something new stirring in Amazonia--a few small steps to increase profitability that might suggest their future corporate strategy: rather than continuing to cut prices to undermine competition, Amazon has begun to raise prices. For example, they are charging more to ship books and some of their book prices--always heavily discounted--are beginning to creep up.

Until now, shipping has been free for orders of $25 or more. Soon, just in time for the holidays, customers will have to order at least $35 dollars of goods to qualify for free shipping. This will save the company a few million dollars a year and may also increase sales by prodding people to spend at least $10 more to continue to qualify for free shipping.

But then book prices are also quietly increasing. The evidence thus far is anecdotal. According to the New York Times, if you placed a "save-for-later" order recently for the University of Nebraska Press' bibliography of the novelist Jim Harrison, it was listed as costing $43.87 and then a week later returned to your "shopping cart," you might have found that if you wanted to complete your purchase it would cost $59.87. And this pricing strategy is proving true for some more popular books

That new Doris Kearns Goodwin biography of Teddy Roosevelt, The Bully Pulpit, offers another example. When I went to look for it on Amazon I found that though the list price was $40, it was available for $24, including shipping. Wondering if I could do better, I checked AbeBooks (ironically, an Amazon company) and found a bookseller who had them available for $19.88, also including shipping. True, from Amazon the book would arrive in 2-3 days and from the Abe dealer it would take 10 or so days; but, if you are not in a hurry, the savings would be $4.

I opted to be patient and ordered it in hardcover from PaperbackShop--US in Secaucus, New Jersey, the AbeBooks independent book dealer. I was not only happy to save a few dollars but also liked the idea, in a small way, of not so automatically helping Amazon take over the world.