MONEY online shopping

8 Amazing Things People Said When Online Shopping Was Born 20 Years Ago

Vintage 1960s advertisement from the Electric Light and Power Companies of America of what future online shopping could be like
Advertising Archive—Courtesy Everett Collection

My, how things have changed, and yet remained the same. Two decades ago, when the era of e-commerce was born, people fretted about online fraud and security—and that the Internet had too much porn.

Toward the end of 1994, MONEY magazine published a story about the sharp rise in consumers shopping from home. That year, some 98 million consumers made $60 billion worth of purchases from home, nearly all of it through phone orders prompted by mail catalogues and TV shopping channels. Another home-shopping option had suddenly arrived on the scene that year, too–an “on-line shopping service [that] requires a PC or Macintosh that’s equipped with a modem.” The article explained how such curious services worked:

For ordering, many of the “computer stores” offer shoppers an 800 telephone number to call. Others are set up so a shopper can click on a box next to the desired gift, type in payment information and the shipping address and then hit a “Submit Order” button. Some companies even let shoppers pick out the wrapping paper via computer.

That’s pretty much how people talked about e-commerce in 1994, when it was brand-spanking-new, not to mention weird, sorta scary, and totally unfamiliar to most consumers. American Public Media’s Marketplace noted that this week marks the 20th anniversary of online shopping, as chronicled in an August 1994 New York Times story describing how one shopper made history by purchasing a “compact audio disk” (a.k.a. a CD, which is how we used to listen to music before iPods, kids) by Sting—a transaction “celebrated as the first retail transaction on the Internet using a readily available version of powerful data encryption software designed to guarantee privacy.”

In honor of the big anniversary, we thought it would be fun to look back at how the birth of online shopping was viewed in 1994, a year before Amazon.com arrived. There was some skepticism, lots of confusion, and plenty of futuristic gee-whiz bluster about all of this “on-line” business. For instance, a headline in The Financial Post (Canada) described e-commerce as a “tele-shopping magical experience,” and the story that followed was a bit dismissive of “the latest fad.” An October ’94 Computerworld story pointed to the group of skeptics who categorized online shopping as just another component of the “infohypeway” that was the Internet.

Mostly, though, what’s amazing is that, in retrospect, so much of what was said and written in 1994 about online shopping was pretty much right on the money. From the get-go, many people realized that e-commerce would revolutionize shopping, by making it cheaper, more convenient, and more customizable than traditional shopping in physical stores. There were also tons of concerns about security, fraud, hackers, and porn, as well as predictions that as online shopping grew, advertising would absolutely ruin the Internet.

Without further ado, here are some of the funny, odd, and/or eerily prophetic ways people viewed online shopping 20 years ago, back when it was just a baby.

Online shopping was as hip as the Marlboro Man. An end-of-the-year article from USA Today featured a side-by-side list of trends that were In and Out for 1994. The Out side included no-longer cool stuff like faxes, Bud Light, Joe Camel, theme parks, and TV shopping, while the corresponding IN side listed the Internet, microbrews, Marlboro Man, casinos, and “on-line shopping.”

Everything had to be explained in (now) excruciatingly painful detail. A modem, a New York Times magazine story explained, was “a small device that sends and receives computer language over the telephone and does with computer files what a fax machine does with paper.” You need one of these to use the Internet and possibly buy stuff, you see.

People had no clue where or how to buy stuff. “One dirty little secret on the Internet is that nobody’s selling anything yet,” an executive at QVC told a publication called Network World. At the time, home-shopping networks like QVC were viewed as potentially huge players in online shopping. Few retailers had their own websites or Internet “pages,” as they were more often described, so they used services like the Internet Shopping Network—something of an “electronic home shopping mall,” as Reuters put it—to post items for sale. At the time, the Internet Shopping Network merely listed product descriptions, but the plan was to eventually feature product photos and “eventually, moving pictures of the items.”

Roland Bust, a marketing professor at Vanderbilt University, explained to the Atlanta Journal and Constitution that most consumers “don’t know where to go” when they attempted to shop online in 1994. “Like a real mall, a cyberspace mall has lots of stores, and finding a particular product can be hard unless a user knows which stores carry what,” the story summed up. Interestingly, the article also pointed to CD-ROMs as another online shopping option at the time. They sold for $8 and up, and when inserted into a computer, the consumer could access the contents of a couple dozen catalogues, from merchants like Spiegel and L.L. Bean.

There was plenty to be scared about—privacy, fraud, porn, and more. If you think your private information is easy for scammers and marketers to gather now, just think about the Internet circa 1994. The NYT magazine story regarded email as a “reasonably private written message.” The Mail on Sunday (London) warned consumers that purchase orders must be placed on the phone because “credit card numbers given down a computer are not yet safe from fraud.” Five of the 10 most popular “newsgroups” then on the Internet were “sexually oriented,” the Atlanta Journal and Constitution cautioned, and because free porn was easy to come by and the “Internet has more dirty jokes than the walls of a public bathroom,” there was cause for concern that unsuspecting web surfers and shoppers would be horrified with what they (or their children) found. ‘Just the title of some of the discussion groups is something you don’t want your kids to see,” the head of IBM’s Internet services said to the (London) Times.

It was assumed advertising would ruin everything. This now seems pretty laughable, but in the early ’90s, Internet culture was “decidedly uncommercial,” in the words of Computerworld. What was then a niche group of users wanted the Internet to be a place where ideas and information could be shared quickly and openly. But as such it was open to the possibility of “being hijacked by companies, which will flood the system with advertising,” according to the Times.

“Advertisers are looking for ways to exploit cyberspace,” the Atlanta Journal and Constitution stated. And many Internet users weren’t happy about it. So-called “commercial zones” were “created on the Internet for exclusive use by advertisers, but companies haven’t figured out how to get netsurfers to look at them. Efforts to plant ads in the network’s 2,500 newsgroups have caused an uproar.”

Another prophetic assumption: Online shopping would make stuff cheaper. “Selling goods electronically can be 40% to 50% cheaper than by conventional means,” Computerworld explained. Without the need for salespeople or even a physical sales space, it seemed inevitable that online shopping offered sellers a means to lower overhead costs—and therefore lower the prices charged to customers. “Nobody’s going to want to do electronic shopping if there’s no advantage to the customer—and that advantage is cost. You’ve got to save money,” Randy Adams, a serial entrepreneur who went on to co-found Funny or Die, told the San Jose Mercury News in 1994, when he was involved in an e-commerce startup. “I think conventional retailers are not going to like what we’re doing because we’re forcing margins down.”

Sure enough, they didn’t—and they still don’t like how e-retail giants like Amazon are pushing around the competition and product makers alike, usually with the idea of getting prices lower for the customer.

People saw the upsides of customization and convenience, too. Not only would online shopping make it possible to buy stuff 24/7, regardless of “store hours,” and without dealing with traffic or even leaving the house, but e-commerce also brought with it the opportunity to order far more than what one found on a store’s shelves. A 1994 USA Today story focused on the new concept of “made-to-order merchandising,” in which customers could order shoes, jeans, greeting cards, and more in the personalized style and size of their choosing. “The trend is the first step toward on-line shopping—when customers will use computers to order exactly what they want rather than going to a mall,” the article stated.

Overall, they knew online shopping would be a huge deal. “At some point it will be a really big business,” a UBS analyst said to Reuters in 1994. How big? Analysts told Computerworld that “on-line shopping could explode into a $5 billion sales channel in a few years.” In fact, when the Census bureau began tracking e-commerce sales in 2000, it reported that sales had hit $5.3 billion—in the fourth quarter of 1999 alone. Forecasts call for e-commerce sales to hit $304 billion in the U.S. for all of 2014.

MONEY E-Commerce

3 Ways Walmart Is Trying to Out-Amazon Amazon

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Okko Oinonen/GalleryStock

Walmart might look like the sleeping giant of e-commerce, but it has one surprising advantage in the online space.

On Monday, Walmart announced a major overhaul of its e-commerce offerings. The brick-and-mortar Goliath plans to add new features to its website in the coming months, including more personalized product recommendations, discounts available in the user’s local store, and significantly faster check-out. The moves are presumably aimed at making Walmart more competitive online with Amazon, the other dominant force in American retail.

Walmart still dwarfs Amazon in terms of total revenue, having pulled in $473 billion in 2014 compared to Amazon’s mere $60.3 billion. But Walmart’s been woefully slow to embrace online commerce, a realm where Amazon outsold the biggest-box retailer seven-to-one last year. And the larger trends have to concern the executives in Bentonville: E-commerce in the U.S. grew at about six times the rate of conventional retail over the past year.

On the other hand, Walmart is hardly the sleeping giant that it’s often portrayed as. A closer look at the company’s moves in recent years reveals a slow but consistent effort to catch up to Amazon’s online offerings. That effort is starting to pay off: Walmart’s online sales grew 30% in the 2013 fiscal year, to $10 billion. (Amazon’s online sales started at a much higher number, but grew “only” 20% during that time.)

Meanwhile, Walmart may have an ace in the hole — in the form, ironically, of its 4,900 U.S. retail outlets. Generally seen as a symbol of Walmart’s lumbering inability to adapt to the digital world, those stores may prove to be Walmart’s one big advantage in the online space.

Here are three ways Walmart is trying to turn up the heat on its major e-commerce adversary.

1. A Better Online Experience

Walmart’s Monday announcement was entirely web-centric, and focussed on an area that has long been one of Amazon’s great strengths: usability. Amazon pretty much invented one-click shopping, and has the patent to prove it. Meanwhile, users of Walmart’s old site had to go through six pages before they were allowed to click the buy button. That’s not how you win customers from the market leader. The new Walmart site, which is being rolled out gradually (about half of Walmart.com’s visitors have been using a portion of its new features), makes major strides in this area by turning the buying experience into a simple, one-page process.

Walmart will also be introducing a custom recommendation engine that serves users with customized product suggestions based on past searches, purchase history, and location. This personalization even extends into the brick-and-mortar stores by showing customers deals and coupons that they can cash in at nearby Walmart locations.

walmart
Walmart’s new site is trying to let you buy what you want in as few steps as possible.

2. Same-Day Delivery

Amazon, eBay, and other e-retailers know their next big opportunity for growth — and the one huge disadvantage they face vis a vis brick-and-mortar stores — is the human desire for instant gratification. Overnight delivery is great, but if your iPad/TV/groceries are just a five-minute drive away, even the next day can seem like too long to wait. As a result, Amazon has been spending through the nose to build the infrastructure necessary to make same-day delivery a reality. Already, Bezos and Co. offer it in 12 metro areas.

That might sound like a lot, but Walmart has the potential to put Amazon’s same-day coverage to shame. The chain has thousands of locations across the country, and has long advertised a “Site-to-Store” feature that allows customers to order online and then pick up their order at a nearby Walmart location right away. Lately, the company has been putting increased effort behind this hybrid digital/conventional form of retail: The number of products available for same day pick-up has tripled in the past 18 months. And having a store with an actual cashier also means Walmart customers who purchase online can choose to pay for their order in cash.

If the item isn’t on shelves at the moment, Site-to-Store also replicates (and pre-dates) one of Amazon’s most useful features, Amazon lockers, by allowing customers to order nearly any item and have it delivered to a store location.

So why isn’t Walmart dominating when it comes to delivery? Well, it turns out that executing on the promise of same-day delivery isn’t so easy. Amazon Prime typically still beats Walmart shipping times on all but a select few products. But Walmart is getting better. The chain has rolled out traditional save day delivery in an increasing number of test markets, and according to spokesman Dan Toporek, has begun building out its next-generation order-fulfillment network in which online fulfillment centers work in concert with distribution centers and stores that are set up to deliver web orders to create shorter delivery times.

3. War For Your Groceries

While everything from calling a cab to shaving has been disrupted by an online ordering model, stocking up on groceries has remained a chore most of us still have to do in person. But Amazon and Walmart have been one-upping each other in recent years to change that. Amazon made the first move, having launched AmazonFresh in 2007, enabling customers to order meat, veggies, and comestibles the same way they would a new printer. Initially available only to those in the Seattle area, Fresh has expanded into Northern and Southern California.

But Walmart has battled back with Walmart To Go, which the company tested in San Francisco for three years and recently expanded to the Denver area. What’s more, To Go has at least one advantage that Amazon can’t yet offer: Shoppers can order online and then pick up in stores. Walmart claims this as a real competitive advantage: Fifty-five percent of those surveyed supposedly told the retailer that they prefer to pick groceries up themselves so they can grab any forgotten items on the way through the checkout.

Still the Underdog… For Now

Make no mistake, Amazon is still king of the online retail space, and looks likely to retain its crown for the foreseeable future. But Walmart’s online redesign and roll-out of Amazon-like features that leverage its army of stores, make it a force that no one can ignore, especially as Amazon looks less focussed than ever on its core e-commerce business.

Either way, when two giants like Amazon and Walmart fight, the consumer tends to win.

MONEY

Facebook’s Next Battle Is Wrestling Your Credit Card Number from Amazon

Facebook logo with game pieces on top of it
Berliner Verlag/Archiv—AP Images

Advertisers will pay big bucks to get in your Facebook newsfeed. But will you really buy their products?

And they said Facebook couldn’t sell ads. Ha!

In its quarterly earnings report on July 23, the social network posted a blockbuster figure: $2.68 billion from advertising in the second quarter alone, a 67% increase from last year. About 62% of that revenue came from mobile devices.

With numbers like that, Facebook has started breathing down Google’s neck. eMarketer expects Facebook will capture 18.4% of the mobile ad industry this year, with Google holding onto 40% market share.

Facebook is gaining ground in the battle over mobile ads. But the next battle could be on a completely different front, against a completely different player: Amazon. Facebook’s new “buy” button, announced on July 17, will let Facebook users order products simply by clicking a button on a Facebook ad. The feature requires that users give Facebook their credit or debit card information to complete the transaction without ever leaving the social network.

Of course, Facebook has tried e-commerce before. In the past, the social network has asked users to open their wallets for virtual games and gift cards. But as more eyeballs moved to mobile devices, those efforts flopped. Even though advertising revenue has skyrocketed since the company’s IPO, revenue from “payments and other fees” (read: Farmville) has stayed relatively flat.

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But here’s why the “buy” button is different. Facebook doesn’t plan to sell its own products. It plans to sell enhanced advertising. Facebook’s founders are adamant that the buy button is just a way to “streamline” the process of buying from other companies.

“Commerce is really important, and it’s a growing part of our business,” COO Sheryl Sandberg said during yesterday’s earnings call. “But I don’t think people should confuse that with Facebook selling things directly. The more people discover things from a newsfeed and go on to purchase, the more important we are in driving commerce. That doesn’t mean we’re going to, or have to, sell products.”

“Our main business is advertising,” CEO Mark Zuckerberg added. “To the extent that we do payments, it’s related to that.”

When it comes to the “main business,” Facebook has a clear competitive advantage: its 1.32 billion users worldwide. A good proportion of those people are total addicts. Zuckerberg says that on average, users spend 40 minutes a day on Facebook. Even people who claim to dislike Facebook won’t shut down their accounts.

“We believe hundreds of millions of users face switching costs that keep them from leaving Facebook,” Morningstar analyst Rick Summer wrote in a recent report. “People are unlikely to leave unless they can take their network of friends, content, and applications with them.”

Still, Facebook doesn’t have a good track record when it comes to protecting users’ privacy. One poll found that only 5% of people really trust Facebook with their personal information. Why give Facebook your credit card number and purchase history?

“With anything that Facebook does, there are always questions about how people’s privacy is going to be protected and what sort of data and information is shared,” says Debra Aho Williamson, principal analyst at eMarketer. “With e-commerce there’s a lot of potential for questions because people are exchanging their credit card information, their personal information, making Facebook aware of things they’re actually buying – that’s data Facebook can use for advertising or creating other products down the line.”

In a way, Facebook’s greatest asset – detailed information about your likes, dislikes, and all of your social connections – is also its greatest vulnerability. If Facebook could tell you which products your friends like, maybe you’ll be more likely to buy those products within the social network itself (with just two clicks!). Or maybe your friends will be totally freaked out that you know what they’re buying.

“It’s one thing for me to give Big Brother information about every purchase I make,” says Oded Netzer, associate professor at Columbia Business School. “It’s another thing when Big Brother wants to share it explicitly or implicitly with my friends.”

Meanwhile, Facebook’s competitors are also arming themselves for this next fight. Amazon and Twitter recently teamed up on an initiative that lets you add products to your Amazon cart by replying to certain tweets. And just last week Twitter announced that it planned to buy CardSpring, a company that helps developers incorporate payments systems into their apps.

One other piece of news could spell trouble for Facebook. While mobile ad revenue is way up, impressions are down 25%. That’s because users will only put up with so many ads when they’re scrolling through their newsfeeds on their phones – so Facebook has a relatively limited amount of space to sell. (On desktops, the right-hand rail provides more available ad space.) Over the long-term, Facebook plans to ramp up video ads, monetize Instagram, and test the “buy” button. But the question remains: If users primarily use Facebook to interact with their friends, how much e-commerce will they really tolerate?

“This whole idea of making money from social networks has not worked well,” Netzer says. “More and more companies are finding that people interact with each other not for the purpose of talking about products – they’re just interacting with each other. The products are interrupting this discussion.”

Facebook may be winning the advertising war. But if Facebook’s revenue has skyrocketed on the premise that social networks are the best place for businesses to reach new customers, then the “buy” button may finally put that theory to a test.

MONEY Shopping

Amazon Fire Phone Seem Too Pricey? Discounts Bound to Come Soon

Amazon Fire Smartphone with 3D map feature
An Amazon representative shows off the 3D map features of the company's new Fire smartphone at the company's campus in Seattle, Washington June 18, 2014. Jason Redmond—Reuters

If you think the brand-new Amazon phone is too darn expensive, sit tight. Discounts and promotions are bound to pop up within a few months, if not sooner.

Jeff Bezos unveiled the long-awaited Amazon Fire Phone on Wednesday, and the reaction in tech and consumer circles has been near universal: The phone has some very cool features, but at a price point starting at $199, with a two-year AT&T contract required, it simply costs too much to make a big impact on the smartphone market.

The “uninspired price tag is a surprising disappointment,” wrote the New York Times’ influential Farhad Manjoo, pronouncing the Amazon Fire phone a “missed opportunity.” It’s “Just Too Expensive,” a tech column Huffington Post headline declares bluntly.

Sure, the Amazon phone hasn’t even been released for sale yet, but that doesn’t mean it’s too early to start thinking about when it will be discounted. As anyone who follows the consumer electronics world in general—and smartphones and Amazon in particular—might guess, the Fire Phone is not likely to remain in the “too expensive” category forever. It’s not a matter of if but when the discounts and deals appear.

According to Louis Ramirez, senior editor at the deal-tracking site dealnews.com, the typical Android phone experiences a 50% price drop after two months on the market, and what “with better and cheaper Android phones being released every other month,” the pace of markdowns is on the rise. “The Galaxy 5S, for instance, saw multiple 50% discounts just one month after its release.”

Because this is Amazon’s first phone, and because AT&T is the exclusive provider, it’s not likely the phone will be discounted that aggressively in the near future, but experts foresee bundled deals and/or short-term promotional price drops fairly soon. “I think around the holidays is definitely a safe bet,” Sucharita Mulpuru-Kodali, a leading analyst in e-commerce for Forrester Research said via e-mail. (A note “Sent from my iPhone,” btw.)

Ramirez says that Amazon regularly hosts a “Penny Pincher” smartphone sale around Black Friday, when popular Android phones are sold for 1¢ when signing a two-year contract. “Now that they have their own phone,” Ramirez says of Amazon, “it’s very likely that phone will join their Black Friday sale. They may not cut it down to a penny, but you can expect it to see steep discounts come November.”

(MORE: Four Theories on What Amazon and Jeff Bezos Are Really Up To)

Forrester’s Mulpuru-Kodali agrees with the consensus take that the current Amazon Fire Phone price point is too high. But she stressed there was solid reasoning for why it wasn’t set cheaper. “That’s so they have room to bring the price down if units don’t move,” she said.

By putting an initial price on the Fire phone of $199 (with a two-year AT&T service plan) or $649 (with no contract), Amazon is also locking in the idea that this is how much the device is truly worth. The concept is called “price anchoring,” and it allows the seller to create the perception of an amazing, can’t-pass-up deal when the price is suddenly marked down. The J.C. Penneys and Kohl’s of the world make a regular habit of utilizing the tactic, in order to make their “sales” seem all the more impressive.

Smart consumers know to tune out these never-ending sales and just assume it’s unnecessary to buy anything at “full price.” Amazon generally doesn’t discount its devices left and right in this manner. On the other hand, Amazon doesn’t go the full Apple route either by offering discounts only on older gadgets—and only when a newer version is about to hit the market or has already been released. What Amazon tends to do instead is roll out deals here and there, somewhat randomly but regularly, so that consumers don’t think of the full price as a total joke, and so the discounts seem truly special.

(MORE: It Doesn’t Matter That Amazon’s Streaming Services Are Lame)

The folks at dealnews noted that the recently released Amazon Fire TV streaming device is likely to remain priced at $99 for quite some time, but that Amazon has already discounted it by including it in bundles packaged with an HDX tablet. They also say it’s all but guaranteed that the streaming device will be marked down during one or more holiday season promotions.

Complicating matters for Amazon is the fact that, as the (Jeff Bezos-owned) Washington Post pointed out, this is an especially difficult time to jump into the smartphone market. Pretty much everyone who wants a smartphone already has one—likely one that they’re pretty happy with too, after switching and upgrading a few times. While many of the Amazon Fire phone’s features are indeed cool, it’s unclear how many people will summarily dump their Apple or Samsung phones for a device from Amazon, a company that has had some glitches when launching new products, as Bezos mentioned during Wednesday’s unveiling. “I’m a little skeptical that what they’re bringing to the table is enough to make people put down their current phone and change to a new device,” Gartner analyst Tuong Nguyen told the Washington Post.

Of course, one way to encourage people to switch phones is a substantial discount on the purchase price. Such a discount won’t bother AT&T, which makes its money via monthly subscriber bills. And it may not be anathema to Amazon, which in the long run makes its money not by selling devices but by getting consumers to do more and more of their shopping on its site. That’s the purpose of services like Amazon Prime, of course.

It’s no coincidence that Prime is included for a year at no charge with Amazon Fire Phone purchases. “Think of the Amazon Fire as a Prime subscription-selling machine that also happens to make phone calls and send text messages,” New York magazine observed. The phone’s Firefly feature, which allows the owner to scan almost anything imaginable and soon be able to purchase it via Amazon, was also obviously created with the idea of boosting Amazon sales into the next stratosphere.

If the tradeoff for such sales increases is that Amazon has to sell its phone at cost or take a loss during promotional sales, that’s a trade Amazon can probably live with. Anyway, for consumers, the moral is: If you like shopping at Amazon and like Amazon’s new phone but think it’s too expensive, don’t preorder it, and don’t pull the trigger within the first couple weeks it’s officially for sale. Wait a bit, and you’re sure to be rewarded with a better deal.

TIME Business

Amazon Launches Online Payment System To Rival Paypal

The e-commerce company’s new feature will allow users to pay using their Amazon accounts

Amazon debuted an online payment system on Monday in an effort to expand into money transfer services, Reuters reported.

The new service will allow over 240 million active monthly users of Amazon to use their stored credit and debit card information to pay for outside subscriptions such as cellphone payments or music subscriptions, for which Amazon will charge a fee.

This subscription billing system is an extension of Amazon’s previous efforts to compete with PayPal and other online payment service companies, such as Braintree, Stripe and Google Wallet. Last October, Amazon announced the “Login and Pay with Amazon” feature, in which partner websites allowed customers the option of paying using information stored on their Amazon accounts.

“[The new service] opens up Login and Pay with Amazon to other types of subscription-based business models, companies who want to make Amazon customers their customers, back payments with the A to Z guarantee and use transparent and low payment processing,” Amazon spokeswoman Julie Law told TIME.

Amazon has gauged the online payment system’s potential by testing the feature on various start-ups that charge recurring payments. Users of mobile phone company Ting that paid with Amazon’s new service spent 30% more on the Ting website, Ting product manager Justen Burdette told Reuters.

[Reuters]

MONEY online shopping

Boycotting Amazon: A Brief History

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Amazon employees in Germany staged a strike over wages and working conditions during the holiday shopping season of 2013. UWE ZUCCHI—AFP/Getty Images

Throughout its history, Amazon has been the target of attempts to get you not to shop there. Here's a look at past boycott efforts against the retailer, and how they fared.

The recent rallying cry for a boycott of Amazon.com is hardly the first of its kind. It’s also not the first time the world’s largest e-retailer has been accused of using bullying, unfair, tone-deaf business practices.

To put the current “boycott Amazon” campaign—as promoted by The Stranger, Reuters, Gawker, and others—in perspective, here’s a brief retrospective of previous efforts to put Amazon in place by not giving it any of your money.

1999
The Free Software Foundation urged a boycott of Amazon because the site claimed a patent on one-click purchasing—something of a novelty at the time—and was suing other e-commerce companies (including BarnesandNoble.com) that used a one-click purchasing process. “Amazon has sued to block the use of this simple idea, showing that they truly intend to monopolize it,” a widely circulated e-mail that called for the boycott stated. “This is an attack against the World Wide Web and against e-commerce in general.” A couple years later, Amazon seemed less inclined to bother using its patent to threaten competitors, and the boycott was dropped.

2007
Around 2007—the year that NFL quarterback Michael Vick was suspended and sent to jail for running an illegal dogfighting ring—animal lovers began loudly calling for a boycott of Amazon because the site sold videos, magazines, and books about dogfighting and cockfighting. At least two of the titles described as “torture guides” by the People for the Ethical Treatment of Animals (PETA) are still available for purchase on Amazon.

2010
In late October 2010, a self-published e-book went on sale at Amazon with extremely disturbing subject matter, summed up in the title: The Pedophile’s Guide to Love and Pleasure: a Child-lover’s Code of Conduct.

At first, despite massive protests online and calls for a broad boycott of Amazon, the e-retailer refused to remove the item from the site. The company released a statement with its justification to keeping the e-book for sale, explaining, “Amazon.com believes it is censorship not to sell certain titles because we believe their message is objectionable.” Within a few days, however, Amazon relented and stopped selling the pedophilia book.

2010
After U.S. political leaders pressured Amazon to block Wikileaks, the whistle-blowing website known for leaking classified security documents, Amazon relented, and stopped hosting the site. Free speech advocates including Daniel Ellsberg, who leaked the Pentagon Papers to the press in 1971 leak of the Pentagon Papers, promptly called for a consumer boycott of Amazon.

2011
For several years, Amazon was in the habit of spending millions of dollars lobbying various states to cut off local efforts to start charging sales tax on online purchases. To small business owners, the fact that sales tax was not automatically charged for e-commerce purchases gave e-retailers such as Amazon an unfair advantage—customers could easily save 7% or whatever the local sales tax rate was simply by purchasing online. (Sure, those consumers were later supposed to pay the sales tax they owed to the state, but almost no one did that.) In 2011, while California approved the installation of a sales tax on online purchases but hadn’t yet put the policy in practice, Amazon was actively trying to get the law overturned. The company’s efforts were met with a call to (surprise, surprise) boycott Amazon.

The boycott never really gained steam, and as of mid-September 2012, the campaign was totally moot, as Amazon began charging sales tax in California. Amazon customers in many other states who once could skip out on sales tax are now automatically charged sales tax on e-commerce purchases as well.

2011
In the fall of 2011, reports spread about deplorable worker conditions at Amazon warehouses and shipping centers around the country. An investigation by the Pennsylvania Morning Call showed employees at the Amazon warehouse in the Lehigh Valley enduring sweatshop-like conditions, including indoor temperatures so hot (over 100 degrees during summer heat waves) that the company arranged for ambulances to parked outside, waiting to treat workers for dehydration or other heat-related issues.

“Workers said they were forced to endure brutal heat inside the sprawling warehouse and were pushed to work at a pace many could not sustain,” the Morning Call reported. “Employees were frequently reprimanded regarding their productivity and threatened with termination, workers said.”

After consumer and worker groups got wind of Amazon worker complaints, a boycott was called for during the 2011 winter holiday shopping season. Some 12,600 consumers pledged to boycott Amazon for the holidays, if not indefinitely. If nothing else, Amazon stated that it has since installed much-need air-conditioners in warehouses, when appropriate.

The U.S. isn’t the only country where Amazon workers have voiced gripes against the company. In late 2013, for instance, Germany’s Amazon.com workers went on strike and staged protests outside the company’s Seattle headquarters due to “low wages, permanent performance pressure and short-term contracts.” Many have called for a boycott of Amazon among German consumers because of the company’s treatment of workers.

2012
Calls for a consumer boycott Amazon, as well as Starbucks and Google, throughout the UK started spreading in 2012, continued through 2013, and gained more traction in spring of 2014, with Margaret Hodge, chair of the public accounts committee in the UK, personally calling for consumers to avoid doing business with these companies.

Why? Due to a range of strategies employed by the companies, they pay relatively little in corporate taxes. Amazon, for instance, paid £4.2m in UK taxes in 2013, or 0.1% of its UK revenues. “It is an outrage and Amazon should pay their fair share of tax,” said Hodge. “They are making money out of not paying taxes. I no longer use Amazon. We should shop elsewhere.”

2013
In September, Boston-based author Jaime Clarke launched an odd website to help sell his new novel, Vernon Downs. The site’s url was PleaseDontBuyMyBookonAmazon.com. Clark said he was motivated to create the site because he wanted help independent publishers such as Roundabout Press, which published Clarke’s book.

“Most indie publishers rely on Amazon to sell their books, and to quote F. Scott Fitzgerald, the price is high,” Clarke said in a Q&A with CNET. “Indie publishers realize a fraction of the purchase price and are at the mercy of Amazon’s discounting policies.”

What’s more, Clarke just so happens to be the co-owner of Newtonville Books, which just so happens to be an independent bookstore—the ranks of which have been depleted during Amazon’s rise to power. “Independent bookstore owners loathe Amazon and its bald-pated founder, Jeff Bezos,” a Boston Globe story on Clarke explained.

2014
The most recent boycott Amazon push is related to the company’s ongoing battle with the Hachette Book Group. Essentially, Amazon wants to sell Hachette e-books at a lower price than the publisher wants, and to get its way, Amazon has stopped selling preorders of Hachette books, and it has slowed down the process of customers buying and shipping other Hachette books. For many, this clash epitomized the view that Amazon has too much power, is verging on a monopoly, and is perhaps just plain evil. And for many, this clash is what finally makes them feel that it is time to buy stuff elsewhere.

MONEY chinese stocks

What JD.com's IPO Says About Alibaba

The Amazon of China showed investors' appetite for Chinese e-commerce companies remains in tact. That's good news for Alibaba's pending IPO.

A Chinese e-commerce giant just went public, though it wasn’t the one you were probably anticipating. Still, it’s worth paying attention to.

JD.com JD.COM INC ADS EA REPR 2 COM 'A' SHS JD 1.5267% , known as the Amazon.com of China, debuted on the NASDAQ Thursday and performed slightly better than expected (the shares were up around 6% in their first two trading days). The news gives renewed hope for those waiting with bated breath for the initial public offering for Alibaba, expected later in the summer.

JD.com is a pretty big deal — the company is valued at more than $25 billion. But Alibaba will be much, much bigger. Some analysts believe the Street will value the company at around $170 billion, making it larger in market cap than Amazon AMAZON.COM INC. AMZN -0.2882% or Facebook FACEBOOK INC. FB 1.3066% . Brendan Ahern, managing director of KraneShares, said this would make Alibaba instantly “bigger than 95% of the Standard & Poor’s 500 index,” he noted. In fact, he added, “Alibaba will be the most valuable internet company after Google GOOGLE INC. GOOG 0.4216% , which has a market cap of about $347 billion.”

Despite JD.com’s smaller scale, there are plenty of things you can glean from the company’s debut to help you set your expectations for Alibaba. Here are three:

1) Both Chinese stocks and U.S. tech shares have been slumping, but investors still can’t resist China+Internet.
As the chart below shows, investors have lost their appetite for Chinese stocks in general this year — as seen below by the drop in the Markets Vector China ETF; MARKET VECTORS ETF CHINAAMC A-SHS ETF PEK 1.2056% . That’s owing to fears over the health of the slowing Chinese economy, which now faces threats to its financial and real estate sectors. Meanwhile, a drop in risk-taking among investors has also pushed the value of tech shares lower in recent months. Take a look at the losses suffered by PowerShares NASDAQ Internet ETF; POWERSHARES ETF - NASDAQ INTERNET PORTFOLIO PNQI 0.5261% .

PEK Chart

PEK data by YCharts

However, the bulls are giving Chinese Internet companies — especially Chinese e-commerce firms — a bit more slack, as evidenced by the performance of KraneShares CSI China Internet ETF KRANESHARES TR CSI CHINA INTERNET ETF KWEB -0.2313% :

KWEB Chart

KWEB data by YCharts

2) Even though the IPO market is sluggish, there’s still demand for Chinese IPOs.
In recent months, several IPOs priced below expectations, causing some companies to shelve their plans to go public until the mood of the market improved. And yes, Weibo, the so-called Twitter of China, was one of those disappointing debuts.

However, the JD.com IPO shows that this isn’t necessarily a widespread problem. So does the eye-popping performance of Chinese e-commerce debuts lately. Look at the stunning run for Vipshop Holdings VIPSHOP HLDGS LTD SPON ADR EA REPR 2 ORD SHS VIPS -5.9007% , a leading Chinese flash sales site, since it went public in March 2012:

VIPS Chart

VIPS data by YCharts

3) For Chinese e-commerce companies, it’s still all about potential.
U.S. e-commerce plays don’t have it so easy. Amazon, which has spent recent years bolstering sales at the expense of profits, got knocked around in April after it announced somewhat disappointing first quarter results.

On the other hand, the market was happy to overlook the fact that JD.com is profitless because of its stunning revenue growth. The company’s sales grew 68% last year after surging 98% in 2012. This is particularly true given the potential for the market that JD and also Alibaba are playing in.

Morningstar’s consumer equity strategist R.J. Hottovy notes that “you’ve seen tremendous amount of wage-rate growth among that lower- to middle-income consumer” in China that Alibaba and JD are wooing. “The expectation is that we’ll continue to see more disposable income devoted to online purchases within that market,” he said.

TIME Retail

These 2 Charts Show How Enormously Powerful Alibaba Is

As Chinese e-commerce giant Alibaba prepares for its initial public offering in the U.S., these two charts show how it has become so enormously successful, and why its IPO is expected to raise as much as $20 billion.

Correction appended, May 7

Get ready to hear a lot about Alibaba in the coming weeks. The Chinese e-commerce giant filed for its initial public offering in the United States Tuesday, and the hype machine is quickly heating up for what could be the largest tech IPO ever. Though Alibaba’s filing indicates that the company plans to raise just $1 billion, that number is only a placeholder — the company is expected to raise as much as $20 billion in its offering, leading to an overall valuation as high as $250 billion.

What is it about Alibaba that’s causing such a furor on Wall Street? The uproar is most easily explained through these two charts:

Alibaba sales volume

 

Massive volume: Alibaba says it’s the largest e-commerce company in the world. The company operates a wide number of businesses, but the most lucrative are Taobao Marketplace, a large, eBay-like commerce site; Tmall, an online marketplace for name-brand retailers like Apple; and Juhuasuan, a daily deals site similar to Groupon. These sites and their 8 million vendors generated a massive $248 billion in retail transactions in 2013 between them, dwarfing both eBay and Amazon.

Alibaba processed 254 million orders on a single day last year. Amazon, by comparison, sold 36.8 million items on Cyber Monday in December. With China’s online population expected to grow to 800 million by next year, Alibaba will soon have even more customers to serve.

graph (6)

 

A low-expense business model: The key to Alibaba’s financial success—and a significant differentiator from Amazon—is that the company doesn’t actually sell any products. Instead, Alibaba operates vast marketplaces for third-party sellers who either pay a commission for sales or pay an advertising fee to have their wares displayed more prominently on Alibaba’s sites. Amazon spent $8.6 billion on its fulfillment centers in 2013, a cost that never dings Alibaba’s bottom line. Alibaba also has less than 21,000 full-time employees and 4,500 part-time customer representatives, compared to 33,500 total employees for eBay and 117,300 for Amazon. In short, the company doesn’t have to spend more to make more to the same extent that Amazon does.

Before you call your broker to bet the farm on Alibaba’s IPO, though, there are some caveats to consider. The company has a troubled history with counterfeit items, for example. There were once so many knockoff goods on Alibaba’s shopping sites that it was on the U.S. government’s list of notorious markets, but the company says it has since cleaned up its act. It’s also worth learning about the company’s odd governance structure that makes it nearly impossible to remove chairman Jack Ma from power. And even if Alibaba continues flying high, it’s possible the Wall Street hype machine could over-inflate its stock. That’s what happened to Facebook, the last heavily-sought tech stock, which didn’t reach its IPO price for its first 14 months as a public company.

Correction: The original version of this story misstated the number of vendors for Alibaba’s websites. Taobao Marketplace, Tmall and Juhuasuan have 8 million vendors between them.

TIME Shopping

People Are Ignoring Store Assistants Because Their Phones Are More Helpful

"Find everything okay?" "Yep, no thanks to you."

If you’re out shopping and would rather get help from your smartphone than an actual person, you’re now in the majority.

A new study by Deloitte found that more than half of in-store shoppers prefer to look up prices, get product information and check item availability using their own smartphones. By comparison, less than a quarter of shoppers prefer to talk to a sales associate. Given the option, 48 percent of shoppers would also rather check out using their own devices, instead of dealing with a cashier.

This isn’t a huge surprise. If you look up prices or product reviews on your phone, you know you’re getting unbiased facts about the product in question. Store associates probably won’t tell you if a product is cheaper elsewhere. They can also be hard to trust for buying advice, especially in the electronics business, where they may be trained to push one brand over another. (Do you really think that “Samsung Experience Consultant” at Best Buy is going to give you an even-handed view of the Galaxy S5 vs. the iPhone 5s?)

Deloitte says retailers should respond by creating mobile applications that focus on making the in-store shopping experience better, rather than just giving them another digital storefront to wade through. That includes providing simple in-store checkout tools and even providing price comparisons to other stores.

“If you stop trying to sell to her, she will buy more,” Deloitte says.

[Engadget]

TIME alibaba

Alibaba’s Massive U.S. IPO Could Top Facebook’s Debut

Alibaba founder Ma gestures during celebration of 10th anniversary of Taobao Marketplace, China's largest consumer-focused e-commerce website, in Hangzhou
Alibaba founder Jack Ma gestures during a celebration of the 10th anniversary of Taobao Marketplace, China's largest consumer-focused e-commerce website, in Hangzhou, May 10, 2013. China Daily/Reuters

Last year, the Chinese e-commerce business that is part-owned by Yahoo handled $248 billion in transactions, more than Amazon and eBay combined. The company's IPO could be the largest in tech history

Chinese e-commerce behemoth Alibaba has filed documents with the Securities and Exchange Commission to go public in the U.S., setting the stage for what could become the largest technology stock offering in history.

If successful, Alibaba’s IPO could eventually value the company at substantially more than $150 billion, according to Wall Street analysts, in what would amount to a windfall for Yahoo, which owns 22.6% of the e-commerce giant. Alibaba’s public debut would be the largest ever by a Chinese company in the U.S. public markets.

Alibaba, which was founded 15 years ago by English teacher-turned-entrepreneur Jack Ma, dominates the Chinese e-commerce market, powering four-fifths of all online commerce in that country, according to Reuters. Along with its flagship Taobao website, the company also operates a digital payments service and a cloud computing business.

In its filing with the SEC, Alibaba said it aims to raise $1 billion, but that figure is a placeholder amount used to calculate registration fees. Wall Street analysts believe Alibaba could eventually top Facebook’s 2012 $16 billion IPO, which set a record as the largest technology stock offering in history. Alibaba has yet to decide whether to list its shares on the New York Stock Exchange or the Nasdaq.

Alibaba aims to sell a 12% stake to the public, according to Bloomberg, which could generate as much as $20 billion in new capital for the company. In the coming months, Alibaba will embark on a “road show” designed to woo Wall Street investors. Demand for a piece of the IPO is expected to be intense because Western investors are eager to gain exposure to China’s massive and fast-growing e-commerce market.

Alibaba could eventually have a market valuation of between $150 billion and $200 billion, according to Jeffries technology analyst Brian Pitz, who estimates that Alibaba accounts for about 75% of Yahoo’s valuation, along with other Asian assets and cash holdings.

Yahoo owns 22.6% percent of Alibaba, and is expected to sell a 9% stake, which could generate more than $10 billion for the purple-hued Silicon Valley pioneer depending on the final price of the IPO.

At $200 billion, Alibaba would be worth more than U.S. tech titans Facebook and Amazon, but it would still trail Apple and Google, the world’s two most valuable technology companies. Last year, Alibaba handled $248 billion in online transactions, according to the company’s IPO filing, more than Amazon and eBay combined.

Alibaba’s meteoric growth has been powered by economic and demographic trends in China, including the ongoing emergence of a large, tech-savvy middle class. In its IPO filing, Alibaba cited China’s population of 1.35 billion people, including 618 million Internet users. The company said there are 500 million mobile Internet users and 302 million Internet shoppers in China.

Alibaba said its logistics partners delivered 5 billion packages last year, substantially more than UPS, which delivered 4.3 billion packages globally.

“There is less of a retail culture in China, ie. ‘Let’s go shopping on Sunday,'” Paul Sweeney of Bloomberg Industries told PBS Newshour. “They don’t necessarily have that as much, and as a result, e-commerce has actually grown much faster in China than it has in a lot of the Western markets.”

“The Alibaba opportunity there is tremendous,” Sweeney added. “U.S. and Western investors recognize that. There are very few ways for Western investors to invest in this growth story. Alibaba will be by far the largest, most liquid, and arguably safest investment vehicle.”

Last month, Yahoo reported tepid results for its core business, but the company’s stock jumped 8% based on Alibaba’s revenue, which soared 66% from the year before. The company’s net income was $1.6 billion, more than double the previous year. Yahoo shares moved 1% higher in after-hours trading on Tuesday, following Alibaba’s IPO filing.

“The bottom line is that Yahoo’s stock continues to be driven by Alibaba results,” Macquarie tech analyst Ben Schachter wrote in a recent note to clients. “With its reaccelerating revenue growth and high margins, Yahoo will continue to reap the rewards of its Alibaba holdings.”

Investment banking giants Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and Citi are listed as underwriters for Alibaba’s stock offering.

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