I’m a member of Amazon Prime. It’s Amazon Inc’s [NASDAQ:AMZN] ‘VIP’ service. Well not really VIP. There are millions of Prime customers around the world. To be a Prime member I pay Amazon something like £69 a year for the privilege.
I think it’s worth it. As a perk, when I order goods and services through Amazon I can get ‘Prime Next Day Delivery’. I can order something in the evening and it’ll be at my door the next day.
That’s how it used to be at least…in the time I’ve had Prime things have gotten even better. Like today for instance. Today I ordered something from Amazon, and lo and behold it was here today.
That’s right, same day delivery. To me, that’s worth the £69. It’s worth it because I order everything through Amazon now. I guess that’s a benefit of living in the UK. The Amazon service here is as good as it is in the US. I can buy anything through Amazon.
I can get furniture, homewares, electronics, DVDs, books, I can even buy my groceries through Amazon. And as a member of Prime, it’s all speedy delivery. I also get access to Amazon Prime Movies and Videos. This is Amazon’s attempt at replicating Netflix [NASDAQ:NFLX].
It’s not as good as Netflix. Not even close in my book. But it’s not bad. And the benefit is at least I’ll get to see the former members of Top Gear in their new Amazon Prime exclusive, The Grand Tour.
The other benefit of Prime is that I get access to ‘Prime Day’. This is a sale that’s happening on Monday 12 July all day just for Prime members. In other words, you can’t participate, because in Australia about all you can buy from Amazon is books. Sorry to rub it in, but I’m just a little excited about it.
We’ve been looking to get a new sofa. And an outdoor dining setting. And I’m about due for a new phone. And, hmmm, what else did I need to get that I can bring forward to Prime Day?
Many Amazon Prime users have the same attitude. I’ve had friends ask me if I’m excited about Prime Day. It’s almost a part of popular vernacular.
Stop! Don’t buy a fake pillow
I have no doubt Prime Day will be huge for Amazon. I would expect them to possibly do a couple billion in sales for the day. That’s right, I said ‘couple billion’.
Actually, in anticipation of the size and scale of Amazon, it might even be a good chance now to jump into the stock. Yes, the stock is worth US$352 billion. Yes, it’s trading at a P/E over 300 times. But there’s a lot to like about Amazon — and Prime Day is one of the least impressive things.
But the ins and outs of Amazon as a business aren’t the topic of conversation here. Their status amongst revolutionary technology companies is a point to cover off some other time.
This sales day for Amazon unleashes a world of potential sales from not just Amazon, but a whole world of retailers.
You see, all the products on Amazon aren’t from Amazon. That might sound confusing, so let me explain. Anyone can sell on Amazon. It’s a bit like eBay except well, it’s not. It’s Amazon, it’s a bit more ‘premium’ that eBay.
But if you’re a retailer, just a small little shop, and you want to tap into the millions of Amazon users you can sell your goods on Amazon. Easy. You don’t have to be Sony. Dyson, Westinghouse or Bosch. You don’t need to be a global conglomerate. You can be an everyday battler and still access the immense Amazon marketplace. You can even utilise Amazon’s logistics chain to get your goods out to buyers.
I like the support for the little guy. I say this because I recently bought a pillow (yes, a pillow) on Amazon.
I got it delivered next day through Amazon Prime. But before I bought it my wife said to me, ‘wait! Is it from a good seller? Is it a fake?’ What she was getting at was whom was I buying this pillow from?
The downside of anyone being able to sell on Amazon is that anyone can sell on Amazon. So naturally there are Amazon merchants that sell inferior, knock off and dubious products. That’s where Amazon customer reviews are important. But sometimes they’re fake too.
So I checked the reviews for the pillow. Made sure they were verified reviews. Then I checked out who the retailer was. Sure enough, they had an external website. So I went to their website. It all checked out; they seemed a reputable seller.
And then I asked myself, ‘Why don’t I just buy the pillow through their website?’
Well for a start, if it weren’t for Amazon I wouldn’t have even known the company existed. Second, they didn’t have Amazon Prime for fast delivery. I went back to Amazon and bought the pillow.
How dodgy can Amazon get?
It got me thinking, what else can you buy through Amazon? In fact it made me think, how dodgy can you go on Amazon? At first I wasn’t sure. And then I decided to look for some ‘aftermarket’ electronics.
Ever heard of XMBC or KODI? Do you know what they do when installed on a small Android OS mini computer? Probably not. But do yourself a favour and Google the term ‘Android KODI box’.
It’s effectively a small computer with a user interface you connect to your TV. It allows you to access live streams of movies, TV, live sports from all over the world. I’m talking free to air TV — but I’m also talking about pay TV services, all free, all played through the box.
This little box aggregates stream from websites all over the world that somehow access subscription TV services and then delivers them through these little boxes right onto your TV. You can access shows from Foxtel, including sports, Sky, HBO, Hulu, Netflix…and even Amazon Prime.
Seriously. Amazon sells small boxes that provide illegal streams of their own subscription TV service. And there’s the option to have it delivered with Amazon Prime. It’s quite funny really. But I wonder, do Amazon really care?
Anyone looking to buy one of these boxes is likely already an Amazon Prime member. So that’s money in the bank for Amazon. And the money they’d make from the logistics and the sales from the listing probably offset their loss anyway.
It certainly does more damage to Netflix than it does to Amazon. But also is it illegal to sell these boxes? Is Amazon breaking their own copyright laws by having these boxes listed on their site? They might not be the retailer, but they host the retailer and deliver for them.
So is it a breach of copyright if you’re participating in the breach of copyright yourself? It’s such a grey area. And I can’t make heads or tails of it. But this isn’t uncommon with cutting edge tech companies.
What it does say though is that perhaps selling products has never really been the focus for Amazon. Perhaps they don’t care about what products sell on their site. The real money is in the subscriptions, Prime members like me, logistics and web services.
If that’s the case — and I’m increasingly certain it is — then Amazon might just be the best company in the world.
Until next week,
Editor, Money Morning