I think there is a slight conflation with the go and the fresh stores here. I live in seattle so I shop at both regularly. At Go stores you scan your phone and can put anything in your pockets and walk out. Fresh stores are closer to a typical retail store with check out lines but with the option to use a ‘smart cart’ which uses cameras to detect items so you can skip the check out line.
“But if the Hampton Inn can’t hire people to clean rooms cheaply, they’re just not going to hire anyone to do it. It’s not a high-end luxury brand, and the customers don’t care that much about it.”
I listened to this story during a two-month cross country road trip where my top concern was the cleanliness of my upcoming cheap hotel room. Aside from cleanliness, I had no other requirement after “cheap”, and I can’t imagine this makes me some kind of freak.
I’m sure there are many examples that serve the point you are trying to make, can’t agree with this one.
I still really want to hear the podcast of the Matts Yglesias and Stoller sitting down and hashing out their underlying disagreements.
It strikes me that at some level what's happening here is a replication of the argument between Hamilton and Jefferson. Hamilton wants to allow for financial agglomeration -- and he's right! An independent financial center in New York, and strong investment in American industry, builds up America into a global power, which then goes on to be critical in preserving democracy through the twentieth century. Jefferson on the other hand is suspicious of any centralization of power, whether public or private -- and he's right too! In the absence of the TR progressive movement, it's possible that American government would've been captured by the Robber Barons, and ultimately either turned fascist or collapsed in revolutionary violence.
As the joke goes, "democracy is the worst form of government except for everything else we've tried." Same with capitalism -- worst economic system, except for everything else we've tried. You certainly need a government that's strong enough to maintain a level playing field, and prevent the autocratic corporate fiefdoms from taking over too much of life -- like, if you look at the behavior of CEOs at places like Hobby Lobby, it's clear they _want_ to dictate their employees' private lives -- who they can marry, what religion they can practice, etc. Capitalism, left unattended for long enough, becomes feudalism.
This "innovation" solves no problem. I have been ordering delivery groceries for years. I don't even have to interact with a robot. Why would anybody want to go to the maximum surveillance grocery techno-sphere when delivery groceries are already a very real thing?
Because it's cheaper and more convenient? Won't argue that ordering groceries isn't maximally convenient - it is. But it comes at a huge premium, and always will - it's taking the existing model and adding two middlemen - the delivery app, and the delivery person, both of which get a cut.
More, smaller grocery stores means more people live in walking distance. Lack of checkout means you don't have to wait in checkout lines that feel not-great if you only want to grab a few things. You get to browse, you get to choose the exact apples you want, and there's no high-friction process to deal with replacements when an item isn't in stock. And that's before the potential cost savings that this model provides over both traditional and delivery groceries.
"This is just not true in NYC. It's a weird place, real estate is so expensive that grocery delivery is cheaper and better quality."
Horsepucky. Maybe if your alternative is shopping at a drecky place like Gristedes. The junk you get delivered and the constant out of stock when the shoppers can't find your ordered is maddening.
Your model was productivity (innovation) drives higher wages (for the few, not the many?) due to reduced labor costs and efficiency? "To go from high pressure to sustainable high wages, you need productivity improvements that let certain tasks be done by smaller numbers of workers. That productivity doesn’t generate automatic wage gains by magic, but it does create the circumstances in which a high-productivity employer can take advantage of the tight labor market to offer higher pay and drive competitors out of business." What happens when productivity increases your energy costs or material costs? Is there any experiences where this has happened historically and people went back to using human labor?
"That’s more convenient for customers and also labor-saving for the hotel. But making a system like this work seamlessly is something that is much easier for management groups that operate at a big scale than for a fragmented ecosystem of independent operators."
Big vendors tend to make systems for smaller operators in many different areas, including this type of thing.
Below Rory mentioned fraud. This is another area where Amazon excels. For example, I bought an HDMI cable. to use with something else I bought. Turns out the device came with an HDMI cable. So I tried to return the cable to Amazon. Amazon responded with, "We've refunded the money. You can keep the cable."
I think 80% of people if put in charge wouldn't approve that policy as a matter of principle.
I know someone who recently ordered two speakers, $500 each. Second one was reported as delivered but never showed up, so Amazon refunded him $500. It eventually showed up a few days later. The person tried to make it right by contacting Amazon, but they said not to worry about it.
That happened to me like two days ago! It was for a $50 item not $500. But they said it was delivered on Tuesday. It wasn’t. They said wait till Thursday. Still nothing. So they gave me my money back. Two or three weeks later the item finally arrived. Well…I guess now I have a backup.
Seems like Amazon's thing is really good for preventing shoplifting, which as I understand is a big issue for supermarkets because they operate on such low margins. Might make it possible to open supermarkets in neighborhoods that typically get high shoplifting rates too, which could be helpful to reduce food desserts as they're called.
Thanks for the perspective Matt. As automation threatens to reduce work in every area of our lives, I am starting to get a little freaked out about bigness and automation, but I don't actually know if these are logical concerns. Is this moment actually different or are we wringing our hands over nothing? I'm glad you are a calming influence, but I'm still big-skeptical. I would love to see macro-economic analysis on the topic.
Uniqlo has a pretty advanced model, too. Have stores in the states gone to the "just toss your basket into the scanning area and it gives you a total" model? (Last couple of times I've purchased Uniqlo in the States it was online). But here in China they're a God-send (foreign retailers generally are), so, I shop there pretty frequently. And I enjoy the ease of the automated, bulk check out.
For any of you worried about competition from China, I got news for you: bricks and mortar retail in the United States is heaps better, even before the advent of Amazon's fancy computer stuff. (Relatedly, though, that's a big part of the reason Chinese digital retail is quite well developed -- in some ways more advanced than in the US.) Stores in the US are much larger, much more well-stocked, much better lit, much more serene, much better organized, much more dependable in terms of inventory consistency (they rarely run out of stuff), much less crowded and much better air-conditioned. In China a lot of shopkeepers don't scan in your goods: they either do mental arithmetic to add up your tab or use a portable calculator. I know this is increasingly the case for many Americans, too, but more and more I find myself buying stuff online because the in-person experience is so dismal. And I live in perhaps the richest city in the country. I would kill for a CVS. And if they dared open a Trader Joe's here, you wouldn't be able to get in it because it would be mobbed (if they could pull off their business model in the PRC that is, which I doubt).
>>>If Amazon drives them out of business, that’s bad news for the UFCW and bad news for the labor movement as a whole. This is one of the worst aspects of America’s broken labor relations paradigm<<<
Question about the above: do Democrats even TRY to start remedying the this situation when they have power? I don't recall a single, serious legislative effort during the Clinton or Obama presidencies. And I haven't heard anything from Biden. I likely missed something (the politics of organized labor definitely isn't something I know a lot about). But still: stronger labor rights seem to make every progressive's short list of things that need to be done to make the economy work for the non-rich again. And I hardly ever hear a peep from Professional Democrats about actual legislation. Like, for instance, shouldn't repeal of Taft-Hartley be as high a priority to Democrats as universal healthcare? Plus, pro-union laws might even help them win a few elections in places they're currently having trouble doing so.
Democrats to me don't seem very consistent on these issues. For example, the policy goals of increasing the pool of unskilled labor via immigration, implementing a high minimum wage, some hand-waving about unionization, while strongly preferring big business (easier to regulate and unionize), all work at cross-purposes.
Combined with what the GoP is doing, it's no surprise that low-skill labor is getting fucked and it's only going to get worse.
It isn't that mysterious. The actual 'left' of the Democratic party hasn't really had any say over policy for the last two decades, though, to be fair, the Democratic party also hasn't really had much say over policy, because of how the Senate works. This even came to a head in 2016 when some Senator from Vermont got over 40% of the vote for the Presidential nomination against Hillary Clinton.
Relative to Clinton and Obama ... I feel like Biden is actually pursuing radical change to the labor market. I think his Blue Collar Blueprint speech was - truly transformational. I loved it. I think it's the best speech he's given. While not leveraging unions, it really shifts power to labor. WSJ also just covered it some of the behind the scenes rules they're pushing.
“When it comes to the economy we’re building, rising wages aren’t a bug, they’re a feature.”
“We want to get something economists call full employment, where instead of workers competing with each other for jobs that are scarce, we want employers to compete to attract workers."
I think there is a misperception here about where the bulk of Amazon's profits come from, because our experience as customers is with ecommerce/retail side of things. The story is quite fascinating. The company started as an ecommerce platform, and their tech team quickly found that the existing technology platforms could not keep the scale of the business running, so they invented the technology behind Amazon Web Services. Then they realized they had become better at scaling IT systems than anyone in the world, so by 2006 they offered this tech to other companies as AWS.
In terms of profits, Amazon is really a technology company that does retail and ecommmerce as well. They will continue to innovate in retail, ecommerce, logistics, etc because they are good at "fancy computer stuff" and not the other way around. Ben Thompson of Stratechery is great on this topic. https://stratechery.com/2016/the-amazon-tax/
I don't think this changes Matt's argument that labor productivity is good, but I think it is important to see the nuance in the interplay between the tech side and retail side. One note on the interplay between the two halves of the company is that at an early talk on AWS the speaker emphasized that they would dominate cloud computing because they were used to a low margin retail profits and would continue to price AWS just above cost. He said we have a low cost culture and my desk is a used door on a couple of cabinets. Such a contrast to other tech companies because of this interesting mix of businesses they are in.
Online grocery order and in-store pick up is more convenient than Amazon's system and requires far less capital investment since you don't have to install a ridiculous amount of cameras and so on. A hypothetical "pick up only" store, maybe with a clerk that can take orders from walk-in customers plus a small seating area, would have very similar footprint savings since it wouldn't require a checkout line either, and again would require a lot less capital investment. Such a hypothetical store might even have greater footprint savings since the "shopping" areas wouldn't need to be optimized for general public customers and could be laid out like a warehouse.
If you have to open up an app on your phone to enter an Amazon Fresh store, why not just open up an app where you can pick out your groceries and not have to shop in a store at all?
I think there is a slight conflation with the go and the fresh stores here. I live in seattle so I shop at both regularly. At Go stores you scan your phone and can put anything in your pockets and walk out. Fresh stores are closer to a typical retail store with check out lines but with the option to use a ‘smart cart’ which uses cameras to detect items so you can skip the check out line.
“But if the Hampton Inn can’t hire people to clean rooms cheaply, they’re just not going to hire anyone to do it. It’s not a high-end luxury brand, and the customers don’t care that much about it.”
I listened to this story during a two-month cross country road trip where my top concern was the cleanliness of my upcoming cheap hotel room. Aside from cleanliness, I had no other requirement after “cheap”, and I can’t imagine this makes me some kind of freak.
I’m sure there are many examples that serve the point you are trying to make, can’t agree with this one.
I still really want to hear the podcast of the Matts Yglesias and Stoller sitting down and hashing out their underlying disagreements.
It strikes me that at some level what's happening here is a replication of the argument between Hamilton and Jefferson. Hamilton wants to allow for financial agglomeration -- and he's right! An independent financial center in New York, and strong investment in American industry, builds up America into a global power, which then goes on to be critical in preserving democracy through the twentieth century. Jefferson on the other hand is suspicious of any centralization of power, whether public or private -- and he's right too! In the absence of the TR progressive movement, it's possible that American government would've been captured by the Robber Barons, and ultimately either turned fascist or collapsed in revolutionary violence.
As the joke goes, "democracy is the worst form of government except for everything else we've tried." Same with capitalism -- worst economic system, except for everything else we've tried. You certainly need a government that's strong enough to maintain a level playing field, and prevent the autocratic corporate fiefdoms from taking over too much of life -- like, if you look at the behavior of CEOs at places like Hobby Lobby, it's clear they _want_ to dictate their employees' private lives -- who they can marry, what religion they can practice, etc. Capitalism, left unattended for long enough, becomes feudalism.
This "innovation" solves no problem. I have been ordering delivery groceries for years. I don't even have to interact with a robot. Why would anybody want to go to the maximum surveillance grocery techno-sphere when delivery groceries are already a very real thing?
Because it's cheaper and more convenient? Won't argue that ordering groceries isn't maximally convenient - it is. But it comes at a huge premium, and always will - it's taking the existing model and adding two middlemen - the delivery app, and the delivery person, both of which get a cut.
More, smaller grocery stores means more people live in walking distance. Lack of checkout means you don't have to wait in checkout lines that feel not-great if you only want to grab a few things. You get to browse, you get to choose the exact apples you want, and there's no high-friction process to deal with replacements when an item isn't in stock. And that's before the potential cost savings that this model provides over both traditional and delivery groceries.
This is just not true in NYC. It's a weird place, real estate is so expensive that grocery delivery is cheaper and better quality.
The problem is...that's also where this Amazon "solution" is launching. If Amazon launched this thing in St. Cloud, I would be impressed.
"This is just not true in NYC. It's a weird place, real estate is so expensive that grocery delivery is cheaper and better quality."
Horsepucky. Maybe if your alternative is shopping at a drecky place like Gristedes. The junk you get delivered and the constant out of stock when the shoppers can't find your ordered is maddening.
Yall enjoy yourselves in the grocery store!
All I know is Whole Foods is a crummier experience than it was before Amazon bought it and the prices are not lower.
Your model was productivity (innovation) drives higher wages (for the few, not the many?) due to reduced labor costs and efficiency? "To go from high pressure to sustainable high wages, you need productivity improvements that let certain tasks be done by smaller numbers of workers. That productivity doesn’t generate automatic wage gains by magic, but it does create the circumstances in which a high-productivity employer can take advantage of the tight labor market to offer higher pay and drive competitors out of business." What happens when productivity increases your energy costs or material costs? Is there any experiences where this has happened historically and people went back to using human labor?
"That’s more convenient for customers and also labor-saving for the hotel. But making a system like this work seamlessly is something that is much easier for management groups that operate at a big scale than for a fragmented ecosystem of independent operators."
Big vendors tend to make systems for smaller operators in many different areas, including this type of thing.
Below Rory mentioned fraud. This is another area where Amazon excels. For example, I bought an HDMI cable. to use with something else I bought. Turns out the device came with an HDMI cable. So I tried to return the cable to Amazon. Amazon responded with, "We've refunded the money. You can keep the cable."
I think 80% of people if put in charge wouldn't approve that policy as a matter of principle.
I know someone who recently ordered two speakers, $500 each. Second one was reported as delivered but never showed up, so Amazon refunded him $500. It eventually showed up a few days later. The person tried to make it right by contacting Amazon, but they said not to worry about it.
That happened to me like two days ago! It was for a $50 item not $500. But they said it was delivered on Tuesday. It wasn’t. They said wait till Thursday. Still nothing. So they gave me my money back. Two or three weeks later the item finally arrived. Well…I guess now I have a backup.
Seems like Amazon's thing is really good for preventing shoplifting, which as I understand is a big issue for supermarkets because they operate on such low margins. Might make it possible to open supermarkets in neighborhoods that typically get high shoplifting rates too, which could be helpful to reduce food desserts as they're called.
Thanks for the perspective Matt. As automation threatens to reduce work in every area of our lives, I am starting to get a little freaked out about bigness and automation, but I don't actually know if these are logical concerns. Is this moment actually different or are we wringing our hands over nothing? I'm glad you are a calming influence, but I'm still big-skeptical. I would love to see macro-economic analysis on the topic.
> most people don’t look at the ceiling while grocery shopping
I'm always looking at the ceiling and behind walls and through doors in public spaces. All the infrastructure and stuff is really interesting.
Uniqlo has a pretty advanced model, too. Have stores in the states gone to the "just toss your basket into the scanning area and it gives you a total" model? (Last couple of times I've purchased Uniqlo in the States it was online). But here in China they're a God-send (foreign retailers generally are), so, I shop there pretty frequently. And I enjoy the ease of the automated, bulk check out.
For any of you worried about competition from China, I got news for you: bricks and mortar retail in the United States is heaps better, even before the advent of Amazon's fancy computer stuff. (Relatedly, though, that's a big part of the reason Chinese digital retail is quite well developed -- in some ways more advanced than in the US.) Stores in the US are much larger, much more well-stocked, much better lit, much more serene, much better organized, much more dependable in terms of inventory consistency (they rarely run out of stuff), much less crowded and much better air-conditioned. In China a lot of shopkeepers don't scan in your goods: they either do mental arithmetic to add up your tab or use a portable calculator. I know this is increasingly the case for many Americans, too, but more and more I find myself buying stuff online because the in-person experience is so dismal. And I live in perhaps the richest city in the country. I would kill for a CVS. And if they dared open a Trader Joe's here, you wouldn't be able to get in it because it would be mobbed (if they could pull off their business model in the PRC that is, which I doubt).
>>>If Amazon drives them out of business, that’s bad news for the UFCW and bad news for the labor movement as a whole. This is one of the worst aspects of America’s broken labor relations paradigm<<<
Question about the above: do Democrats even TRY to start remedying the this situation when they have power? I don't recall a single, serious legislative effort during the Clinton or Obama presidencies. And I haven't heard anything from Biden. I likely missed something (the politics of organized labor definitely isn't something I know a lot about). But still: stronger labor rights seem to make every progressive's short list of things that need to be done to make the economy work for the non-rich again. And I hardly ever hear a peep from Professional Democrats about actual legislation. Like, for instance, shouldn't repeal of Taft-Hartley be as high a priority to Democrats as universal healthcare? Plus, pro-union laws might even help them win a few elections in places they're currently having trouble doing so.
This is really a mystery to me.
Democrats to me don't seem very consistent on these issues. For example, the policy goals of increasing the pool of unskilled labor via immigration, implementing a high minimum wage, some hand-waving about unionization, while strongly preferring big business (easier to regulate and unionize), all work at cross-purposes.
Combined with what the GoP is doing, it's no surprise that low-skill labor is getting fucked and it's only going to get worse.
It isn't that mysterious. The actual 'left' of the Democratic party hasn't really had any say over policy for the last two decades, though, to be fair, the Democratic party also hasn't really had much say over policy, because of how the Senate works. This even came to a head in 2016 when some Senator from Vermont got over 40% of the vote for the Presidential nomination against Hillary Clinton.
Relative to Clinton and Obama ... I feel like Biden is actually pursuing radical change to the labor market. I think his Blue Collar Blueprint speech was - truly transformational. I loved it. I think it's the best speech he's given. While not leveraging unions, it really shifts power to labor. WSJ also just covered it some of the behind the scenes rules they're pushing.
“When it comes to the economy we’re building, rising wages aren’t a bug, they’re a feature.”
“We want to get something economists call full employment, where instead of workers competing with each other for jobs that are scarce, we want employers to compete to attract workers."
https://www.wsj.com/articles/biden-administration-moves-to-tilt-pay-and-power-toward-workers-11627378380
I think there is a misperception here about where the bulk of Amazon's profits come from, because our experience as customers is with ecommerce/retail side of things. The story is quite fascinating. The company started as an ecommerce platform, and their tech team quickly found that the existing technology platforms could not keep the scale of the business running, so they invented the technology behind Amazon Web Services. Then they realized they had become better at scaling IT systems than anyone in the world, so by 2006 they offered this tech to other companies as AWS.
As of the end of Dec 2020, 59% of their operating profits came from AWS per Investopedia. https://www.investopedia.com/how-amazon-makes-money-4587523
In terms of profits, Amazon is really a technology company that does retail and ecommmerce as well. They will continue to innovate in retail, ecommerce, logistics, etc because they are good at "fancy computer stuff" and not the other way around. Ben Thompson of Stratechery is great on this topic. https://stratechery.com/2016/the-amazon-tax/
I don't think this changes Matt's argument that labor productivity is good, but I think it is important to see the nuance in the interplay between the tech side and retail side. One note on the interplay between the two halves of the company is that at an early talk on AWS the speaker emphasized that they would dominate cloud computing because they were used to a low margin retail profits and would continue to price AWS just above cost. He said we have a low cost culture and my desk is a used door on a couple of cabinets. Such a contrast to other tech companies because of this interesting mix of businesses they are in.
I don’t think that the Hampton Inn bathrooms being cleaned was a great example of the marginal supply / marginal demand of labor.
Hotels/Motels are probably going to spring the extra budget to make sure their bathrooms are regularly cleaned.
Clean bathrooms are a prerequisite up and down the product line, not some bougie up sell you only see at the luxury brands.
Online grocery order and in-store pick up is more convenient than Amazon's system and requires far less capital investment since you don't have to install a ridiculous amount of cameras and so on. A hypothetical "pick up only" store, maybe with a clerk that can take orders from walk-in customers plus a small seating area, would have very similar footprint savings since it wouldn't require a checkout line either, and again would require a lot less capital investment. Such a hypothetical store might even have greater footprint savings since the "shopping" areas wouldn't need to be optimized for general public customers and could be laid out like a warehouse.
If you have to open up an app on your phone to enter an Amazon Fresh store, why not just open up an app where you can pick out your groceries and not have to shop in a store at all?
This whole thing seems pretty gimmicky to me.