I enjoyed this, but much more interesting was a link from one of the comments to this talk by Jared Spool, "user interface expert."
Revealing Design Treasures From The Amazon
Kind of a breezy discussion of what Amazon does to improve the user experience and its bottom line, and why "Do it like Amazon" may not work for you.
Slide number 86/91 was a jaw-dropper for me. It was part of his section on "never forget the business."
What the slide shows is that any retail business buys product at day zero and pays for it at day 45.
Best Buy turns their inventory over in 74 days. So on average a product is eventually bought by a customer at day 74, and Best Buy gets the money at day 76 (processing time).
All of the days between 45 and 76 are debt.
Amazon turns their inventory in 20 days. So on average they get customer money on day 22 for a product that Amazon bought on day zero. All the days between 22 (got the money) and 45 (must pay the supplier) are float.
Which is why, according to Spool, Amazon can sell most things cheaper than everyone else. They focus on getting shit out the door quickly.
I'm sure that's not the only thing. But the fact of the float must contribute quite a bit, and is probably very welcome.
Comments
I enjoyed this, but much more interesting was a link from one of the comments to this talk by Jared Spool, "user interface expert." Revealing Design Treasures From The Amazon
http://www.slideshare.net/jmspool/revealing-design-treasures...
Kind of a breezy discussion of what Amazon does to improve the user experience and its bottom line, and why "Do it like Amazon" may not work for you.
Slide number 86/91 was a jaw-dropper for me. It was part of his section on "never forget the business."
What the slide shows is that any retail business buys product at day zero and pays for it at day 45.
Best Buy turns their inventory over in 74 days. So on average a product is eventually bought by a customer at day 74, and Best Buy gets the money at day 76 (processing time).
All of the days between 45 and 76 are debt.
Amazon turns their inventory in 20 days. So on average they get customer money on day 22 for a product that Amazon bought on day zero. All the days between 22 (got the money) and 45 (must pay the supplier) are float.
Which is why, according to Spool, Amazon can sell most things cheaper than everyone else. They focus on getting shit out the door quickly.
I'm sure that's not the only thing. But the fact of the float must contribute quite a bit, and is probably very welcome.