You Got to Be Kidding Me!

Evolution, not Revolution

Posted in Economics, The Intrawebs by Stacy McMahon on December 4, 2006

I’ve been hearing bits and pieces about this for a few months now, but Amazon is going to make all of its physical plant available for rent (link via Instapundit) to people who have a product idea but can’t or won’t fund the fixed cost to start up a business. Jeff Bezos says it’s going to change the world, and Kevin Maney agrees:

If you tease out Bezos’ plan, you get to a point where a high school cheerleader sitting at home with a laptop could theoretically harness computing power, design capabilities, manufacturing and distribution from around the world, and make and market a cute little pink hot rod that would compete against General Motors.

Now, it will change the world for some things. Books and music for example, not because they are Amazon’s existing core retail business but because they are a product where the manufacturer has no responsibilities beyond making and distributing the product. Anything else that loosely fits that description could make a killing using this service. Clothing, for example, which would be a much better bet for our notional cheerleader than a “cute little pink hotrod”.
Why not the hotrod? Simply, what’s she going to do when she needs to put out a recall? That should be fairly self-explanatory, but the bottom line is that for products that need post-sale manufacturer support, there is no substitute for owning your own factory. In fact, that’s already becoming a marketing slogan for makers of high-end electronics, and precisely because of the massive outsourcing that makes it nearly impossible to know where the object you bought was made. No big deal if it’s a t-shirt, but potentially a very big deal if it’s a $3k HDTV, and definitely a dealbreaker for any color of hotrod.

Jeff Bezos also thought the Segway would change the world, and you never even hear about it anymore. I like the idea of what Amazon is doing here, but they need to closely study what’s going on right now in consumer durable goods manufacturing. The moped market would be a great place to start, as it took off during high gas prices and dozens of US-based companies sold scooters (some strictly by mail order) that were all made by maybe three Chinese factories. Lots of people thought that was a great model, but it actually went exactly the way you’d expect and most of those companies don’t exist anymore. Some never shipped a unit and a lot of customers ended up with junk bikes and no service or spare parts.

That said, I’ll be waiting for my chance to write the great American novel and sell it on Amazon, all without any literary agents or publishers taking a cut. But I think I’ll pass on “Maney sausage”…

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