Returning something would be a bitch.
Yeah, I ordered a mouse from Amazon. I got the wrong one and sent it back. They sent the same thing again. I have my money back, but still no new mouse.
I can’t think of that many things that I would want to buy from this kind of place.
Clothing - nope, I want to try it on first.
Food - to parishable
Household paper products - I can’t imagine that shipping toilet paper from China would be cheap, because of the bulky nature of TP.
Cleaning products - I wouldn’t trust the makeup of the soap (to many lead scares from China), I wouldn’t trust shipping liquids overseas without making a mess, and I don’t think a powder would be cheap to ship.
OTC drugs - I wouldn’t buy them from China, don’t trust the quality.
That pretty much leaves stuff that I buy only occasionally, and usually when I needs it, as opposed to stocking up on it. I don’t see ordering buckets, silverware or bedsheets, and sticking them in the closet until I need them. Books, music and movies are covered by Amazon. Garden hoses and kitchen sponges get bought when I discover I need them. Small kitchen appliances are short notice buys (dang it, the coffee maker broke).
I can’t think of enough things that I would want to buy with this model, to make it worth my while.
I would also point out that there are a lot of Hong Kong-based markets on eBay. Why make your own site when you can just use someone else’s?
A lot of my budget electronics come from H.K.
Is this Chinese Internet-Mart going to be selling U.S. brand name items? How are those all going to be collected at one central distribution point?
When I go into Walmart, I see aisles full of well advertised, brand name health & beauty aids, cleaning supplies, hardware, toys, sporting goods, paper products, housewares. . .
If I’m buying online from China-Mart, I will be buying what? Six tubes of Crest tarter control gel, a dozen Old Spice original scented stick deoderants, a dozen Dove original stick deoderants, a case of Fructis shampoo/conditioner, a case of marshmallow Peeps, a carton of Dove chocolate Easter eggs, a Stanley tape measure, the new Rapunzel DVD and a truckload of ScotTowels?
Think about how you buy what you buy at Wal-Mart.
Think about the average America planning all of that out weeks and weeks in advance.
Why???
Why all the hostility toward American labor, executives and government? Do you seriously think that Chinese execs are kinder, touchy-feely, customer-loving people who sacrifice personal profits for the customers’ satisfaction?
I also must assume an unfamiliarity with the relative costs of operations and doing business.
Your assumptions are uninformed at best and easily could be called silly.
So some questions for you: How much would the total cost of delivery be if the drivers of the vehicles were not unionized? Are you aware than many are not? How much do drivers make? Union members? Non-union?
What percentage of the cost of good is American execs’ pay?
How has Walmart become inefficient?
This is what I do. I’ve been involved in international business (for professional products, not consumer, but many of the principles are the same) for a couple of decades now, including establishing a branch office of an American company (world-wide number one in its field). I import products from the US, Europe and China into the Japanese market, as well as doing consulting for companies who wish to be involved in Asian business.
I fail to see the relationship of your assumptions to the possible success or failure of the proposed operation.
@TokyoPlayer, new market entrants usually keep prices down to carve out a market niche. That means, among other things, keeping salaries down to everybody, all the way to the non-touchy-feely exec. Established companies, by contrast, have gotten a cash flow and can now spend it on execs, execs’ girlfriends, unions, lawsuits, advertisement, motivational speakers and so on. You don’t need to be a PhD in management to know that not all large organizations are real efficient.
Your other questions seem tantamount to telling me “write a 100 page analysis of Walmart operation to prove it’s inefficient”. I am not going to do that because that is not my job description at the time. Similarly, I am not going to write a 100 page analysis of Pentagon or Dep. of Education spending practices in order to justifiably claim on forums that we as tax payers are getting the biggest bang for the buck spent by the DoD and DoE. Some things are just common knowledge among people with a shared frame of reference - and if your frame of reference happens to be sufficiently out of kilter from mine, the discussion would not be productive in any event.
So it’s just a rant about American businessmen and Walmart.
Fair enough. Carry one.
Wal-Mart is very efficient, at least in matters like this. What you’re proposing would be vastly less efficient. That’s the main reason nothing like it has appeared, which what everyone has been saying, in different ways.
Agreed; Wal-Mart is known for being pretty ruthless about ferreting out waste and inefficiency, and cutting costs wherever possible. If code_grey’s assumption is “Wal-Mart is huge, therefore they must have become inefficient”, from everything I’ve seen about Wal-Mart over the years, that may not be a safe assumption.
If you want to buy a shipping container of 80 200 liter drums you can get most basic hard liquors for $1/liter.
Took one look at that and figured there must be a killing to make in cheap vodka/rum. Or worse, start bottling it in fancy bottles and market it as something awesome 
blessed are the thread-sh…rs for their efforts at fouling up intelligent and informative threads shall be ignored by the mods.
Indeed. There’s a dedicated group of cost-cutters based at Wal-Mart’s central headquarters that take a detailed look at every aspect of operations and tries to pare down inefficiencies, even if they don’t exist. Each of them is responsible for cutting costs in some area (overall or per capita) by some percentage each year. If they fail, they’re fired or put on notice.
What kind of detail do they look at? They go down to the level of visiting individual stores. They may count how many additional cashiers are put on checkout at 6pm for the evening rush vs leaving the staffing in place and using the man-hours later for re-stocking. Or even if the aisles are kept clear and merchandise cleared away properly (messy stores may drive customers to other retailers). Or establishing some demographic information about the residents of Arlington, Texas and the differences between their Sam’s Club shoppers and Costco shoppers. These are employees at the central corporate office who are tasked with looking at this information down to the store level.
If anything, Wal-Mart may be creating it’s own inefficiencies by these measures (i.e. maybe the division of effort between increasing revenue and cutting costs could be tweaked).
I think you are mis-categorizing the objectors.
Here is a huge part of the deal:
99% of online purchasers want their stuff ASAP. 24 hour delivery is quickly becoming the norm. For US e-commerce, the ocean trip has already taken place, so consumers get their stuff right when they order, and would generally not be happy with an extended wait.
Regarding Costs:
The costs being saved are primarily the US distribution center costs, all other activities still have to happen and you have to pay people. Foreign labor is often cheaper, but in the US, distribution centers rely on automation to cut labor costs. Conveyors, sorters, print and apply label machines, auto-tapers, auto-scale, etc. etc.
In addition, the location of the distribution center(s) in the US can make a difference for freight costs. Where does your offshore DC send packages for import? If west coast then you need to spend more to get to the 66% of people in the east coast. Who is handling the import? Do you have an office open here just for that or do you pay an extra service fee for some other company to handle it? Those costs add up.
RaftPeople, I have nothing against “objectors”. As you can readily see from this thread of mine and others like it, I read people’s arguments, respond to them and generally try to understand how the world works.
Nevertheless, there may or may not be at least one poster in this thread (he knows who he is) who may or may not qualify as the subject of the beatitude. Any resemblance to actual persons and events is purely coincidental.
Great Antibob, Walmart can be very efficient at what is is doing how it is doing it while not being optimally efficient at the intended function, i.e. at providing stuff to people at lowest cost. Or, at least, not for all types of products - they certainly are most optimal for some (perhaps most) of them. Similarly, you can have a very efficient horse drawn carriage transportation business, but such business would not be optimal for doing transport of certain categories of items where an alternative method (perhaps truck based transportation) is more appropriate. Customers don’t care about how efficient you are at your way of doing things, they just want stuff cheaper and/or better.
Walmart might also (hypothetically) be simply selling stuff at too high a markup. What good is it to your customers if you are very efficient but don’t pass the efficiency onto them via price reductions?
This, mostly, would be my guess. Partly this is, as said already, the fault of badly made Web-shops, which fail to grasp that on the net, they need to provide a lot of information.
Another aspect is customer segment: just because the Dopers belong to that segment of the population that
- has access to a PC and internet
- knows how to use them, and feels secure / enjoys doing that
- has enough knowledge to comparision shop for price, instead of just buying “bargain” or what TV ads tell them
doesn’t mean that everybody who shops at Walmart (or their competitors) belongs to the same group. A lot of them don’t like or have computers, so internet competition doesn’t enter the picture for them.
I remember, back in the 1990s when the web-shops started, back in the dot com days, a lot of articles about if people would buy online (no, they need the haptic feel of articles, the full shopping experience of a mall, said psychologists - but a large portion of the population already shops from catalogues, how’s that different? said others - but only old people buy from catalogues, and they don’t want to touch computers - said the first side).
Then, when the first online businesses started doing well and making a profit, the next series of articles was “will web shops take over everything, and make brick-and mortar stores disappear?” There were trial runs for busy people to place an order for food in their supermarket, who would pick the selection from the shelves and put it into cool storage lockers at a central place, and the customers could open the lockers with their customer or credit card. So even food, which requires short distances, could be sold online! You could even order pizza online (instead of that terrible old-fashioned way of picking up a phone -seriously, where’s the advantage there?
)
And it turned out that not everybody wanted to buy over computer, and that supermarkets, with their narrow profit margin of 2-3%, charged extra for these services of delivery to cover their extra costs, so while it was a nice service for the well-off, it was unattractive to the normal and poorer people.
And so the brick-and-mortar stores stayed in business, parallel to the web shops. All big stores have an additional web-shop, so they don’t miss out this sales segment, and some drugstores offer web-based services delivered into their store, where you pick it up, to save delivery fees and offer more products than in stock normally. But that’s just additional bonus.
Fair enough for the general case.
For this specific case, it still doesn’t explain why an international distribution point makes sense. It’s the exact opposite of the same situation in the US. Big retailers don’t use a single big warehouse in cheap areas to fulfill their orders. They tend to use several fulfillment centers spread across the country and use trucks to do more specialized deliveries to individual customers/stores.
As with any type of distribution, it’s generally cheaper to ship a bunch of the same type of thing together and do more detailed shipping (mixed bunches of individual items) using more local methods.
The idea of an international distribution center drastically increase shipping costs and increases human work. Part of the reason international shipping is cheap is logistics. If a company is producing X containers of items every Y weeks, you can more easily plan on fixed schedules. With individual order fulfillment, it becomes much harder to know, in advance, how much to ship.
And since cargo vessels are hideously expensive (in time and money) to produce (even at reduced prices at the height of the recession, $5 million for a “small” 500 ton ship to upwards of $100 million for an ultra-large), you can’t simply ramp up or ramp down the number of ships to keep costs consistent.
It’s Wal-Mart all over again. Do you use a single distribution center in Bentonville, AR or spread your distribution centers across the country?
They found that the most efficient way to ship stuff to their stores was to use a bunch of individual distribution centers (to centralize where stuff was going) and then send individual trucks to nearby stores to send smaller batches of specialized batches.
Ditto Amazon. They found the best solution for them was multiple fulfillment centers spread across the country.
Make big shipments to the distribution centers and serve local consumers/stores more directly from there.
And yes, these distribution centers do tend to be in places that locally minimize labor and distribution costs, but they’re still local. If cheap labor and lowest distribution costs were the sole criterion, they could have been put elsewhere. The overall minimization of distribution costs give up some labor and distribution costs but pick it up elsewhere.
This is countered by actual evidence. It’s not just Wal-Mart, but Amazon got to be a market leader by squeezing markups and passing the savings to customers.
Part of the job of those cost cutting teams is indeed in trying to establish if different distribution methods could lead to better order fulfillment. So far, they haven’t found any.
Sure, this could be due to the fact that they’re blinded into their own distribution model. But it’s not bloody likely, especially with all the other competitors (US or international) out there.
This tells me that you don’t understand Wal-Mart very well. Wal-Mart’s business model is exactly that…to offer the lowest price on items. Yes, they ruthlessly squeeze costs out of the system (not only their own system, but they demand ever-lower prices from their suppliers)…but they use those reductions to keep their price at the shelf low.