Good question, Michelle.
Do people here consider toys and electronics to be commodities? I never did. Books are commodities I thought. If toys and electronics are commodities can someone outline what is not a commodity in retail to me please, thanks.
In my mind, a product is not a commodity when it is something that is tough to duplicate by others. Sometimes, a company can take a commodity product, and add so much that it is no longer a commodity. A good example coming to mind is Nike, or perhaps other names like Tommy Hilfiger (you could probably think of many other non-commodity products that you buy--you know, girl stuff). A shoe only is a commodity. Add the Nike swoosh to it, and guess what? People are paying $35-50 more for that shoe than they would pay for a generic manufactured shoe. Of course, there is more to the Nike shoe than the swoosh only, or so the marketers would have you believe ;-). But see? Lots of ppl do believe there's more, and pay more.
And yes, electronics is for the most part a commodity biz, IMO. Particularly on the innards. Have you checked out the long-term stock charts of the disk-drive makers? Or the modem makers? I once took exception to the idea that a modem was a commodity. Upon witnessing the slow and painful decent of USRX/3com, I now get it. We had many a discussion about what is and what isn't a commodity over on those threads here at SI.
So are microprocessors a commodity? INTC has added so much, so fast, so often to its product line-up, that they could charge non-commodity margins. But it's entirely true that the loyal opposition in the various CPU companies has forced prices downward, towards the commodity area. So IMO, some of INTC products are commodities now, and some are not (high end like XEON, for one).
Toys I believe are a commodity, yes, with the rare exceptions like Beanie Babies and whatever becomes "the" hot toy during Christmas season. And some brands are desirable: "Hot Wheel", "Tonka", "Playskool". In electronics, Sony has "Playstation". But the retailers peddling all these toys and electronics: What are these middlemen adding? Nothing. Definitely commodities for the retailer, and 90% of the mfrs.
So I ask again, what is Amazon going to do towards building a true brand? The funny thing is, they got very very good at selling books. They became known for that. They were becoming known as the Starbucks of books (btw: is coffee a commodity? Absolutely. But with the Starbucks name on the cup? Perhaps no). Now they've (Amazon) apparently decided they will sell any and everything, perhaps including in the future, kitchen sinks. Now the Brand and the mission and the "What we are famous for", is growing more and more murky -- not good, IMO. |
