The author makes a really good point. Personally, about 90% of the time I buy something online I just go straight to Amazon.

Me too, ever since I got Amazon Prime (do you have that as well?)

Amazon Prime has shifted my buying habits to where I go there first for even small things like personal care items I would have otherwise bought at, say, Target.

I used to travel 4 days every week and so my weekends at home became extremely precious time. By buying that stuff on Amazon on Wednesdays from my hotel room, the free two day shipping meant it'd be delivered when I was working from home on Fridays. I was able to do the things I wanted to do on the weekend rather than spending time at the store doing what I needed to do.

I don't have that horrible travel schedule anymore but I still appreciate how I can just order shampoo from my mobile phone when I realize I'm running low.

Me too, but Amazon's horrible searching means I search them with Google Shopping set to "amazon". So google still gets to watch me.

I had Amazon Prime for two years and I ended up buying so much stuff due to the convenience and lack of "delivery cost shock" that I didn't renew it last year! No, I don't teach Self Discipline 101 ;-)

"[Google] competes with Amazon in a number of areas, particularly web services and big data."

I believe Amazon treats web services and big data seriously, but IIRC they're well under 1% of revenues. These services are of particular interest to the HN crowd of course, but just wanted to point out that it's far from a core offering for them.

Amazon has become the incumbent in this space, which may have some value in the future, but it's entirely possible they're happily losing money on it at the moment.

They might be 1% of revenues, but more interesting to my mind is what % of profits they are. One of the core motivations, as I understand it, was to utilize the excess capacity Amazon had built for peak seasonal activity. These sunk costs don't necessarily count against the EC2, S3 etc. revenue.

Amazon's "attack" relies upon its continued physical goods dominance. Perhaps Google should find ways to help out Amazon's competitors.

This is a very interesting observation with respect to what Facebook is doing with their 'real-world things' Open Graph (http://goo.gl/xn4c) strategy and their plans for an internal currency. I say this will be at least a 3-way race:

1. Amazon attracts users with inventory, content. They will win share through selection, ease of purchase and branding. 2. Facebook attracts users through social interaction, peer-peer trust. They will win share by facilitating transactions within their community. 3. Google attracts users by helping find what they want to buy. They will win share by meaningfully indexing content and putting ads in the right place.

Its an over-simplification, but you go to Amazon when you know what you want; you go to Google to figure out what you want; and you go to facebook to buy something from within your network (when trust matters). When none of this matters, its all about the brand.

Saying Facebook has a hand in the ecommerce market is still very speculative at the moment. That may happen but right now it doesn't even look like they're moving that direction really.

And also, Amazon attracts me definitely for their vast inventory but primarily because of their reviews which falls under the social interaction / peer-peer trust you ascribe to Facebook.

True, and Facebook can't truly leverage any of its "friend-based" data without ugly privacy skirmishes. Because Amazon didn't start out claiming that your opinions (eg. reviews) were private, they have no trust issue to overcome. Trust is the elephant in the room for Facebook.

>> and Facebook can't truly leverage any of its "friend-based" data without ugly privacy skirmishes.

Oh if only that were the roadblock that it ought to be.

I just wanted to point out, that is a really misleading graph. All the lines start at "100%", so the scales aren't comparable at all.

Actually, this makes perfect sense. The sales data at any given point of time is given as a percentage of the baseline, which is set at Q1 '03.

Of course, it makes sense if you interpret it right -- but it looks at first glance like it's comparing absolute sales figures, rather than change from baseline for each.

It shows exactly what it intended to show.

I don't think this is a fair comparison. While Google does make most of their money from ads that result in a purchase, that purchase is not always the sort of thing Amazon sells.

For instance one of the highest grossing per-click terms has consistently been mesothelioma. I'm guessing Amazon won't be selling legal services this year.

My suspicion is that much more of Google's revenue comes from purchased services (and I'm counting their #1 spender, eBay, as a service), digital or otherwise, than tangible, shippable, durable goods.

Google's core business is AdSense. This article doesn't take into account services. While amazon can take up an increasingly larger chunk of the internet retailer pie, presumably not all of Ads on AdSense are for goods. As long as people still use search engines to find services in addition to goods businesses will stay pay for ads and AdSense can keep growing. Amazon isn't really entering the ad business or killing off the need for advertising.

you are mistaking adsense with adwords. Currently adwords revenue dwarf adsense

Agreed, but the reality is that Amazon has over a decade of experience in dealing with publishers. Neither Google nor Apple is going to catch up with that. Google just realizes they have a risky high-margin business and they need to diversify. They're doing so on both novel and established areas.

Outside the obvious A9 disaster, Amazon doesn't usually chase the competition. They have a low margin business, meaning they don't have a fierce bite, but do have a long breath. They start early to become the leader and then try to maintain their position. Apparently quite successfully.