Friday, 21 December 2012

Some more ratios - and why does wikipedia need my donation?

Having started to delve into the annual reports / 10-K for Amazon and Asos for my last post, I thought I'd extract and compare a few more data points from their published information. Firstly their fulfilment centre density.

Asos have just opened a new 1.1M sq ft facility (for metric readers, 1 square metre = approx 10.7 sq ft, 1:10 is an easily memorable ratio). According to their published figures, they expect to be able to serve £1.2 Bn of sales from this warehouse: a ratio of £1090 per year per sq ft. This fairly high figure presumably reflects the relatively high price points of clothing.

By contrast, Amazon publishes (non-services) sales of $42Bn from 44M sq ft of warehousing (although it is not clear how much of this warehousing space is already open, and how much is secured/under construction for the future). Converting the currency, this is equivalent to around £600 per year per sq ft. Interestingly this figure is remarkably close to the ratio for Ocado, the online only grocer, at around £630 per year per sq ft; this either reflects very well on Ocado - typical price points for grocery are around £1 per item - or rather badly on Amazon.

(It's also interesting to compare with sales / sq ft / year in a typical supermarket of around £1000 in the UK, although less than half that in the US.)

Secondly, sales per visitor. Asos also publishes visitor numbers in its annual report, based on comScore data. Most online retailers seem rather reluctant to publish these numbers, but comScore occasionally publishes data points for huge sites like Amazon (282M visitors in June 2012 worldwide) which can be used for estimation. With these caveats on the reliability of the numbers (and some allowances for seasonality), it's possible to estimate revenue-per-visitors figures.
Assuming the data is reaonably trustworthy, it becomes more evident why Amazon is such an effective machine: the cash it extracts per visitor to its website is quite spectacular. Almost 5 times what Asos manages, and treble eBay - and the eBay figures include the income from paypal. (Note that this is eBay's revenues, not the total value of transactions on eBay).
Although this is nothing to do with multichannel retail, on another tab I am now looking at yet another appeal from Wikipedia for donations. Why? I know it is supposed to be a wonderfully pure site, unsullied by commercial interests, unbiassed in its editorial approach. Would it, I wonder, be compromising its principles too far by becoming the biggest Amazon affiliate in the world? Most Wikipedia entries (should!) have a list of citations and sources; many of these are books. Would it be a commercial step too far to advertise just the books that are specifically in the citations; a wikipedia citation is almost an advertisement anyway? And Wikipedia has visitor numbers that make Amazon look really rather pathetic - at least double. Just a thought...