Disappointing News from Both Sides of Business

Amazon logoCaterpillar logoTwo announcements this week from opposite ends of the economy prove how challenged the business environment continues to be. On the “old industry” front, Caterpillar has announced that it will be permanently cutting ~2,500 employees from its operations.

At the same time, a few hundred hourly workers are being called back by Caterpillar to select factories that manufacture certain types of road construction equipment. That softened the blow a bit, but the overall message is clear: Despite the expected growth in infrastructure projects, the stimulus legislation isn’t having much if any “ripple” effect on related or ancillary business segments.

On the other end of the scale is the über-hip, “new economy” Amazon – an enterprise that has achieved so much success selling products of all kinds online. But Amazon seems to have laid an egg in one product category: selling fine wines. After spending several years attempting to organize a mail-order business around wine products – even with the enthusiastic cooperation of boutique wineries all across the country – Amazon has had to throw in the towel on this enterprise.

The hurdles that turned out to be so insurmountable? Everything from the logistics of shipping products that must be delivered directly to the recipients’ hands to avoid problems with perishability … to the Byzantine state laws that regulate the shipment of wine across state lines. (Taken as a whole, those laws are probably more complicated than the provisions of the health care insurance reform bills being debated on Capitol Hill!)

In the end, even the vaunted Amazon – so used to success in practically everything it undertakes – has had to give up on trying to sort through the myriad governmental laws and regulations along with the challenges of wine shipping and delivery, while also turning a profit on the enterprise.

Incidentally, this isn’t the first time Amazon has gotten burned in this business. Back in the late 1990s, the company sank ~$30 million into an ill-fated venture with Wineshopper.com that likewise came to nothing. I guess when your company is made up of mostly twenty-something-aged workers, the institutional memory is pretty short!

Sour grapes, anyone?

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