Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


How Netflix, Amazon, PayPal and Apple sell time

In reality, what Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX), PayPal (NASDAQ: PYPL), Apple (NASDAQ: AAPL), and other tech companies sell is time.

To explain, each of those companies markets technological advances that save ordinary time. For example, Netflix and other streaming services save time by eliminating television commercials.

An hour of American television contained 15 minutes and 38 seconds worth of commercials a day in 2014, claims. Hence a person who watches three hours of television watches 45 minutes of commercial.

How Streaming Video Sells Time

Consequently, a viewer who shifts from cable or broadcast television to Netflix or Disney+ could bet an additional 45 minutes of time each day. Thus what people pay for when they buy a Netflix or HBO Max subscription is time – not entertainment.

Remember, much of the programming Netflix, HBO Max, and Hulu sells is available on broadcast or cable TV. HBO Max even advertises that it offers shows available for free on other television; such as South Park and Friends. However, Netflix, HBO Max, and Amazon Prime eliminate the commercials saving the viewer time.

The viewer gets the entertainment she or he wants with streaming video and more time. Thus, streaming video services sell time.

How Amazon sells time

Amazon is the most successful seller of time. Amazon saves time by eliminating the need to shop.

When you order an item on Amazon, there is no need to drive to a store and spend an hour searching for what you need. Instead, you can complete your purchase in a few seconds or minutes and go back to something else.

Americans love Amazon because it sells them more time. For instance, the average American spent 10 hours a month shopping in 2018, Quartz estimates. In 2003 before Amazon the average American spent 12 hours shopping.

Americans order from Amazon because it gives them more time to spend with their families, more time to work, and more time to have fun. For instance, a shopper can have two or three extra hours a day to devote to her hobbies.

Thus, Jeff Bezos’ actual genius is not in retail or discounting but in saving time. Consequently, Amazon Prime offers one stop shopping, delivery, music, and streaming video.

How Apple Sells Time

One time marketer that many people cannot spot is Apple (NASDAQ: AAPL). I think the chief attraction of many Apple gadgets is their capacity to save time.

Thirty years ago sending a photograph of the cute thing your kid did yesterday to your mother in another state involved a couple hours of work. Back in 1990 if you wanted to take a picture you needed to dig out the camera, put film in it, take the picture, drive to the store, get the film developed, and snail mail the photo to your mother.

Hence, you needed two trips to the store, and a trip develop to the photograph to mail the picture. Today you can snap the picture on your phone and send it to your mother in two seconds.

Therefore, Apple sells time when it sells you an iPhone. The iPhone eliminates both the need for several devices; including a tape recorder, a camera, a video camera, and a radio. The iPhone also eliminates all the extra time needed to carry those devices.

How PayPal and Apple save time

In contrast, PayPal and Apple save time by lessening the need for banks and bankers.

Most American banks, for example, offer customers the ability to “deposit” checks by photographing them with a phone. Hence, the iPhone or Android saves time by eliminating the need to drive to the bank and deposit the check.

 Likewise, PayPal saves small business people and customers time by allowing individuals to send money and receive payments without a bank account. Hence, PayPal eliminates the need to write checks, mail checks, and to drive to the bank to deposit checks.

Similarly, Apple Pay allows users to bank at the touch of app. For instance, Apple Pay eliminates the need to pull out a credit card to make payments at the cash register.

How much is Time Worth?

Selling time is a very profitable business. The super timesavers, Apple and Amazon are two of the most lucrative companies on the planet.

On 31 March 2020, Apple reported quarterly revenues of $58.313 billion and a gross profit of $22.370 billion. Amazon reported quarterly revenues of $75.452 billion and a $31.195 billion quarterly gross profit on 31 March 2020.

In contrast, a smaller time saver Netflix (NASDAQ: NFLX) reported making a quarterly gross profit of $2.167 billion on quarterly revenues of $5.768 billion on 31 March 2020. I think Netflix will never be as lucrative as Apple or Amazon.

To explain, it is easy to duplicate Netflix’s business; streaming video. Several companies including AT&T (NYSE: T), Comcast (NASDAQ: CMSCA), Disney (NYSE: DIS), and ViacomCBS (NASDAQ: VIAC) are launching streaming services.

However, duplicating Amazon or Apple’s business will be difficult. To explain all you need to launch a streaming service is programming and cloud space. To compete with Amazon, you will need a network of fulfillment centers. Likewise, to compete with Apple you will tens of thousands of engineers and a network of factories.

How to Identify the Super Timesavers

You could make money by identifying companies that are possible super timesavers and investing in them.

On the positive side, there are many super timesavers out there. On the negative side, only a few of those super timesavers will make money.

One class of companies that could become super timesavers are food delivery services such as Grubhub (NYSE: GRUB), DoorDash, and UberEATS. These services save time by eliminating the need to go out to eat and the need to cook meals.

Additionally, Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) save time by eliminating the need to own a car. For instance, a person who takes Uber does not spend time parking a car, washing the car, putting gas in the car, and walking back and forth to parking spaces.

Waymo and Tesla Super Timesavers

A future timesaver could be the Alphabet (NASDAQ: GOOG) subsidiary Waymo. Waymo is developing autonomous vehicles that we companies could leverage for ride share and delivery. For instance, an autonomous ride share car that drives around the city picking people up and dropping them off.

Another potential timesaver is Tesla (NASDAQ: TSLA). In particular, a Tesla electric car eliminates the need to spend 10 minutes at the gas station each week. Instead of going to the gas station, you can plug the Tesla in each night.

Likewise, Tesla is developing Autonomous vehicles through its Autopilot program. Ironically, Tesla; a car company, could save time by reducing the need for driving.

Finally, retailers such as Kroger (NYSE: KR), the Ocado Group PLC (LON: OCDO), Instracart, and Walmart (NYSE: WMT) are trying to develop timesaving delivery and pickup capacities. Kroger and Ocado, in particular, re developing robotic warehouses that could speed up grocery delivery and save time.

Unfortunately, it will take some time to see which super timesavers succeed. However, recent history shows people who invest in super timesavers can make money.