Amazon is my favourite website. It has improved my life in so many ways. So I take an interest in their finances.

And it is interesting to note that they are still not making any profit. It is one of the most unusual business models I have seen.

Usually a site will concentrate on growth and not bother about profits in its early years. Particularly when its business does not generate much turnover anyway (think Twitter and Facebook).

But Amazon has been around for about 20 years - and over the past three months had 17 billion dollars in revenue. Yet still manaaged to make a loss of 41 million dollars.

There is a new biography of the founder (Jeff Bezos) coming out in a few weeks. And I am going to pick it up - since the business model underpinning Amazon fascinates me.

It is a little wonder that the site and the service is so good - when they are still not bothering to make a profit.

It will be really interesting to see how this plays out.



Here is a nice quote (from the link below) which sums up how unusual this situation is:

Quote:Quote:

My colleague Matt Yglesias once half-joked that the company amounts to “a charitable organization being run by elements of the investment community for the benefit of consumers.”

http://www.slate.com/blogs/future_tense/...chart.html

The share price is doing very well. But it is hard to figure out if Amazon's price is a bubble - or an thumbs up that their strategy of achieving massive growth at all costs is a good one.

I hope they croak. They treat their workers like shit, and turn the Main/High Street into a wasteland of nail parlors and fast-food restaurants.

Here is a comment from the article above. It is a good one since it points out that Amazon is only allowed to capture and destroy everybody else's retail markets bcause Wall Street is happy to turn a blind eye to it's lack of profit.

So - you can forget Amazon and Jeff Bezos. Amazon only gets away with this because Wall Street has given it a free pass (for now).

Quote:Quote:

If you are going to defend Amazon's current valuation, then you should be able to answer that question. Certainly you will acknowledge that Wall Street is not in the habit of putting these kinds of crazy valuations on money-losing companies. Quite the opposite. In fact, Wall Street will crater a stock for much less than non-profitability.

But to claim that other retailers should be able to get Wall Street to do for them what Bezos gets them to do is pretty comical. It's not that Wall Street is unintelligent. It is that Wall Street is very good at creating bubble stocks and then cashing out before the bubble bursts. So Wall Street is not stupid, and Bezos is not stupid. Amazon just happens to be Wall Street's latest darling stock ... until it isn't anymore.

The problem is that this darling stock hurts other retailers because Wall Street allows it to run its business the way it doesn't allow its competitors. Wall Street is basically helping Amazon to kill the rest of the retail sector. And that may be good for Amazon, and for a while it will be good for Wall Street. But I don't see how that will be good for America.

If you hate Amazon. Then you should fire some of that hatred to the bankers.

From Slashdot:

Why Amazon Is Profitless Only By Choice

Quote:Quote:

Eugene Wei, a former employee at Amazon and Hulu, explains why Amazon continues to post quarterly earnings statements with lots of revenue but no actual profit. Many of Amazon's retail businesses and platforms are quite profitable by themselves, Wei says, a fact that is hidden by large expenditures on investment for the future. He writes, 'If Amazon has so many businesses that do make a profit, then why is it still showing quarterly losses, and why has even free cash flow decreased in recent years? Because Amazon has boundless ambition. It wants to eat global retail. This is one area where the press and pundits accept Amazon's statements at face value. Given that giant mission, Amazon has decided to continue to invest to arm itself for a much larger scale of business. If it were purely a software business, its fixed cost investments for this journey would be lower, but the amount of capital required to grow a business that has to ship millions of packages to customers all over the world quickly is something only a handful of companies in the world could even afford. ... I'm convinced Amazon could easily turn a quarterly profit now. Many times in its history, it could have been content to stop investing in new product lines, new fulfillment centers, new countries. The fixed cost base would flatten out, its sales would continue growing for some period of time and then flatten out, and it would harvest some annuity of profits. Even the first year I joined Amazon in 1997, when it was just a domestic book business, it could have been content to rest on its laurels. But Jeff is not wired that way. There are very few people in technology and business who are what I'd call apex predators. Jeff is one of them, the most patient and intelligent one I've met in my life.'"

Quote: (10-27-2013 07:59 AM)cardguy Wrote:  

Here is a comment from the article above. It is a good one since it points out that Amazon is only allowed to capture and destroy everybody else's retail markets bcause Wall Street is happy to turn a blind eye to it's lack of profit.

So - you can forget Amazon and Jeff Bezos. Amazon only gets away with this because Wall Street has given it a free pass (for now).

Quote:Quote:

The problem is that this darling stock hurts other retailers because Wall Street allows it to run its business the way it doesn't allow its competitors. Wall Street is basically helping Amazon to kill the rest of the retail sector. And that may be good for Amazon, and for a while it will be good for Wall Street. But I don't see how that will be good for America.

If you hate Amazon. Then you should fire some of that hatred to the bankers.

Well, I hope they get burned. I buy my stuff in things called "stores" or "shops." Even when I order on-line, I buy from companies that have "stores" or "shops." Browsing for books, cameras and clothes in "stores" and "shops" is a pleasure I want to preserve.

they are in an extended sprint race against Apple, Google and Microsoft, plus thousands of up and coming ecommerce companies. They have to keep it in the red to stay ahead. They dont have the cushy margins of their competitors because they are more of a traditional retailer, they dont have a 'product' per se, they are a reseller. Thats why all of these side businesses popped up like Kindle, content, A9, their ad sales, etc.. all in an attempt to offset their shitty margains.

Sp5, I hear and I feel what you are saying about shops and stores. I experienced this with video stores, especially, which I used to love to browse. I had a whole ritual of when I would walk to the video store, in what order I would go through the different sections. The VHS and then DVD covers smelled in a certain way that I found pleasant. There would be the walk back, having found the right movie for the night. And so I was not entirely happy to see Netflix basically push them out of business.

But you have to look at the whole picture.

Amazon is one of the wonders of the world.

It is the greatest marketplace that has ever existed, and it's the second most important website (next to Google, obviously -- Google is so fundamental that people almost forget it's there).

It can be hard to understand just how much value Amazon has contributed with its mind-boggling infinity of merchandise, efficient organization and delivery, and a superb suggestion and review system.

When you think about all this value -- hundreds of millions and maybe eventually billions of people having access to products they would never otherwise have access to, things that can improve their lives in every possible way, and that could not possibly be provided by your local store -- does this outweigh the sentimental attachment one has to certain habits of shopping? Of course.

And I think with time, as one develops new habits, there can be just as much charm in, and fondness for, browsing a website as there can be for walking through a physical store. Just keep your mind and heart open to new habits and new attachments.

Finally. I don't think that street retail is necessarily doomed, either. It will evolve. Many stores will disappear, but some won't. Some stores in some places will find niches in which they can provide value that you can't get online. This is the sort of thing that's hard to predict and that always surprises you. It's part of what makes life interesting...

What's unique about Amazon is not that it's profitless, but the length and scale at which it's profitless.

I have been disappointed with their food offerings. The actual food items have far more detail on their packaging than the Amazon listings do, and the prices and selection are not great. I browsed Amazon Fresh and the selection is a joke.

Quote: (10-27-2013 07:46 AM)Sp5 Wrote:  

I hope they croak. They treat their workers like shit, and turn the Main/High Street into a wasteland of nail parlors and fast-food restaurants.

There would be some substance to this criticism if the stores Amazon displace offer unique, artisanal, quality goods.

That isn't the case. It's hard to object to Amazon displacing a Kmart or Kohl's.

Quote: (10-27-2013 09:42 AM)The Lizard of Oz Wrote:  

Finally. I don't think that street retail is necessarily doomed, either. It will evolve. Many stores will disappear, but some won't. Some stores in some places will find niches in which they can provide value that you can't get online. This is the sort of thing that's hard to predict and that always surprises you. It's part of what makes life interesting...

I think that's probably the appeal of stores like the Apple stores. People choose to go buy their iPods and MacPros rather then just ordering off Amazon and letting the delivery guy do all the leg work because the Apple stores give you an experience. You go into an Apple store to shop and while you are there they have a bunch of toys out for you to play around with and there's also a legion of people there to make sure you're every question is answered.

To this day I still buy physical CDs. I haven't once paid money for any sort of music file whether on iTunes or any other service. I also still buy physical books rather then loading up a Kindle with e-books. For me, there's something special about being able to hold some tangible in your hands rather then just having a product be nothing but a bunch of electronic 1s and 0s. Big stores like Barnes and Nobles and FYE will probably go the way of the dodo eventually but I think smaller mom and pop shop type stores will survive since they only need to rely on a group of dedicated specialists and hobbyists (ie. people who like buying physical books) to survive while the big chain stores require a bigger, less dedicated crowd that only care about prices and convenience. The big mortar and cement stores simply can't compete with retailers such as Amazon when it comes to that.

Quote: (10-27-2013 10:11 AM)basilransom Wrote:  

Quote: (10-27-2013 07:46 AM)Sp5 Wrote:  

I hope they croak. They treat their workers like shit, and turn the Main/High Street into a wasteland of nail parlors and fast-food restaurants.

There would be some substance to this criticism if the stores Amazon displace offer unique, artisanal, quality goods.

That isn't the case. It's hard to object to Amazon displacing a Kmart or Kohl's.

Yeah, try running daygame in Amazon the way you can at a Kmart.

You can chat up those Amazon cashiers, no? One example of the loss of normal human interaction and community. Another example, ever hear of Amazon donating to the local youth football league?

But don't ask me, I still miss the creaky wooden floors, parakeets and smell of popcorn at Woolworth's.

Quote: (10-27-2013 09:42 AM)The Lizard of Oz Wrote:  

But you have to look at the whole picture.

Amazon is one of the wonders of the world.

It is the greatest marketplace that has ever existed, and it's the second most important website (next to Google, obviously -- Google is so fundamental that people almost forget it's there).

It can be hard to understand just how much value Amazon has contributed with its mind-boggling infinity of merchandise, efficient organization and delivery, and a superb suggestion and review system.

When you think about all this value -- hundreds of millions and maybe eventually billions of people having access to products they would never otherwise have access to, things that can improve their lives in every possible way, and that could not possibly be provided by your local store -- does this outweigh the sentimental attachment one has to certain habits of shopping? Of course.

And I think with time, as one develops new habits, there can be just as much charm in, and fondness for, browsing a website as there can be for walking through a physical store. Just keep your mind and heart open to new habits and new attachments.

Finally. I don't think that street retail is necessarily doomed, either. It will evolve. Many stores will disappear, but some won't. Some stores in some places will find niches in which they can provide value that you can't get online. This is the sort of thing that's hard to predict and that always surprises you. It's part of what makes life interesting...

There's a certain faith in progress that impels people to jump on the bandwagon with some faith that things will work out, even though the trends are evident. It really is irrelevant how clever and big Amazon is, even if I take your argument that they are providing products many people can't get in stores - if they end up causing huge social destruction.

As I said - we already see the "niches in which they can provide value that you can't get online," Fucking nail parlors and tattoo parlors.

Aside from the possible monopoly aspects of Amazon, more and more places are looking like this:

Quote: (10-27-2013 11:24 AM)Sp5 Wrote:  

Yeah, try running daygame in Amazon the way you can at a Kmart.

You can chat up those Amazon cashiers, no? One example of the loss of normal human interaction and community. Another example, ever hear of Amazon donating to the local youth football league?

But don't ask me, I still miss the creaky wooden floors, parakeets and smell of popcorn at Woolworth's.

There is no reason why an industry or a type of business should be supported for the simple fact that we feel bad its going out of business because its inefficient and something else works better. Like water rushing down a river, it will simply reroutes past roadblocks. In terms of commerce, society somehow made this happen. It wasnt the act of one man, one company, one government. Society, i.e. humankind, simply found a better way for commerce from the effort of thousands of companies, millions of people, mostly without government help or assistance as you seem to support. Truth be told, the whole 'mom and pop' argument is such shit, most of these businesses were put out anyway by Kmart in the late 70's and 80's, long before Walmart and way long before ecommerce. And any remaining mom and pop is probably in the red or struggling like Amazon, most of these people eak out a living.

Tell me, are you a big supporter of welfare and government intervention? I am not trying to mock or throw mud, just understand where this anti-advancement mindset comes from.

Quote: (10-27-2013 11:24 AM)Sp5 Wrote:  

But don't ask me, I still miss the creaky wooden floors, parakeets and smell of popcorn at Woolworth's.

I remember an entire generation of department stores that were around when I was a really little kid, but were pretty much all defunct by some point between the late 80s and mid 90s.

http://en.wikipedia.org/wiki/Category:De...ted_States

Makes me wonder what caused those stores to lose so much money when there wasn't any competition from online retailers and Wal-Mart had not really taken off yet either.

Quote:Quote:

If you are going to defend Amazon's current valuation, then you should be able to answer that question. Certainly you will acknowledge that Wall Street is not in the habit of putting these kinds of crazy valuations on money-losing companies.

This is the stupidest thing I've ever read. Ever heard of a little thing called the dot-com bubble?

There was a film called 'Other People's Money' which had a couple of brilliant scenes debating these sorts of issues.

The scenes are two speeches given to the shareholders of a struggling cable and wire business.

The first speech is from the CEO trying to save the company.

The other is from a liquidator who wants to shut down the company and sell off the assets.











Really great acting and writing!

Quote: (10-27-2013 11:44 AM)Vitriol Wrote:  

Quote: (10-27-2013 11:24 AM)Sp5 Wrote:  

But don't ask me, I still miss the creaky wooden floors, parakeets and smell of popcorn at Woolworth's.

I remember an entire generation of department stores that were around when I was a really little kid, but were pretty much all defunct by some point between the late 80s and mid 90s.

http://en.wikipedia.org/wiki/Category:De...ted_States

Makes me wonder what caused those stores to lose so much money when there wasn't any competition from online retailers and Wal-Mart had not really taken off yet either.

retail is a risky business. when you win you become Sam Walton and Jeff Bezos, when you lose you file Ch. 11. Its a margins game, and most of these mom and pops had similar financials of amazon, operating from a loss. I grew up in a retail business, dept stores killed the mom&pop, ecommerce is killing the dept stores. You know whats weird? Malls are killing it. Westfield's financials are through the roof, they are building malls all over the world. This whole argument that 'there is nowhere left to day bang' is emotional and not based in reality.

Quote: (10-27-2013 11:24 AM)Sp5 Wrote:  

There's a certain faith in progress that impels people to jump on the bandwagon with some faith that things will work out, even though the trends are evident. It really is irrelevant how clever and big Amazon is, even if I take your argument that they are providing products many people can't get in stores - if they end up causing huge social destruction.

Far from being irrelevant, it is the most relevant thing about it.

Again, I understand your feelings and I am sympathetic. But don't miss the forest for the trees.

These "products many people can't get in stores" are not just some abstraction to be shrugged off. It's as real as those shuttered storefronts that you hate. And it's of greater consequence.

It means hundreds of millions of people will read books they would never have read otherwise. They will learn things about the world they could never have found out in another way. Things that can change their entire lives.

It means they can experience great art, like music or film, that they would never have experienced, and wouldn't even have known about.

They will buy products that allow them to dress better, furnish their homes better, get better air conditioning, take better care of their bodies, the list goes on and on and on. And because of well organized recs and reviews, even people who are not very intelligent can often figure out the right product for their needs.

Because the delivery system is so efficient, people will be able to get the things they need when they need them.

As a result of all of this, tens and hundreds of millions of people will live better, healthier, more interesting, more various, and more enjoyable lives.

Again. Look at the whole picture. The value being added here is not some abstraction. It is vast and incalculable.

It is one of those things that are right in front of us and that are easy to take for granted and just dismiss. But take 5 minutes to think about it.

This is not about any kind of blind faith. This is reality, now, today.

Quote: (10-27-2013 11:57 AM)The Lizard of Oz Wrote:  

These "products many people can't get in stores" are not just some abstraction to be shrugged off. It's as real as those shuttered storefronts that you hate. And it's of greater consequence.

It means hundreds of millions of people will read books they would never have read otherwise. They will learn things about the world they could never have found out in another way. Things that can change their entire lives.

It means they can experience great art, like music or film, that they would never have experienced, and wouldn't even have known about.

They will buy products that allow them to dress better, furnish their homes better, get better air conditioning, take better care of their bodies, the list goes on and on and on. And because of well organized recs and reviews, even people who are not very intelligent can often figure out the right product for their needs.

Because the delivery system is so efficient, people will be able to get the things they need when they need them.

As a result of all of this, tens and hundreds of millions of people will live better, healthier, more interesting, more various, and more enjoyable lives.

Again. Look at the whole picture. The value being added here is not some abstraction. It is vast and incalculable.

It is one of those things that are right in front of us and that are easy to take for granted and just dismiss. But take 5 minutes to think about it.

This is not about any kind of blind faith. This is reality, now, today.

Well, I took your argument for the sake of argument, but I don't really take it. Most people on the planet now live in cities. Stores in the cities have just about everything. So "hundreds of millions" of people finding a lot of things on Amazon they can't find in downtown NYC or Cedar Rapids or Seoul or Salamanca for that matter does not wash for me.

I think I am a conservative, maybe even a reactionary, but not one blind to the destructive effects of capitalism. Companies are basically sociopaths with only one object - maximize shareholder return. They can be blind to any other effects not harming their bottom line. This can cause destruction of the physical and social environment along with the good they do. Amazon is a mixed bag, true, some good, some bad, but I am not going to cheerlead for their destruction of storefront retail.

Someone asked if I favored government intervention. Of course, for example we have things called zoning laws regulating how and where businesses operate.

Quote: (10-27-2013 11:44 AM)Vitriol Wrote:  

Quote: (10-27-2013 11:24 AM)Sp5 Wrote:  

But don't ask me, I still miss the creaky wooden floors, parakeets and smell of popcorn at Woolworth's.

I remember an entire generation of department stores that were around when I was a really little kid, but were pretty much all defunct by some point between the late 80s and mid 90s.

http://en.wikipedia.org/wiki/Category:De...ted_States

Makes me wonder what caused those stores to lose so much money when there wasn't any competition from online retailers and Wal-Mart had not really taken off yet either.

Most of the first generation of department stores were killed off by the automobile - they were located on the high street in places served by streetcars and the like. People drove to the second generation of strip-mall department stores for the convenience of big parking lots.

In my small hometown I recall these stores that closed up shortly after the arrival of the first Wal Mart store in town during the late 80's.

Shultz's
Gambles
Ben Franklin
Montgomery Ward
Coast to Coast
Sears (Has since reopened in half of the original Wally World building in town)
Speigel's
Edit-Rexall drug store. Had the old school soda fountain right up to the end.

Town is only 5000 people with about 18,000 total for the county.

This thread is more about Amazon, but Wal Mart has killed more small town businesses than Amazon by far.

I buy stuff on Amazon simply because I probably can't get it locally or I don't want to drive all over looking for it. Do a search, press buy, and it's on my doorstep in a couple days.

Everyday things I don't by online.

Quote: (10-27-2013 01:02 PM)Hotwheels Wrote:  

Ben Franklin

Used to practically live in one as a kid. They had the best art department. The best selection of pens, my buddy who grew up thieving them out of the store is now a very successful graphic artist.

Quote: (10-27-2013 01:02 PM)Hotwheels Wrote:  

Montgomery Ward

The had the best record and tape department, along Kmart. My first records, from Disco Duck up to the first Police, Michael Jackson, Wham, Duran Duran, Van Halen records where bought at a 'Monkey Wards'

A lot of individuals make money selling things on Amazon (not just kindle books). All the money Amazon gets doesn't just go to them. They provide opportunities for entrepreneurs. Replace mom and pop stores with entrepreneurs.

Quote: (10-27-2013 07:46 AM)Sp5 Wrote:  

I hope they croak. They treat their workers like shit, and turn the Main/High Street into a wasteland of nail parlors and fast-food restaurants.

I have to partially agree. Whilst I am a frequent Amazon user, from books to Baking Soda...I adore bookshops. They're like a sanctuary, at least in my hometown, of intelligence and curiosity in a midst the chavs and the morons.

Quote: (10-27-2013 11:34 AM)puckman Wrote:  

Quote: (10-27-2013 11:24 AM)Sp5 Wrote:  

Yeah, try running daygame in Amazon the way you can at a Kmart.

You can chat up those Amazon cashiers, no? One example of the loss of normal human interaction and community. Another example, ever hear of Amazon donating to the local youth football league?

But don't ask me, I still miss the creaky wooden floors, parakeets and smell of popcorn at Woolworth's.

There is no reason why an industry or a type of business should be supported for the simple fact that we feel bad its going out of business because its inefficient and something else works better. Like water rushing down a river, it will simply reroutes past roadblocks. In terms of commerce, society somehow made this happen. It wasnt the act of one man, one company, one government. Society, i.e. humankind, simply found a better way for commerce from the effort of thousands of companies, millions of people, mostly without government help or assistance as you seem to support. Truth be told, the whole 'mom and pop' argument is such shit, most of these businesses were put out anyway by Kmart in the late 70's and 80's, long before Walmart and way long before ecommerce. And any remaining mom and pop is probably in the red or struggling like Amazon, most of these people eak out a living.

Tell me, are you a big supporter of welfare and government intervention? I am not trying to mock or throw mud, just understand where this anti-advancement mindset comes from.

What's happening here isn't real capitalism. It is called crony capitalism. Amazon is clearly getting pumped up by the smart money in wall street. While I am an adament supporter of the "market" this is a clear example of a bunch of dudes pumping and dumping the market for their benefit. This isn't business but cronyism at its finest.

So no, this isn't advancement in any sense of the word because what's going to happen when the smart money decides to bail? Yup, small time investors, various other funds, and whoever else was stupidly invested in this gets screwed over. This is what wild west regulations look like and it benefits a small few while screwing over everyone.

Wall Street is being treated as a casino and the house has their hands in the regulatory bodies that work to prevent this. It's a sham and these people are scumbags to the max.

There's very clearly something afoul here when a company's stock doesn't reflect its actual profit. This isn't advancement and don't compare it to the abominations of welfare and other government interventions. This is an area where the government isn't intervening and should be but is stupidly focusing its attention in places that it doesn't need to.

Quote: (10-27-2013 02:10 PM)frenchie Wrote:  

What's happening here isn't real capitalism. It is called crony capitalism. Amazon is clearly getting pumped up by the smart money in wall street. While I am an adament supporter of the "market" this is a clear example of a bunch of dudes pumping and dumping the market for their benefit. This isn't business but cronyism at its finest.

Would have to completely disagree that this is a pump and dump. It has absolutely no characteristics of a pump and dump, what type of analysis or data do you have that shows this? I know thats a popular term used by Rachel Maddow.

Quote: (10-27-2013 02:10 PM)frenchie Wrote:  

There's very clearly something afoul here when a company's stock doesn't reflect its actual profit. This isn't advancement and don't compare it to the abominations of welfare and other government interventions. This is an area where the government isn't intervening and should be but is stupidly focusing its attention in places that it doesn't need to

Amazons stock reflects its growth and the strength of its business, as well as value to shareholders. The strength of its business is how well it manages cost and reacts to growth. When you learn about the stock market and valuation, you will see that. It would be wrong for Amazon to take a profit right now because they are reinvesting that money into the business to over spend and build a company that lasts decades, not to pay a paltry dividend to short term investors. Apple and Google are anomalies in terms of cash on hand.

guys, growth expectations fuel stock prices

everyone knows that at some point amazon will slow its expansion and start to grind its vendors and suppliers down and start making that money. with their revenues, it wont take much of a percentage move to generate billions.

prior bubbles were based on companies that didnt even have any damn revenues or infrastructure.

amazon is one of the most successful companies of ALL TIME