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As Amazon looses money on every sale, and makes it up with funding from new shareholders, I'm going to call it a Ponzi scheme and not a business.

garyclarke27 10y ago
Reminds me of the old accounting joke. CFO -> CEO We have a major problem, recent price cuts mean that we are now making a loss per unit on our major product lines. CEO -> CFO Don't worry about that, We'll make it up on the volume!
- kriro 10y ago
  I have this bookmarked just for these types of discussions. It's surprising how often I have used it: http://www.giantitp.com/comics/oots0135.html http://www.giantitp.com/comics/oots0135.html
  - ZeroGravitas 10y ago
    This may seem like a ridiculous strawman, possibly because it's presented as a comic strip, but I've seen similar conversations on the TV show Kitchen Nightmares. Possibly worse actually, as the business owners didn't even know how much it cost them to make their most popular dishes.
  - dexterdog 10y ago
    Not to over-analyze a comic, but the business model might not be awful in this case. They sell all potions for 20gp kind of like the original dollar stores. The one particular item is at a loss, but the majority may be at a profit or at least the aggregate based on volume is a profit. Basically they have loss-leaders to get people to use them as their only store.
jasonlingx 10y ago
What funding from new shareholders?
adventured 10y ago
That's of course incorrect. Amazon doesn't lose money on every sale. Their business is profitable and generates a lot of cash. Their retail business is also profitable. They lose money in retail only on new segments and similar, not on the older existing segments. That has been well known about them for years now. For fiscal 2015 they were positive on net income: $596 million. Q1 2016: $513 million in net income They'll be generating $3 billion in annual net income in just another year. Sounds like a business to me, even if half of that net income comes from AWS.
t_fatus 10y ago
That's just false, amazon just announced profit for 20015 & q1 20016
tylaw 10y ago
Amazon has diversified income streams, they don't just resell products they purchase wholesale. They have a pretty sweet deal with 3rd party sellers, they make a big cut providing a sales channel for inventory owned by others, either seller-fulfilled or FBA.

garyclarke27 10y ago

Reminds me of the old accounting joke. CFO -> CEO We have a major problem, recent price cuts mean that we are now making a loss per unit on our major product lines. CEO -> CFO Don't worry about that, We'll make it up on the volume!

kriro 10y ago
I have this bookmarked just for these types of discussions. It's surprising how often I have used it: http://www.giantitp.com/comics/oots0135.html http://www.giantitp.com/comics/oots0135.html
- ZeroGravitas 10y ago
  This may seem like a ridiculous strawman, possibly because it's presented as a comic strip, but I've seen similar conversations on the TV show Kitchen Nightmares. Possibly worse actually, as the business owners didn't even know how much it cost them to make their most popular dishes.
- dexterdog 10y ago
  Not to over-analyze a comic, but the business model might not be awful in this case. They sell all potions for 20gp kind of like the original dollar stores. The one particular item is at a loss, but the majority may be at a profit or at least the aggregate based on volume is a profit. Basically they have loss-leaders to get people to use them as their only store.

jasonlingx 10y ago

What funding from new shareholders?

adventured 10y ago

That's of course incorrect. Amazon doesn't lose money on every sale. Their business is profitable and generates a lot of cash. Their retail business is also profitable. They lose money in retail only on new segments and similar, not on the older existing segments. That has been well known about them for years now. For fiscal 2015 they were positive on net income: $596 million. Q1 2016: $513 million in net income They'll be generating $3 billion in annual net income in just another year. Sounds like a business to me, even if half of that net income comes from AWS.

t_fatus 10y ago

That's just false, amazon just announced profit for 20015 & q1 20016

tylaw 10y ago

Amazon has diversified income streams, they don't just resell products they purchase wholesale. They have a pretty sweet deal with 3rd party sellers, they make a big cut providing a sales channel for inventory owned by others, either seller-fulfilled or FBA.