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Amazon Posts Another Blockbuster Profit
- DarkTree 10y agoJust 5 years ago, as a freshman in college, I was alternating between Amazon and eBay to find the cheapest price for textbooks. This was the first time I ordered anything off of Amazon, and it was their bread and butter; a book. Fast-forward to present day and I order almost everything off of Amazon, even if I can get it at a store nearby. Why? Because products reviews have grown to be essential in my psychology for buying, and it's very easy to wait just two days for the product to arrive at your doorstep. And I haven't used eBay in years.
- estrabd 10y agoI find that eBay's bread and butter is really small fry to small fry - or at best, dealers in collectibles to collectors.
- selimthegrim 10y agoClothing and shoes still are a better experience for me on eBay than amazon although Amazon is catching up.
- deleted 10y ago[deleted]
- choward 10y agoI read the reviews for anything I buy. The average rating is pretty much useless though.
- artursapek 10y agoAgreed. The critical ones are the useful ones.
- CodeCube 10y agoI always find it more interesting to look at the distribution of ratings that they have. It's usually overwhelmingly good, overwhelmingly bad, or polarising, with lots of good and lots of bad. That to me is a pretty good quick-window into the level of quality of the product.
- BHSPitMonkey 10y agoI do the same, but as time goes by I'm inherently less and less trustful of all of it. The incentive to manipulate ratings and reviews is just too great for sellers to ignore, and it's not as though Amazon can reliably measure review honesty.
- pduan 10y agoUse fakespot.com and use filtered by "Verified Purchase".
- brianwawok 10y agoWhat does verified purchase matter when so many sellers pay people to review? Yes they really bought it, but for pennies on the dollar.
- rogerdpack 10y agoYeah I've started going for products that only have "hundreds" of reviews, and over several years, those are usually hard to game :)
- brianwawok 10y agoYou are just upping the stake. Some people DO pay for hundreds of reviews. It just cost more to do.
- mod 10y agoAbsolutely! I find myself looking at items in-store to get an idea of what's available, then going home and comparing reviews & prices on amazon where there is more variety. This is particularly true with what I've been buying lately--tools. The local home depot will just deal in a couple of brands for most tools, while amazon is virtually guaranteed to have dozens in all variety of size, power, options, price, and quality. The price is usually better, as well, and then I don't have to load it into my vehicle, either. Poor UPS guy, though.
- nbakshi 10y agoI do that too, and with the Amazon App you can even scan the barcode of the product you are looking in the market to compare prices and look at reviews right there. Don't even have to go home for that.
- ryandrake 10y agoI find eBay a better source for tools, but both it and Amazon are head-and-shoulders better than Lowes and Home Depot if you don't need that tool right this minute. And if you do need it today and it can be used, Craigslist.
- mod 10y agoIn my area (poor, very rural), craigslist is too slow for that. I've been searching for a drill press for months, and I actually just hit one today. Assuming it's not sold out from under me by tomorrow, I'll have a new one in the evening. The last one I saw was sold within two hours of listing, and that was over a month ago.
- enobrev 10y agoSimilarly, I've switched almost completely from selling an occasional book or used item on eBay to Amazon because I can generally get a better price when I sell things on Amazon, and it's much easier to list things in that the description and reviews are already available for most of the things I have to sell. When I changed cities a few years ago, I decided to sell the majority of my books so as not to have to ship them, and I made enough from those sales to cover about a quarter of my shipping fees for the rest of my stuff.
- jameslk 10y agoIncidentally, I'm working on a project to spin off the reviews piece of Amazon and making it first class, with an emphasis on community and trustability. I feel like this is a very important part of the ecommerce ecosystem and I'm not really sure why it hasn't been done already (very well anyway, see Epinions).
- Shebanator 10y agoits not easy to do well. fraud, spam, hate speech, etc.
- SonicSoul 10y agoeasier to do when not anonymous?
- nommm-nommm 10y agoI would go as far as to say it's impossible to do well.
- jameslk 10y agoAll communities have to tackle these problems in various forms, although I believe it is possible to fix in a way good enough to be more valuable than without it. I have some ideas on ways to tackle the fraud problem, such as with a trust-based ranking system, rewarding balanced feedback, purchase verification, looking for heuristics of fake reviews, and avoiding potential conflicts of interest. It's not the primary concern of Amazon to make sure their reviews are authentic, where as it would be with a service dedicated to that very concern. In fact, positive reviews help drive more sales, so there's an inherent conflict of interest that I feel justifies the need to separate reviews from the place selling the things being reviewed.
- JustSomeNobody 10y agoI'd like to see something "social", where you "follow" other reviewers (who reviewed something you bought and you trust their review) and build up a reviewer network and then factor in some sort of "trust" percentage (how much you trust the reivewer).
- freyir 10y agoOnline reviews were a revelation for me, but they're increasingly being gamed on Amazon (fake reviews, people getting free products in exchange for positive reviews, etc.). I've bought some really mediocre products lately that had amazing reviews. I've also noticed the quality control has gone down the tubes, with 3rd party sellers shipping counterfeit goods. Amazon doesn't seem to be interested in regulating this. If there was a company with Amazon's shipping speed but without all the shady 3rd party sellers, I don't think I'd use Amazon again.
- mcpherrinm 10y agoJet.com?
- freyir 10y agoI'll take another look at them now that they've dropped the membership fee.
- stormbuilder 10y agoGenerally speaking I only read 3 star reviews. 5 star and 1 star reviews are usually garbage - either fluffed fake reviews, or reviews outraged about something unrelated with the quality of the product itself.
- BashiBazouk 10y agoI find 1 star reviews quite useful. If all the reviews are shipping complaints, the lemon rate of the product is probably low.
- newscracker 10y agoThere's a lot of gaming on those low star ratings by competitors. The trustability of reviews on Amazon has sunk so low over the years that for many products, reading many (tens or several tens of) reviews across star ratings is what may help have some idea about the product's quality and the seller.
- hoffcoder 10y agoYou can see when a company has built a stellar product when they can sustain return customers even without discounts and payback offers. See Amazon's rivals, in India atleast, Flipkart and snapdeal are biting the dust, and Amazon doesn't even give any special offers to the customer. They have perfected the thing they must do well to succeed in their business: fast delivery and returns. Amazon is the flagship bearer in e-commerce and is doing a good job advancing state of the art in this segment of human endeavour.
- kartD 10y agoQuick article summary "For the second quarter, Amazon recorded an $857 million profit, or $1.78 a share, compared with $92 million, or 19 cents, a year earlier, as sales rose to $30.4 billion from $23.19 billion. Analysts were expecting a profit of $1.11 a share, according to the average estimate compiled by Thomson Reuters. Amazon had forecast sales of between $28 billion and $30.5 billion. Helping prop up results was the Amazon Web Services cloud computing division, which rents computing power to other companies. AWS increased revenue to $2.89 billion, up from $1.82 billion a year earlier. The unit appears on track to exceed Amazon Chief Executive Jeff Bezos’s goal of reaching $10 billion in sales this year."
- JoshGlazebrook 10y agoThat last part shouldn't be hard with the overpriced bandwidth costs AWS charges.
- meterplech 10y agoCurious as to why you say that. Do you mean in comparison to other cloud infrastructure providers or in comparison or rolling your own infrastructure?
- tedunangst 10y agoComparison: EC2 charges 9 cents per GB, linode charges 2 cents and starts with a much larger (2TB vs 1GB) free quota. Rackspace charges 12 cents, Azure about 9 cents too.
- w1ntermute 10y agoQ2 2016 earnings press release from Amazon: http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-newsArticle&ID=2189731 http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-new...
- hammock 10y agoAmazon suppressed/hid profits for so long.. not hard for them to show strong quarterly earnings. It was accounting then and it's accounting now.
- overcast 10y agoThe only accounting "trick" was using all of your profits to reinvest immediately into expansion. Bezos isn't a moron, this was intentional, and it's paying off now.
- carc 10y agoI've never heard someone saying that a company reinvesting profits into itself as "suppressing/hiding" profits. I guess all Warren Buffet companies are also suppressing an hiding profits. Are you calling those companies out too?
- hammock 10y agoAll I'm saying is "monster profit" doesnt mean the company is doing any better than it was before. It's generating the same cash, they just aren't spending it the same way
- crucifiction 10y agoExcept revenue continues to increase 20-30% yoy
- gmu3 10y agoWell before they didn't report aws seperately so just how profitable it is was somewhat hidden.
- Analemma_ 10y agoThis is the point where things begin to look really scary for every retail company not named Amazon. Amazon's previous two decades of tiny profits have all been in service of building a massive logistics infrastructure (and locked-in customer base, via Prime) that no one else can touch, and now it's paying off. It's going to be very difficult to catch up to them - even if someone was willing to spend a lot of money to do it, Amazon could easily go back to the old regime of just reinvesting more into its operations; with these last three quarters, they've shown the naysayers that it can be made to pay dividends, and so I think Wall Street would be patient if they returned to that route.
- asmithmd1 10y agoThey still have tiny profits in the retail side from North America and actually lose money in rest for the world. Taking all those orders in North America and shipping all that stuff made less money last quarter - $708 Million; than they made running AWS - $718 Million. Time to spin off that loser business of shipping stuff to people's houses. http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-newsArticle&ID=2189731 http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-new...
- trhway 10y ago>Time to spin off that loser business of shipping stuff to people's houses. or start doing it by drones, flying or crawling, doesn't matter.
- dreaminvm 10y agoIf they can bring down shipping costs either through their own trucks or drones, then the eCommerce business is quite a bit more profitable than it is now. Along with continued dominance in the public cloud business, Amazon investors are going to get a really nice payout.
- alttab 10y agoJust 700 million in profit huh? Pretty weak.
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- paulpauper 10y agoSo much for all those failed predictions in 2014 of amazon never being profitable, being a bubble, etc. Amazon's cash flows are very strong, they have huge growth, and market dominance..whats what matters. Amazon is the online version of Walmart but much bigger and much more potential...they are taking over retail, both online and offline...just amazing
- coldcode 10y agoTheir PE ratio is 300. That's not profit that's wishful thinking. I will be amazed if they ever get to 100. Today prices are based entirely on dreams. Sure someday they might make lots of money. Apple makes more profit every few days. With AWS they would have nothing.
- yomly 10y ago>With[out] AWS This is such a moot point. That Amazon a "retail" company was able to roll out Kindle and popularise E readers (while handling distribution)... That Amazon were able to roll out AWS, a highly profitable cloud platform... That Amazon are in the process of launching automated drone delivery... These facts are not coincidence, they are inextricable from Amazon being what it is - a tech company that happened to start with Retail as its cash cow. It's an innovative company that is not content sitting around getting fat the second it reaches some sort of comfort zone, and until running a company like this becomes the norm, they can afford to command higher PE ratios while people anticipate their next big blockbuster product. To compare Amazon to Walmart, a company whose be all and end all is Retail, is missing the bigger picture. (nb that's not to say that their current trading ratio isn't overinflated)
- brianwawok 10y agoExcept Walmart has Walmart labs so they are at least a tiny bit tech :)
- dreaminvm 10y agoPeople were also skeptical about Facebook turning a profit and have a PE less than 100. Now Facebook is literally printing 2B per quarter with a more sane PE (~60) as growth continues to accelerate. Only time will tell, but if Amazon continues bring users into their Prime ecosystem and AWS maintains its position, there's plenty of room to increase profits.
- jordache 10y agoGot $99 from us with a Prime membrship. NetFlix raising it's monthly price to $10.99 and we only get a sub par library of content.. With Prime we pay less and get much more
- dangrossman 10y ago> sub par library of content In the past year, they've produced 600 hours of new original content that earned 54 Emmy nominations, and you get it for less than the price of one premium cable channel. Nobody, neither Netflix nor Amazon, is going to continue to have the kind of library Netflix did during its peak as a catalog of old movies. The lax and low-priced licensing deals they got back then are never coming back, not with the rise of online streaming as a mainstream channel for media: everyone's building their own content silos, everyone's aiming for exclusive control of something so you pick theirs, and everyone's asking an arm and a leg for their streaming rights since there's multiple bidders with big budgets involved now. Netflix will have everything Disney puts out for the next few years; Amazon won't. Amazon will have all of HBO's back catalog for a while; Netflix won't. CBS All Access will have the new Star Trek TV series, nobody else will. Etc etc. That's the short-term future, and it's already locked up in contracts.
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- jordache 10y agoapparently netflix's offerings is not strong enough for ppl to stay on or attract new customers at an ever increasing pace. My experience is obviously not anecdotal
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- abtinf 10y agoBased on my understanding of Amazon's strategy, this is bad news and it raises a lot of questions. The most charitable explanation is that they planned their spending poorly and were not able to match profits - an error which may be a fire-able offence since it could costs hundreds of millions of dollars. Have they run out of ideas to invest in? Why are they suddenly changing strategy and forcing their investors to eat massive taxes on retained earnings? Alternatively, are they saving up for some massive investment in the second half of the year?
- iliveinseattle 10y agoI've worked at Amazon. Let me tell you, this is all part of the strategy. At an all hands sometime ago bezos took questions from employees regarding the worry around profitability. He basically said Amazon has to lose a lot of money to reach a massive scale and only then will they become profitable. However every once in a while they'll show a profit to check in with reality and Wall Street.
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- arzt 10y agoIsn't the war between AWS, Google, and Azure etc just a race to the bottom? Won't these businesses just be complete commodities in the near future?
- jjallen 10y agoHave you seen AWS' margins? Are the dozens of APIs and services AWS offers commodities? Most take years to develop and test. Also a huge market with ~3 suppliers will likely not turn into a commodity business.
- billmalarky 10y agoAWS continues to add new products that support new technologies like Docker etc. They can stay out of "commodity" space by continuing to do so. Tech moves so fast it's hard to imagine them ever really running out of new products to build.
- adventured 10y agoThat would have been true if AWS had remained a simplistic hardware-focused server renting type business. It's a software services business. Those rarely become commodities as a basic server business might. And once you have scale, your ability to sell your customers on an endless variety of new services becomes the real value, and that prevents the classic race to the bottom and it boosts customer lock-in dramatically. AWS, Azure, Google are not primarily competing on compute / ram / bandwidth cost any longer, that's increasingly a meaningless sideshow (which is why AWS is no longer aggressively price cutting / matching). They're competing on what software services they offer, how easy they are to use and scale, etc.
- lostcolony 10y agoThis. There are other comments on this thread griping about the cost of bandwidth, and comparing it to competitors for EC2 (Linode and the like)...and that misses the point. If that's all you want, yeah, there are probably cheaper alternatives that might do. But for a one stop shop that offers the best selection of services from which to compose software solutions, mature and tested, with an aggressive roadmap for adding more...you're left with those three. And of them, AWS leads.
- samfisher83 10y agoIf you look at their accounting statements. They made more money from AWS than their entire selling operation.
- rattray 10y agoCan you elaborate / share the numbers?
- samfisher83 10y agoNet Income From North America Retail Sales = $702 Million International Retail Sales = $-135 Million AWS = $718