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Reminder: http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_profits_fall_45_percent.html http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_pro...

by chx 10y ago

Reminder: http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_profits_fall_45_percent.html http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_pro... > That's because Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers. The shareholders put up the equity, and instead of owning a claim on a steady stream of fat profits, they get a claim on a mighty engine of consumer surplus. Amazon sells things to people at prices that seem impossible because it actually is impossible to make money that way. And the competitive pressure of needing to square off against Amazon cuts profit margins at other companies, thus benefiting people who don't even buy anything from Amazon.

gowld 10y ago
Yglesias is a political pundit, not so much an economic expert. He doesn't understand reinvesting profits to grow a business.
- superbatfish 10y ago
  You are mistaken. For example: - He wrote Slate's economics column, "MoneyBox," for a number of years. - He wrote a book about the economics of the housing market. - He co-founded Vox.com, which -- presumably -- reinvests its profits to grow the business.
  - johncolanduoni 10y ago
    I don't personally know much about him, but your first two points do nothing to make him look less like a political pundit.
    - caminante 10y ago
      I submit the points address questions over his economic analysis credibility. I'll add that his writing was good enough to trigger a response from Bezos in a letter to shareholders.
      - nsp 10y ago
        The book, as someone who is generally a fan of Yglesias, is around 35 pages long and is very light on actual economics and heavy on rhetoric
- aptwebapps 10y ago
  Yglesias has more than a passing grasp of economics, and I guarantee that he understands reinvesting profits to grow a business. It's not that hard a concept to grasp. GP's quote was deliberate hyperbole, IIRC, and was not meant completely literally.
Fezzik 10y ago
I wonder what percentage of goods that Amazon sells are still being sold at low-margin prices though. Most things I see on Amazon these days are more expensive than at my local store. Two examples from yesterday: Rani Hot Curry Powder (Amazon: $14.99, my local grocer: $8.69) and Speedo Silicone Swim Earplugs ($5.99 on Amazon, $2.99 at Fred Meyer). Just about everything I purchase these days is cheaper at a local store. Ritter Sport chocolate bars are cheaper, bike tubes and tires, pots and pans... I can't think of a single thing that I have price-checked recently that has been even slightly cheaper on Amazon.
- bduerst 10y ago
  Same here. I've been using Amazon Prime less and less, because once you notice they hide the "Free" shipping costs into the price of the item, it's difficult to justify larger orders with them.
  - Spooky23 10y ago
    Beyond that, there's all sorts of hidden bullshit around prime now. If your local DC isn't stocked, you're waiting days or the order cut off is way earlier. They are incredibly competent though. I ordered an iPad from Target, and it was like ordering from LL Bean in 1987. I think FedEx Ground dispatched it by horse, it took 11 days to travel from St Louis to NYS.
    - sbierwagen 10y ago
      Did you order it in December? And choose free shipping?
      - Spooky23 10y ago
        Right after New Years and yes. It shipped within hours from the warehouse.
        sbierwagen 10y ago
caminante 10y ago
This is from 2013. The author has revised his thesis (Q4 2015) [0], though he remains bearish on AMZN longterm. [0] http://www.vox.com/2015/12/9/9873174/amazon-never-profitable http://www.vox.com/2015/12/9/9873174/amazon-never-profitable
- aptwebapps 10y ago
  If by revised you mean changed, then I don't think he has. GP's quote was a joke (see below) about Amazon's behavior and intentions rather than a condemnation. I'm going to go ahead a pull a few quotes out of your link that I think are illustrative: Amazon has not, historically, been a profitable company because Amazon's leaders don't want it to be a profitable company. In the future it will continue to not be profitable for the exact same reason. In the past, Amazon has managed to turn a profit when it's forced to by skepticism from Wall Street, which suggests that non-profitability is a choice. Indeed, it's a choice that CEO Jeff Bezos has explained to the public in response to a joke I once made about the company's unprofitability: and Fundamentally, Amazon will only start booking large consistent profits when the company's leaders run out of new ideas to invest in. Right now they are not out of ideas, as you can easily tell from the wide range of businesses they are halfway into.
  - caminante 10y ago
    Since 2/1/13 (Slate), AMZN's up 205%. 205% in 4 years to almost this day!!!!! His thesis that AMZN's an investor funded charity has been blown up via the gains accrued by investors. Despite being wrong, I admire his analysis as insightful and true to value investing principles. In the '15 article, he changed his thesis to account for AWS' unexpected rise and earnings contributions and said his thesis fails if AMZN doesn't run out of profitable investment ops. I submit that's the key change. Despite being overall bearish, that's walking it back quite a bit. FWIW, since 12/9/15 (Vox), AMZN's up 26%.
    - aptwebapps 10y ago
      I was going by memory and your '15 link, so I could well be mistaken. I remembered the general tenor as "What's up with this?" rather than "It will never work."

by chx 10y ago

gowld 10y ago

Yglesias is a political pundit, not so much an economic expert. He doesn't understand reinvesting profits to grow a business.

superbatfish 10y ago
You are mistaken. For example: - He wrote Slate's economics column, "MoneyBox," for a number of years. - He wrote a book about the economics of the housing market. - He co-founded Vox.com, which -- presumably -- reinvests its profits to grow the business.
- johncolanduoni 10y ago
  I don't personally know much about him, but your first two points do nothing to make him look less like a political pundit.
  - caminante 10y ago
    I submit the points address questions over his economic analysis credibility. I'll add that his writing was good enough to trigger a response from Bezos in a letter to shareholders.
    - nsp 10y ago
      The book, as someone who is generally a fan of Yglesias, is around 35 pages long and is very light on actual economics and heavy on rhetoric
aptwebapps 10y ago
Yglesias has more than a passing grasp of economics, and I guarantee that he understands reinvesting profits to grow a business. It's not that hard a concept to grasp. GP's quote was deliberate hyperbole, IIRC, and was not meant completely literally.

Fezzik 10y ago

I wonder what percentage of goods that Amazon sells are still being sold at low-margin prices though. Most things I see on Amazon these days are more expensive than at my local store. Two examples from yesterday: Rani Hot Curry Powder (Amazon: $14.99, my local grocer: $8.69) and Speedo Silicone Swim Earplugs ($5.99 on Amazon, $2.99 at Fred Meyer). Just about everything I purchase these days is cheaper at a local store. Ritter Sport chocolate bars are cheaper, bike tubes and tires, pots and pans... I can't think of a single thing that I have price-checked recently that has been even slightly cheaper on Amazon.

bduerst 10y ago
Same here. I've been using Amazon Prime less and less, because once you notice they hide the "Free" shipping costs into the price of the item, it's difficult to justify larger orders with them.
- Spooky23 10y ago
  Beyond that, there's all sorts of hidden bullshit around prime now. If your local DC isn't stocked, you're waiting days or the order cut off is way earlier. They are incredibly competent though. I ordered an iPad from Target, and it was like ordering from LL Bean in 1987. I think FedEx Ground dispatched it by horse, it took 11 days to travel from St Louis to NYS.
  - sbierwagen 10y ago
    Did you order it in December? And choose free shipping?
    - Spooky23 10y ago
      Right after New Years and yes. It shipped within hours from the warehouse.
      - sbierwagen 10y ago

caminante 10y ago

This is from 2013. The author has revised his thesis (Q4 2015) [0], though he remains bearish on AMZN longterm. [0] http://www.vox.com/2015/12/9/9873174/amazon-never-profitable http://www.vox.com/2015/12/9/9873174/amazon-never-profitable

aptwebapps 10y ago
If by revised you mean changed, then I don't think he has. GP's quote was a joke (see below) about Amazon's behavior and intentions rather than a condemnation. I'm going to go ahead a pull a few quotes out of your link that I think are illustrative: Amazon has not, historically, been a profitable company because Amazon's leaders don't want it to be a profitable company. In the future it will continue to not be profitable for the exact same reason. In the past, Amazon has managed to turn a profit when it's forced to by skepticism from Wall Street, which suggests that non-profitability is a choice. Indeed, it's a choice that CEO Jeff Bezos has explained to the public in response to a joke I once made about the company's unprofitability: and Fundamentally, Amazon will only start booking large consistent profits when the company's leaders run out of new ideas to invest in. Right now they are not out of ideas, as you can easily tell from the wide range of businesses they are halfway into.
- caminante 10y ago
  Since 2/1/13 (Slate), AMZN's up 205%. 205% in 4 years to almost this day!!!!! His thesis that AMZN's an investor funded charity has been blown up via the gains accrued by investors. Despite being wrong, I admire his analysis as insightful and true to value investing principles. In the '15 article, he changed his thesis to account for AWS' unexpected rise and earnings contributions and said his thesis fails if AMZN doesn't run out of profitable investment ops. I submit that's the key change. Despite being overall bearish, that's walking it back quite a bit. FWIW, since 12/9/15 (Vox), AMZN's up 26%.
  - aptwebapps 10y ago
    I was going by memory and your '15 link, so I could well be mistaken. I remembered the general tenor as "What's up with this?" rather than "It will never work."