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If that's true, why doesn't their e-commerce business make any money? I constantly hear this argument that they can turn on the profit spigot any time they want
by dkrich 9y ago
If that's true, why doesn't their e-commerce business make any money? I constantly hear this argument that they can turn on the profit spigot any time they want, they just haven't yet because, "strategy."
But if what you are saying were true, they'd be making more money than Wal-Mart. But they aren't. In fact they aren't even close.
They have essentially made a land-grab (very successfully) by subsidizing convenience, which is pretty much exactly what Uber did. The problem to me is that I don't see how they turn that into long term profitability. What got them to where they are is almost diametrically opposed to what will make them money.
- ikeboy 9y agoI'm not saying they can do it on every or most items, I'm saying there are many items they can. They make large profits on some items, and lose large amounts on other items to keep customers coming back. If they stopped selling losing items (part of the reason they closed quidsi), they'd grow slower but make more. I can't find Walmart profit numbers for just the online part, or even revenue, but estimates I found say that Amazon is selling more than ten times as much than Walmart. (See http://www.cnbc.com/2016/12/23/amazon-grabbing-the-bulk-of-surging-online-sales-this-holiday.html http://www.cnbc.com/2016/12/23/amazon-grabbing-the-bulk-of-s...). Unless Walmart's margins are ten times better, Amazon made more from online.
- thinkloop 9y agoAmazon's businesses are currently self sustaining and make tons of profit right now. Amazon then takes those profits and invests them in other businesses it thinks will make more profit later, removing their status as profit. That's why it's as easy as turning on the spigot, they can simply choose to stop expanding, everything else is proven.