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Because they can switch on a 30% profit margin at a moments notice once the competition is sufficiently demolished

• zerostar07 9y ago
  doesnt their history indicate that they can't have so large margins in online sales?
  • kardos 9y ago
    With vibrant competition, no
• echosmith 9y ago
  Not quite. Firstly, retail is not a huge loss maker like people make it seem. Amazon has shown in the past that it can make a 6.6% margin on retail (which is fairly huge). Even right now North American retail makes about as big a profit as AWS, losses are coming from international retail. So in the end you can imagine Amazon being something like 6-7% margin on retail (that's not assuming any technological paradigm shifts like fully automated warehouses, amazon owned banking and payments, fully amazon owned logistics) and 25% margins on AWS. On top of that you have a fast growing ads business that is destined to rival Google and Facebook (if not displace them) with fat margins, and a big chunk of the smarthome/IoT market via Alexa and AWS.
  • jacksmith21006 9y ago
    Doubt you will see Amazon compete in ads at a competitive level with Google or even fb. Big problem is media buyers knowledge of their platform and willing to.learn it as well as integration with the ad ecosystem.