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> Amazon used this technique for over a decade There's a bit of a difference between those two examples. Amazon was making a per unit profit but taking losses
by delecti 9y ago
> Amazon used this technique for over a decade
There's a bit of a difference between those two examples. Amazon was making a per unit profit but taking losses overall due to fixed costs, Uber is taking a per unit loss. Amazon was able to eventually overcome those fixed costs with volume, but by taking a per-ride loss, Uber can't ever outgrow that subsidy without raising prices or lowering per-ride costs (and drivers are already not exactly flush with cash).
- malvosenior 9y agoGood point. As a consumer, I'd be willing to pay higher prices so I could see how once you get "hooked" this strategy works. I also would love to see the self-driving dream come to fruition which would presumably lower costs. You're correct that both those strategies differ from Amazon though.