5 ms·

Yet another problem that hasn't been solved by letting companies run unregulated to do whatever is most profitable. What a surprise!

roenxi 7y ago
Your point stands regardless, but Amazon famously doesn't do what is most profitable. Their profits as a business (ignoring AWS) are woeful.
- kerkeslager 7y ago
  That seems like a fairly short-sighted view. Much of Amazon's strategy seems to be giving up short term profit to establish a monopoly for much larger long-term profit. They aren't perfect, and have certainly made some unprofitable decisions over the years, but I think that their overall strategy is VERY profitable, even if it hasn't yet yielded all the profits it is going to.
  - roenxi 7y ago
    Bezos founded Amazon.com, Inc. in 1994. They have yet to produce an impressive profit margin (outside web services which isn't really relevant to this specific thread). How long sighted are we talking here? The raw numbers are impressive, but they clearly aren't in the game of profit maximisation as we knew it back in the 80s. That is why nobody is really managing to compete with them. I don't really see how they could maintain a monopoly and a margin at the same time. If they had actual profit margins then other companies would compete with them. The reason they look like a monopoly at the moment is because they have no margins. If they change that, competition will spring up like mushrooms. Amazon is basically a web services provider by profit. All the other stuff they do is a mysterious distraction. If you want a company making for-profit decisions, look at how Apple runs itself.
    - kerkeslager 7y ago
      > How long sighted are we talking here? As long as it takes to get the monopoly. This can't be rushed. Their competition is from i.e. Walmart. These competitors are big and a single major event isn't going to take them down. It requires a series of major events for a company of that size to fall out of serious competition. But it does happen: look at Sears. It took almost three decades, starting with a pricing scandal in 1992 to declaring bankruptcy in 2018, with many mis-steps along the way, but they did eventually fall. > I don't really see how they could maintain a monopoly and a margin at the same time. If they had actual profit margins then other companies would compete with them. By that logic, monopolies can't be profitable, but they clearly are profitable, so your logic must be faulty. Once a company reaches a certain scale, it becomes very difficult to start a competing company for a bunch of reasons: 1. First to market advantage: name recognition. Amazon is a household name. A new company isn't. A new company could overcome this with marketing, but marketing costs money, and then they have to pass that cost on to consumers, and Amazon will win on price. 2. First to market advantage: pre-existing infrastructure. Amazon has warehouses everywhere, so they can deliver to most places quickly. In places like NYC or SF they can deliver something from a few miles away, so they can deliver it on the same day. They have already spent this money, so they can provide this speed at a lower cost. A new company could overcome this by building out their own infrastructure, but this costs money which they have to pass on to consumers, and again Amazon wins on price. 3. Efficiencies of scale: Amazon is already huge. If it costs them $10 to write a line of code or lay a brick, that cost is amortized across millions of purchases that occur each day. A new company has to write the same line of code and lay the same brick to provide the same feature or distribution center, but that cost is amortized across only a few hundred purchases a day when they're new. There are more reasons, but basically, Amazon is well past the point where new companies could pop up and reasonably compete with them based on profit margins alone. They still have competition, but it's from the likes of Walmart--other giant companies that already have some of the same advantages Amazon does. It would be possible for a newcomer to compete, but it would require an extraordinary innovation which is highly unlikely. > The reason they look like a monopoly at the moment is because they have no margins. If they change that, competition will spring up like mushrooms. They don't look like a monopoly because they aren't yet. They have major competition with, for example, Walmart.
      - 7y ago

roenxi 7y ago

Your point stands regardless, but Amazon famously doesn't do what is most profitable. Their profits as a business (ignoring AWS) are woeful.

kerkeslager 7y ago
That seems like a fairly short-sighted view. Much of Amazon's strategy seems to be giving up short term profit to establish a monopoly for much larger long-term profit. They aren't perfect, and have certainly made some unprofitable decisions over the years, but I think that their overall strategy is VERY profitable, even if it hasn't yet yielded all the profits it is going to.
- roenxi 7y ago
  Bezos founded Amazon.com, Inc. in 1994. They have yet to produce an impressive profit margin (outside web services which isn't really relevant to this specific thread). How long sighted are we talking here? The raw numbers are impressive, but they clearly aren't in the game of profit maximisation as we knew it back in the 80s. That is why nobody is really managing to compete with them. I don't really see how they could maintain a monopoly and a margin at the same time. If they had actual profit margins then other companies would compete with them. The reason they look like a monopoly at the moment is because they have no margins. If they change that, competition will spring up like mushrooms. Amazon is basically a web services provider by profit. All the other stuff they do is a mysterious distraction. If you want a company making for-profit decisions, look at how Apple runs itself.
  - kerkeslager 7y ago
    > How long sighted are we talking here? As long as it takes to get the monopoly. This can't be rushed. Their competition is from i.e. Walmart. These competitors are big and a single major event isn't going to take them down. It requires a series of major events for a company of that size to fall out of serious competition. But it does happen: look at Sears. It took almost three decades, starting with a pricing scandal in 1992 to declaring bankruptcy in 2018, with many mis-steps along the way, but they did eventually fall. > I don't really see how they could maintain a monopoly and a margin at the same time. If they had actual profit margins then other companies would compete with them. By that logic, monopolies can't be profitable, but they clearly are profitable, so your logic must be faulty. Once a company reaches a certain scale, it becomes very difficult to start a competing company for a bunch of reasons: 1. First to market advantage: name recognition. Amazon is a household name. A new company isn't. A new company could overcome this with marketing, but marketing costs money, and then they have to pass that cost on to consumers, and Amazon will win on price. 2. First to market advantage: pre-existing infrastructure. Amazon has warehouses everywhere, so they can deliver to most places quickly. In places like NYC or SF they can deliver something from a few miles away, so they can deliver it on the same day. They have already spent this money, so they can provide this speed at a lower cost. A new company could overcome this by building out their own infrastructure, but this costs money which they have to pass on to consumers, and again Amazon wins on price. 3. Efficiencies of scale: Amazon is already huge. If it costs them $10 to write a line of code or lay a brick, that cost is amortized across millions of purchases that occur each day. A new company has to write the same line of code and lay the same brick to provide the same feature or distribution center, but that cost is amortized across only a few hundred purchases a day when they're new. There are more reasons, but basically, Amazon is well past the point where new companies could pop up and reasonably compete with them based on profit margins alone. They still have competition, but it's from the likes of Walmart--other giant companies that already have some of the same advantages Amazon does. It would be possible for a newcomer to compete, but it would require an extraordinary innovation which is highly unlikely. > The reason they look like a monopoly at the moment is because they have no margins. If they change that, competition will spring up like mushrooms. They don't look like a monopoly because they aren't yet. They have major competition with, for example, Walmart.
    - 7y ago