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> This is of course Amazon’s model, which underpriced competitors in retail and eventually came to control the whole market. This is false. First, Amazon is f

> This is of course Amazon’s model, which underpriced competitors in retail and eventually came to control the whole market. This is false. First, Amazon is far from controlling the whole market. They control close to 50% of e-commerce which itself represents less than 12% of total retail sales. Second, Amazon didn't predatory price, or if it did, it didn't for long, certainly not long enough to achieve its current market share. The author is mistaking Amazon's lack of profit for its propensity to reinvest all of its profit into other businesses (e.g. AWS), or its willingness to take short-term losses in order to reach economies of scale where profits exist (which, as Amazon's retail business has shown, they do).

johnfactorial 7y ago
> They control close to 50% of e-commerce which itself represents less than 12% of total retail sales. Both of these numbers are surprising to me, can you source them? Particularly the first one, which I assume is a global measure, and I'd be interested to know what % of North American e-commerce Amazon controls. I wager I could walk outside my home and ask 100 people on the sidewalk to name one e-commerce site and far more than 50% would name Amazon first.
- TillE 7y ago
  I would struggle to name a single online general retailer that isn't Amazon. Unless you count, like, Walmart. Basically everyone else has some kind of niche. Amazon sells everything.
  - RankingMember 7y ago
    Jet still exists (a Walmart acquisition), but I don't hear much about them and have a feeling they're not doing so great.
  - tomjakubowski 7y ago
    Why wouldn't you count Walmart or Target? For household consumables I bounce between Amazon and Target's subscribe and save offerings depending on whichever is cheaper.
- cfors 7y ago
  Naming something popular != market share.
- hobofan 7y ago
  In North America, Walmart seems to be a significant competition amongst others. Clothing is also a big part of e-commerce, and Amazon doesn't have a good hold on that.
- vonmoltke 7y ago
  > I wager I could walk outside my home and ask 100 people on the sidewalk to name one e-commerce site and far more than 50% would name Amazon first. I don't know how many people would consider the likes of Wal-Mart, Target, and Kohl's "e-commerce sites" even though they have probably ordered stuff through their websites.
- ytwySXpMbS 7y ago
  I'm not the original commenter, but here's two sources [1] [2] for the 50% number, with [1] saying this represents 5% of US retail sales. It's 50% of US e-commerce. [1] https://techcrunch.com/2018/07/13/amazons-share-of-the-us-e-commerce-market-is-now-49-or-5-of-all-retail-spend/ https://techcrunch.com/2018/07/13/amazons-share-of-the-us-e-... [2] https://www.cnbc.com/2018/07/12/amazon-to-take-almost-50-percent-of-us-e-commerce-market-by-years-end.html https://www.cnbc.com/2018/07/12/amazon-to-take-almost-50-per...
  - johnfactorial 7y ago
    Thanks very much. Some great other replies to my question in this thread as well.
cfors 7y ago
I think you have it reversed, AWS accounts for most of Amazon's profit and is used to fund other ventures. > AWS revenue came accounted for 13% of Amazon’s total revenue. Of Amazon’s total $3.1 billion in operating income, 52% came from AWS. [0] [0] https://www.cnbc.com/2019/07/25/aws-earnings-q2-2019.html https://www.cnbc.com/2019/07/25/aws-earnings-q2-2019.html
- crumpets 7y ago
  No, long before AWS, Amazon intentionally re-invested all of the excess revenue that would be reported as profit back into the business instead (expanding capex and opex).
  - buboard 7y ago
    I thought aws sprung out of investment in their own infrastructure. A happy accident of sorts, not some preplanned mammoth investment in building AWS from the ground up
    - vl 7y ago
      Not at all. AWS, or rather S3 was a pet project of one of the very early Amazon employees who wanted to do something fun. It wasn't really taken seriously or had deep strategy at first. Once it's started to gain traction, Bezos realized the enormous potential and full-steamed-ahead AWS. Then it took many years for Amazon retail to actually start using AWS products in any meaningful way.
      - deleted 7y ago
        [deleted]
  - dlp211 7y ago
    That's not how profits reporting works.
- austenallred 7y ago
  Yes, so 52% of Amazon's operating income came from AWS. Which means, conversely, 48% came from Amazon retail and other services. In other words, it's not true to say that AWS subsidizes the rest of Amazon, or that the rest of Amazon runs at a loss.
blueboo 7y ago
Or, it’s true. Amazon did predatory price for several years, subsidising sale and delivery with venture capital. I’m baffled by the nonsense point about reinvesting profit from a lack of profit. AWS doesn’t excuse the years of cynical predation. 50% of a market is easily enough to dominate and control one, of the other players aren’t the same order of magnitude of influence.
- nemothekid 7y ago
  >Amazon did predatory price for several years, subsidising sale and delivery with venture capital. Amazon was founded in 1994 and went public in 1997, and sold more than books in 1998. Where does "several years of subsidy with venture" factor into this? It's also hard to believe that Amazon weathered the dotcom crash while losing money.
  - NCWV 7y ago
    It took Amazon more than 14 years—58 quarters after its May 1997 initial public offering—to make, cumulatively, as much profit as it produced in the latest quarter alone. Keep in mind that Amazon consistently lost money for its first several years as a public company. https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-as-much-net-profit-as-it-did-in-the-fourth-quarter-of-2017/ https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-...
bigYahnz 7y ago
Predatory return policy? >let me use this video card for two years and then get a 100% refund by shipping it back to Amazon. Why would I shop anywhere else?

johnfactorial 7y ago

> They control close to 50% of e-commerce which itself represents less than 12% of total retail sales. Both of these numbers are surprising to me, can you source them? Particularly the first one, which I assume is a global measure, and I'd be interested to know what % of North American e-commerce Amazon controls. I wager I could walk outside my home and ask 100 people on the sidewalk to name one e-commerce site and far more than 50% would name Amazon first.

TillE 7y ago
I would struggle to name a single online general retailer that isn't Amazon. Unless you count, like, Walmart. Basically everyone else has some kind of niche. Amazon sells everything.
- RankingMember 7y ago
  Jet still exists (a Walmart acquisition), but I don't hear much about them and have a feeling they're not doing so great.
- tomjakubowski 7y ago
  Why wouldn't you count Walmart or Target? For household consumables I bounce between Amazon and Target's subscribe and save offerings depending on whichever is cheaper.
cfors 7y ago
Naming something popular != market share.
hobofan 7y ago
In North America, Walmart seems to be a significant competition amongst others. Clothing is also a big part of e-commerce, and Amazon doesn't have a good hold on that.
vonmoltke 7y ago
> I wager I could walk outside my home and ask 100 people on the sidewalk to name one e-commerce site and far more than 50% would name Amazon first. I don't know how many people would consider the likes of Wal-Mart, Target, and Kohl's "e-commerce sites" even though they have probably ordered stuff through their websites.
ytwySXpMbS 7y ago
I'm not the original commenter, but here's two sources [1] [2] for the 50% number, with [1] saying this represents 5% of US retail sales. It's 50% of US e-commerce. [1] https://techcrunch.com/2018/07/13/amazons-share-of-the-us-e-commerce-market-is-now-49-or-5-of-all-retail-spend/ https://techcrunch.com/2018/07/13/amazons-share-of-the-us-e-... [2] https://www.cnbc.com/2018/07/12/amazon-to-take-almost-50-percent-of-us-e-commerce-market-by-years-end.html https://www.cnbc.com/2018/07/12/amazon-to-take-almost-50-per...
- johnfactorial 7y ago
  Thanks very much. Some great other replies to my question in this thread as well.

cfors 7y ago

I think you have it reversed, AWS accounts for most of Amazon's profit and is used to fund other ventures. > AWS revenue came accounted for 13% of Amazon’s total revenue. Of Amazon’s total $3.1 billion in operating income, 52% came from AWS. [0] [0] https://www.cnbc.com/2019/07/25/aws-earnings-q2-2019.html https://www.cnbc.com/2019/07/25/aws-earnings-q2-2019.html

crumpets 7y ago
No, long before AWS, Amazon intentionally re-invested all of the excess revenue that would be reported as profit back into the business instead (expanding capex and opex).
- buboard 7y ago
  I thought aws sprung out of investment in their own infrastructure. A happy accident of sorts, not some preplanned mammoth investment in building AWS from the ground up
  - vl 7y ago
    Not at all. AWS, or rather S3 was a pet project of one of the very early Amazon employees who wanted to do something fun. It wasn't really taken seriously or had deep strategy at first. Once it's started to gain traction, Bezos realized the enormous potential and full-steamed-ahead AWS. Then it took many years for Amazon retail to actually start using AWS products in any meaningful way.
    - deleted 7y ago
      [deleted]
- dlp211 7y ago
  That's not how profits reporting works.
austenallred 7y ago
Yes, so 52% of Amazon's operating income came from AWS. Which means, conversely, 48% came from Amazon retail and other services. In other words, it's not true to say that AWS subsidizes the rest of Amazon, or that the rest of Amazon runs at a loss.

blueboo 7y ago

Or, it’s true. Amazon did predatory price for several years, subsidising sale and delivery with venture capital. I’m baffled by the nonsense point about reinvesting profit from a lack of profit. AWS doesn’t excuse the years of cynical predation. 50% of a market is easily enough to dominate and control one, of the other players aren’t the same order of magnitude of influence.

nemothekid 7y ago
>Amazon did predatory price for several years, subsidising sale and delivery with venture capital. Amazon was founded in 1994 and went public in 1997, and sold more than books in 1998. Where does "several years of subsidy with venture" factor into this? It's also hard to believe that Amazon weathered the dotcom crash while losing money.
- NCWV 7y ago
  It took Amazon more than 14 years—58 quarters after its May 1997 initial public offering—to make, cumulatively, as much profit as it produced in the latest quarter alone. Keep in mind that Amazon consistently lost money for its first several years as a public company. https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-as-much-net-profit-as-it-did-in-the-fourth-quarter-of-2017/ https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-...

bigYahnz 7y ago

Predatory return policy? >let me use this video card for two years and then get a 100% refund by shipping it back to Amazon. Why would I shop anywhere else?