6 ms·

Just want to make a correction here: Amazon was definitely not losing money on every sale. I think what you're thinking of is that the company rarely reported

Just want to make a correction here: Amazon was definitely not losing money on every sale. I think what you're thinking of is that the company rarely reported a profit. But that was because they carefully managed their finances so that all the money they made was redirected back into growth, either through capital improvements, hiring, lowering prices, etc. before it was reported as profit. Amazon maintained a boot-strapping mindset long after going public. In contrast, some gig economy companies are losing money on every sale; they generate no new capital of their own and their growth is financed entirely by external sources of capital.

bsder 6y ago
> Just want to make a correction here: Amazon was definitely not losing money on every sale. Correct. Amazon is in the other category of unicorn--ignore those pesky laws that limit our competitors. Amazon gained 5-8% on every sale because they didn't collect sales tax for a VERY long time. This drove my local booksellers crazy, and probably put them out of business. Yes, I'm still mad about that. Amazon should have been fined billions for those infractions. But it is just another example of "Do that illegal thing that's profitable. We likely won't get fined enough for it to be a problem."
- jasonpeacock 6y ago
  No online seller was/is collecting sales tax, except for their own state. I've always paid sales tax on my Amazon purchases here in Washington.
- autokad 6y ago
  > "Amazon should have been fined billions for those infractions." They were not infractions, that was the tax code. Governments (whether you like it or not) decided that in order for these markets to grow, they need to forgo taxes on them for a while until they reach critical mass. They weren't skirting the law, so you can't 'fine' Amazon (or any online retailer) for that.
  - gowld 6y ago
    Government didn't "decide" that. Government was slow at rectifying the loophole. Legally, all of Amazon's customers were breaking the law by not paying "use" tax.
    - perl4ever 6y ago
      Some states are making up for past undercollection of sales tax by pressuring you to pay when you file your income taxes. Pretty much everybody collects sales tax online these days, but if you don't obsessively keep records, you can't be sure you paid it on every single purchase, so it's safest to pay the estimated amount when you do your NY state income taxes, which means they are double dipping to some extent.
      - chii 6y ago
        wow that's so stupid. Sales tax is paid by the store, not the customer. How can the tax be collected after the fact?!
        perl4ever 6y ago
        There is an estimated amount which you can pay optionally. The implied threat is, if you don't pay the estimate, and thereby claim you already paid your sales tax due on all online purchases, then if you get audited, you lied under penalty of perjury on your return. Now this is very unlikely, but it's compelling if you're very risk averse.
        chii 6y ago
        > paid your sales tax due on all online purchases what i'm saying is that the gov't should not place the pressure of paying sales tax on the consumer, and instead get it off the store that's selling to you. If it's an overseas store, then they do not have legal right to operate in america, and should refuse an american customer. Unless they either also pay sales tax, or have a treaty with the USA in their home country for tax reciprocity. It's dumb to have a customer be responsible for said sales tax.
- dingaling 6y ago
  > Amazon gained 5-8% on every sale because they didn't collect sales tax for a VERY long time. In the USA alone. In the other markets where Amazon had fast growth they had no such advantage because collecting sales tax / VAT is mandatory.
netcan 6y ago
I did say it was a cliche. On the greater point... I agree that some gig economy companies are more on-the-nose, but they overall proposition wasn't that different. The business model lost money, but generated growth. In hindsight, once you know who the winners are, it's easy to point out the differences. Realtime, it's harder.

bsder 6y ago

> Just want to make a correction here: Amazon was definitely not losing money on every sale. Correct. Amazon is in the other category of unicorn--ignore those pesky laws that limit our competitors. Amazon gained 5-8% on every sale because they didn't collect sales tax for a VERY long time. This drove my local booksellers crazy, and probably put them out of business. Yes, I'm still mad about that. Amazon should have been fined billions for those infractions. But it is just another example of "Do that illegal thing that's profitable. We likely won't get fined enough for it to be a problem."

jasonpeacock 6y ago
No online seller was/is collecting sales tax, except for their own state. I've always paid sales tax on my Amazon purchases here in Washington.
autokad 6y ago
> "Amazon should have been fined billions for those infractions." They were not infractions, that was the tax code. Governments (whether you like it or not) decided that in order for these markets to grow, they need to forgo taxes on them for a while until they reach critical mass. They weren't skirting the law, so you can't 'fine' Amazon (or any online retailer) for that.
- gowld 6y ago
  Government didn't "decide" that. Government was slow at rectifying the loophole. Legally, all of Amazon's customers were breaking the law by not paying "use" tax.
  - perl4ever 6y ago
    Some states are making up for past undercollection of sales tax by pressuring you to pay when you file your income taxes. Pretty much everybody collects sales tax online these days, but if you don't obsessively keep records, you can't be sure you paid it on every single purchase, so it's safest to pay the estimated amount when you do your NY state income taxes, which means they are double dipping to some extent.
    - chii 6y ago
      wow that's so stupid. Sales tax is paid by the store, not the customer. How can the tax be collected after the fact?!
      - perl4ever 6y ago
        There is an estimated amount which you can pay optionally. The implied threat is, if you don't pay the estimate, and thereby claim you already paid your sales tax due on all online purchases, then if you get audited, you lied under penalty of perjury on your return. Now this is very unlikely, but it's compelling if you're very risk averse.
        chii 6y ago
        > paid your sales tax due on all online purchases what i'm saying is that the gov't should not place the pressure of paying sales tax on the consumer, and instead get it off the store that's selling to you. If it's an overseas store, then they do not have legal right to operate in america, and should refuse an american customer. Unless they either also pay sales tax, or have a treaty with the USA in their home country for tax reciprocity. It's dumb to have a customer be responsible for said sales tax.
dingaling 6y ago
> Amazon gained 5-8% on every sale because they didn't collect sales tax for a VERY long time. In the USA alone. In the other markets where Amazon had fast growth they had no such advantage because collecting sales tax / VAT is mandatory.

netcan 6y ago

I did say it was a cliche. On the greater point... I agree that some gig economy companies are more on-the-nose, but they overall proposition wasn't that different. The business model lost money, but generated growth. In hindsight, once you know who the winners are, it's easy to point out the differences. Realtime, it's harder.