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It is important to consider that Amazon probably still considers its retail business a growth business, and that it has not captured enough of the market yet to

It is important to consider that Amazon probably still considers its retail business a growth business, and that it has not captured enough of the market yet to start raising prices. I am pretty sure Amazon's retail business is going to completely dwarf AWS in the long term, because they are currently willing to break even on it (and possibly lose money) just to outdo the competition.

runawaybottle 6y ago
Competing on price never pays off imho. You’ll race to the bottom. Amazon already has a massive monopoly on retail, and they wouldn’t dare mess with the prices. My experience: I once tried to corner the market on WoW gems by buying out the undercutters and setting my desired price. My money wasn’t long enough. I really don’t think anyone’s money is long enough :p
- dylan604 6y ago
  Cornering the real world silver market is a tough thing to do as well. Just ask the Hunt brothers. https://en.wikipedia.org/wiki/Silver_Thursday https://en.wikipedia.org/wiki/Silver_Thursday
- c1b 6y ago
  Yes this example is very pertinent to Amazons profit strategy thank you for sharing.
  - runawaybottle 6y ago
    Waiting for some Eve fans to share their economic exploits.
- monocasa 6y ago
  I think they're viewing it instead as continuing to reinvest profits until they're a cyberpunk level corporate power. It's not that they're cutting prices, it's that they're using the excess to buy companies like Whole Foods and vertically integrate them rather than paying out to shareholders, or building a bigger war chest in an index fund.
- lotsofpulp 6y ago
  > Amazon already has a massive monopoly on retail, and they wouldn’t dare mess with the prices. By which definition? It’s trivial to switch to a different website to order from, and Target/Walmart/Bestbuy/etc have significant market share.
  - scarface74 6y ago
    1. Amazon already has your payment information. I was on my phone looking to order something. The first link that came up was Walmart. I went and searched on Amazon because I could just press “Order Now” and not have to create a new account and dig up my credit card. 2. I’m already paying for Amazon Prime. Why not get full use out of it for shipping? 3. Amazon marketplace has network effects. Third party sellers use it because the buyers are there. 4. I wanted to rent a movie on my Roku TV. Again, Amazon already has my payment information and I’m already signed in to Prime Video. 5. I get 3% discounts on my Amazon card when ordering from Amazon. I’ve been downvoted to oblivion plenty of times about being against the government interfering in $BigTech whether it be Google, Amazon, or Apple so I’m definitely not proposing they should be broken up because of a “monopoly”.
    - lotsofpulp 6y ago
      A monopoly would indicate there exists a lack of options for buyers or control of prices from a very large seller. As it stands now, Amazon is a glorified Alibaba that sided with buyers in disputes. You can find the same things on Amazon on Alibaba, Newegg, bestbuy, Walmart, iTunes, Google Play, the Amazon sellers own websites, etc. the buyer is in no way required or affected negatively by not interacting with Amazon. So I’m struggling to see the point of labeling Amazon a monopoly when it doesn’t convey any useful information.
- milesskorpen 6y ago
  They're not competing on price — they're competing on logistics, primarily. They're losing money to offer consumers an experience they can't get on any other platform. Way more defensible than price competition.
syshum 6y ago
Hmm.. they might want to look at Sears or Walmart. Sears is more or less dead. Walmart is struggling to keep market share with amz. With groceries their only saving grace If price is their long term plan with retail that is a loosing proposal. Once they dominant they might be able to sqeeze the market for a few years maybe a decade but them something else will topple them
- kasey_junk 6y ago
  Sears was started over 115 years ago and was a dominating force for most of those years. Walmart is responsible for the 7th, 8th and 9th largest fortunes in the world built before modern monetary policy. Further they completely changed retail in America. Those seem like weird counter examples.
  - tosers4 6y ago
    and a new king is born
jariel 6y ago
"Amazon's retail business is going to completely dwarf AWS in the long term" It will in revenues but not in profits. Right now, Wallmart, Exxon, GM etc. 'dwarf' most tech businesses in terms of revenues and the size of their businesses, but the profits are smaller, so tech companies have a higher valuation.

runawaybottle 6y ago

Competing on price never pays off imho. You’ll race to the bottom. Amazon already has a massive monopoly on retail, and they wouldn’t dare mess with the prices. My experience: I once tried to corner the market on WoW gems by buying out the undercutters and setting my desired price. My money wasn’t long enough. I really don’t think anyone’s money is long enough :p

dylan604 6y ago
Cornering the real world silver market is a tough thing to do as well. Just ask the Hunt brothers. https://en.wikipedia.org/wiki/Silver_Thursday https://en.wikipedia.org/wiki/Silver_Thursday
c1b 6y ago
Yes this example is very pertinent to Amazons profit strategy thank you for sharing.
- runawaybottle 6y ago
  Waiting for some Eve fans to share their economic exploits.
monocasa 6y ago
I think they're viewing it instead as continuing to reinvest profits until they're a cyberpunk level corporate power. It's not that they're cutting prices, it's that they're using the excess to buy companies like Whole Foods and vertically integrate them rather than paying out to shareholders, or building a bigger war chest in an index fund.
lotsofpulp 6y ago
> Amazon already has a massive monopoly on retail, and they wouldn’t dare mess with the prices. By which definition? It’s trivial to switch to a different website to order from, and Target/Walmart/Bestbuy/etc have significant market share.
- scarface74 6y ago
  1. Amazon already has your payment information. I was on my phone looking to order something. The first link that came up was Walmart. I went and searched on Amazon because I could just press “Order Now” and not have to create a new account and dig up my credit card. 2. I’m already paying for Amazon Prime. Why not get full use out of it for shipping? 3. Amazon marketplace has network effects. Third party sellers use it because the buyers are there. 4. I wanted to rent a movie on my Roku TV. Again, Amazon already has my payment information and I’m already signed in to Prime Video. 5. I get 3% discounts on my Amazon card when ordering from Amazon. I’ve been downvoted to oblivion plenty of times about being against the government interfering in $BigTech whether it be Google, Amazon, or Apple so I’m definitely not proposing they should be broken up because of a “monopoly”.
  - lotsofpulp 6y ago
    A monopoly would indicate there exists a lack of options for buyers or control of prices from a very large seller. As it stands now, Amazon is a glorified Alibaba that sided with buyers in disputes. You can find the same things on Amazon on Alibaba, Newegg, bestbuy, Walmart, iTunes, Google Play, the Amazon sellers own websites, etc. the buyer is in no way required or affected negatively by not interacting with Amazon. So I’m struggling to see the point of labeling Amazon a monopoly when it doesn’t convey any useful information.
milesskorpen 6y ago
They're not competing on price — they're competing on logistics, primarily. They're losing money to offer consumers an experience they can't get on any other platform. Way more defensible than price competition.

syshum 6y ago

Hmm.. they might want to look at Sears or Walmart. Sears is more or less dead. Walmart is struggling to keep market share with amz. With groceries their only saving grace If price is their long term plan with retail that is a loosing proposal. Once they dominant they might be able to sqeeze the market for a few years maybe a decade but them something else will topple them

kasey_junk 6y ago
Sears was started over 115 years ago and was a dominating force for most of those years. Walmart is responsible for the 7th, 8th and 9th largest fortunes in the world built before modern monetary policy. Further they completely changed retail in America. Those seem like weird counter examples.
- tosers4 6y ago
  and a new king is born

jariel 6y ago

"Amazon's retail business is going to completely dwarf AWS in the long term" It will in revenues but not in profits. Right now, Wallmart, Exxon, GM etc. 'dwarf' most tech businesses in terms of revenues and the size of their businesses, but the profits are smaller, so tech companies have a higher valuation.