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There's been a fair bit written about how Walmart leveraged incredible logistics to achieve its retail dominance, not unlike Amazon doing the same in the online
by ineedasername 6y ago
There's been a fair bit written about how Walmart leveraged incredible logistics to achieve its retail dominance, not unlike Amazon doing the same in the online world. I've also come across interesting work on how Dell helped change consumer computing with Just in Time supply chains.
- dzhiurgis 6y agoIMO Amazon makes money by selling counterfeits.
- smabie 6y agoYou think Amazon would not be profitable if there were no counterfeits?
- throwaway_kufu 6y agoIsn’t true they never turned a profit until AWS? I wonder if the online marketplace by it self still doesn’t turn profit. Probably impossible to figure out with additions of services like Prime and Amazon Fresh.
- dharmab 6y agoFor most of its history Amazon reinvested all of its excess revenue; the "Amazon wasn't profitable" soundbite is misleading. Amazon made money, and spent it on buying and building more Amazon instead of distributing dividends to shareholders. On paper that is "zero profit" _for shareholders_.
- ericbarrett 6y agoAmazon's retail business (amazon.com) isn't even the majority of its revenue anymore.
- ketzo 6y agoI looked this up just to make sure — it definitely, definitely is the majority of their revenue. Net sales on Amazon.com for Q1 2021 were $75 billion. AWS and “other” combined were $19 billion. [1] As far as profit goes, you have a stronger argument — $6 billion vs. $4 billion for AWS alone. AWS has a 30% operating margin, jesus. [1] page 19 of https://s2.q4cdn.com/299287126/files/doc_financials/2021/q1/Amazon-Q1-2021-Earnings-Release.pdf https://s2.q4cdn.com/299287126/files/doc_financials/2021/q1/...
- kqr 6y agoThat kind of makes sense, though. The tail risk of something like AWS must to be significant in comparison, so a hefty margin to insure against that seems reasonable. Sale and distribution of things is probably much milder in its variations, and the expenses seem like they'd be more strongly correlated with revenue. (All of this is a speculative attempt at explaining the figures, not an authoritative source on strategy. Say I have a 70 % belief.)
- ineedasername 6y agoWhy would the tail risk of AWS be so high? Apart from the economic troubles of COVID which increased online buying, normal periodic economic downturn would be expected to hit all retail businesses fairly hard. Amazon's non retail unit AWS grew significantly throughout the 2008-2010 economic downturn.
- kqr 6y agoI don't know. It feels like the demand from complex software systems would fluctuate more wildly than a relatively predictable human consumer base, but I could be way off the mark.
- ericbarrett 6y agoAh, my mistake. Thanks for the correction.
- deleted 6y ago
- ineedasername 6y agoThat's a bit of a separate issue from their massively efficient logistics network.
- yjftsjthsd-h 6y agoProbably, but could overlap if you believe that they got ahead by cutting corners; I imagine that their practice of commingling inventory nets them a nice improvement in efficiency while making the counterfeiting issue worse.
- jcims 6y agoAnybody that worked at Walmart in the 80’s and 90’s saw unprecedented application of technology to retail operations. Even as a lowly stock boy i could see how the efficiencies and cost savings gave them a huge advantage over their competition.
- Scoundreller 6y agoKinda makes you wonder if Dell (or Gateway?) could have become Amazon as they sold people stuff direct, possibly their first web browser, and never put two and two together about what else could be done with that beyond their next computer.