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First of all, you probably know a lot more than me about the company, so take this with a pinch of salt. You said that you are not sure what we are discussing.

by shubb 5y ago

First of all, you probably know a lot more than me about the company, so take this with a pinch of salt. You said that you are not sure what we are discussing. We may be discussing different things. I'll try to be specific about what I am trying to say. The assertions that I read into your post which I was replying to were: 1. Walmart is making a 3% profit and 2. Amazon has not taken investor money since 1996, so everything since then must have come from the consumer In response: 1. I showed that Walmart has bought back half of its shares during that time, so it must have been making a much larger profit than was return in dividends. 2. I showed that Amazon has taken billions in investor money since 1996, and given that it has not been returning significant dividends or accumulating cash, it is true to say that Amazons business since 1996 has been dependent on constant investment. A post up thread by Roixi questioned whether, in the long term, a business model that depended on continuing incoming investor capital could be flipped to a conventional profit making company - they claimed uber had failed to flip. I was noting that Amazon could not be cited as evidence of a flip that work yet, because the baby milk of [ a huge and constant supply of investor money] was still flowing. It may be that this business model will work, but amazon doesn't prove it... yet

lotsofpulp 5y ago
>The assertions that I read into your post which I was replying to were: 1. Walmart is making a 3% profit and 2. Amazon has not taken investor money since 1996, so everything since then must have come from the consumer No, my intention was to refute Retric's claims that Amazon dumped product at a loss to "burn everyone else out of the market" with VC money, which is obviously disproven by the fact that many competitors exist, and the fact that Amazon took extremely little VC money, and did so 26 years ago. And also to refute Retric's claims that Amazon's retail operations are "making money hand over fist", which is obviously disproven by the fact that no retail business makes money hand over fist. So unless Amazon was selling goods at a much higher price (which it does not), or it discovered a secret technology that let them vastly reduce their COGS (they have not), then it has similarly low margins. >It may be that this business model will work, but amazon doesn't prove it... yet I do not understand how it has not been proven yet? They developed AWS, which ushered in a new paradigm of computing. They are profiting, as shown in their 10-K reports, and have for years. And investors are continuing to bet on Amazon. Investors are not willing to pay as much for Walmart shares because investors do not believe Walmart's team will be able to execute something like Amazon's team. Walmart buying back its shares rather than investing in the business means they do not think they can do anything better with the money. Amazon bet that they could, by building AWS and more logistics infrastructure and a media business, and they did accomplish that, and now they have a great new revenue stream. This is seen in Amazon's market cap of $1.8T versus Walmart's market cap of $400B. Amazon did something more valuable than Walmart, and hence Amazon's owners were rewarded far more.
- Retric 5y ago
  > no retail business makes money hand over fist Did you? AWS for example was built not just from profits or investor money, they turned operating expenses into long term capital. It’s such a common tac avoidance strategy for them that you can’t look at published profit margins as meaningful. As to looking at their share of total online sales that’s a serious pivot from their initial approach of reselling selling books online which by itself is a viable business. Look at what happened to Barns and Noble not Walmart. It’s like looking at Apples initial business was in terms of phone sales.

by shubb 5y ago

lotsofpulp 5y ago

>The assertions that I read into your post which I was replying to were: 1. Walmart is making a 3% profit and 2. Amazon has not taken investor money since 1996, so everything since then must have come from the consumer No, my intention was to refute Retric's claims that Amazon dumped product at a loss to "burn everyone else out of the market" with VC money, which is obviously disproven by the fact that many competitors exist, and the fact that Amazon took extremely little VC money, and did so 26 years ago. And also to refute Retric's claims that Amazon's retail operations are "making money hand over fist", which is obviously disproven by the fact that no retail business makes money hand over fist. So unless Amazon was selling goods at a much higher price (which it does not), or it discovered a secret technology that let them vastly reduce their COGS (they have not), then it has similarly low margins. >It may be that this business model will work, but amazon doesn't prove it... yet I do not understand how it has not been proven yet? They developed AWS, which ushered in a new paradigm of computing. They are profiting, as shown in their 10-K reports, and have for years. And investors are continuing to bet on Amazon. Investors are not willing to pay as much for Walmart shares because investors do not believe Walmart's team will be able to execute something like Amazon's team. Walmart buying back its shares rather than investing in the business means they do not think they can do anything better with the money. Amazon bet that they could, by building AWS and more logistics infrastructure and a media business, and they did accomplish that, and now they have a great new revenue stream. This is seen in Amazon's market cap of $1.8T versus Walmart's market cap of $400B. Amazon did something more valuable than Walmart, and hence Amazon's owners were rewarded far more.

Retric 5y ago
> no retail business makes money hand over fist Did you? AWS for example was built not just from profits or investor money, they turned operating expenses into long term capital. It’s such a common tac avoidance strategy for them that you can’t look at published profit margins as meaningful. As to looking at their share of total online sales that’s a serious pivot from their initial approach of reselling selling books online which by itself is a viable business. Look at what happened to Barns and Noble not Walmart. It’s like looking at Apples initial business was in terms of phone sales.