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If you look at their filings (https://www.sec.gov/edgar/browse/?CIK=1018724&owner=exclude https://www.sec.gov/edgar/browse/?CIK=1018724&owner=exclude), the non

If you look at their filings (https://www.sec.gov/edgar/browse/?CIK=1018724&owner=exclude https://www.sec.gov/edgar/browse/?CIK=1018724&owner=exclude), the non AWS business is still.. not amazing. The idea that "jeff showed them" is simplistic. They started AWS, competitors sat idle for 5-6 years and they ran away in a giant market. Good for them, but had Google & Microsoft woken up earlier the amazon doubters might be the smug ones at this point. This isn't Jeff bashing because he's obviously a hard working and very smart guy. But it's only obvious in retrospect that Amazon knew what they were doing.

ignoramous 5y ago
> But it's only obvious in retrospect that Amazon knew what they were doing. That's not the impression I get from this Bezos interview in 2000: https://www.youtube-nocookie.com/embed/6OVdcS4fuuw https://www.youtube-nocookie.com/embed/6OVdcS4fuuw
c7DJTLrn 5y ago
They may still have a reason to be smug. Quite a few people are of the opinion that Amazon (excluding Web Services) is on the decline. These days the site is crammed with scammers and shoddy, dangerous products. Customer support is degrading as they do a poor job of automating it away with chatbots. I rarely buy anything besides accessories and hard to get groceries on there anymore.
- oarabbus_ 5y ago
  > Quite a few people are of the opinion that Amazon (excluding Web Services) is on the decline. Based on what, anecdotal evidence from squeaky wheels on the internet? I've heard the same claims, but the 10K and 10Q filings the original commentor linked to suggest the opposite.
  - gruez 5y ago
    Agreed. Public opinion polling shows something similar, eg: https://twitter.com/AlecStapp/status/1410453573100609538 https://twitter.com/AlecStapp/status/1410453573100609538
- vadym909 5y ago
  Amazon is a utility for most now and trumps everything except the most urgent. Here's my buying channels depending on how soon i need stuff - do i need it today- Costco, Walmart, Target, Safeway, Dicks Sporting Goods - can i wait till tmrow- Amzn next day to my doorstep. No? resort to above options - can i wait 2 days for a better choice- Amzn Prime - No hurry- a week ok?- Amzn marketplace, eBay
  - axiolite 5y ago
    Your "today" options can push their way into Amazon's market, and eliminate the unnecessary Amazon step... Wal-mart is certainly trying to do just that. Amazon had to drop their the minimum order value for free shipping back down when Wal-mart took the offensive. As far as I'm concerned, Amazon is already imploding. Their search engine has become nearly useless, returning whatever the hell it wants, rather than what you searched for. It keeps getting worse, not better. Have you compared the item counts when you sort by Relevance versus Price Low to High? Where did they disappear to? What the hell is wrong with their site? I used to place thousands of orders from Amazon every year, now I'm down to dozens, just occasionally checking them before buying a large ticket item to see if they've got an incredible price on it. And even then I only go through and buy from Amazon when nothing leads me to believe it might be a scam / counterfeit / mislabeled / etc.
    - throwawayboise 5y ago
      I had mostly stopped using Amazon by early 2020 due to the counterfeits and fake reviews, and swore off the platform entirely when they decided to play politics in the 2020 election.
      - tsimionescu 5y ago
        You think Amazon only started playing politics in the 2020 election? All big companies are deeply embedded in politics, all the time.
oarabbus_ 5y ago
>They started AWS, competitors sat idle for 5-6 years and they ran away in a giant market. Good for them, but had Google & Microsoft woken up earlier the amazon doubters might be the smug ones at this point. But, Google and Microsoft didn't wake up earlier. You mention it's only in retrospect Amazon knew what they were doing; but we also see Microsoft and Google didn't know what they were doing. It wasn't out of charity to Amazon, they simply lacked vision at the time. Had major auto manufacturers taken Tesla seriously 5-6 years sooner instead of sitting idle, the Tesla doubters might be the smug ones at this point. But Tesla had the vision and the execution. In both cases, the competition badly miscalculated while the company executed beautifully.
- hattmall 5y ago
  This isn't how entrenched businesses generally operate though. All those other companies have been making tons of profit the whole time. It doesn't make sense to take massive risks on an unproven business when you are actively making billions in a relatively non-competitive market. The growth dollars are generally better spent figuring out how to maximimally exploit and maintain your monopoly.
  - chii 5y ago
    > It doesn't make sense to take massive risks on an unproven business when you are actively making billions in a relatively non-competitive market. which is interesting - because in almost all cases, it's this unproven market that end up upending the business. IBM is an early case, and now electric cars. So if an existing, well capitalized business would learn from this, they should buck the trend and invest heavily in risky ventures. However, shareholders, esp. conservative shareholders, would not want their existing, certain profit lines be endangered.
    - Retric 5y ago
      People tend to think about this in binary terms but there are three options. Innovate even when you don’t need to, the Facebook strategy of over paying for any competitor that gets real traction, or the Newspaper approach of just milking a money maker into the ground then selling off the remnants. They are all completely valid and profitable options. Facebook’s approach only works when regulators are asleep at the wheel, but standard oil style monopolies can just print money to cover these costs. Innovation is expensive and can fail regularly just look at Intel or most corporate R&D. Finally milking a dying business model can fail really quickly, just look at say blockbuster.
WoahNoun 5y ago
This is a myopic view. Amazon's physical retail has been amazingly profitable for a long time. And when you go into the oldest categories of physical retail (books, electronics, baby, fashion, etc), they were each massively unprofitable for a time until they became massively profitable. https://hurricanecapital.wordpress.com/2015/11/30/business-insider-amazon-ceo-jeff-bezos-interview-part-i/ https://hurricanecapital.wordpress.com/2015/11/30/business-i... >HB: So, let’s just establish this once and for all. Can Amazon make money? >JB: Well, yes, and in fact we have in the past. And you have to understand, there are many ways of thinking about this, but the reality is that Amazon is a collection of several businesses and initiatives. And we have some very significant, very profitable, more established businesses that are free cash-flow generating. Very significantly. And fortunately, the way I think about it, we have lots of opportunities to invest in this new initiatives, and we take advantage of those opportunities. So, it’s kind of like we built this lemonade stand, you know, twenty years ago. The lemonade stand has become very profitable over time. But we also decided to use our skills and the assets that we’ve acquired over time to open up a hamburger stand, and a hot dog stand, and so on and so on. So we’re investing in new initiatives. >JB: Look, you know. Warren Buffett has this great quote, he says: “You can hold a rock concert, and that’s okay. And you can hold a ballet, and that’s okay. Just don’t hold a rock concert and advertise it as ballet.” Investors come in all shapes and sizes. They have different investment horizons, different approaches, different beliefs about what the right kind of portfolio looks like. And, so it’s not when you know people use Wall Street as a shorthand. But there isn’t one type of investor, they come in different shapes and sizes. You have to be super clear about what kind of company you’re trying to build, what your approach is. We laid that out in our 1997 annual shareholder letter. We said we were going to take big bets. We said they were gonna fail. We said some of them hopefully were gonna work. We said we were gonna to invest for the long term, that we were gonna to take advantage of market opportunities as they arose. And there’s a certain kind of investor who is aligned with that approach. And so again, you could hold the ballet or the rock concert, and both can work. Just be clear about which one you are, and then people can self select.
- danielmarkbruce 5y ago
  This story of "profitable lines" has hung around forever. Every retail business has profitable lines and loss leaders. Many non retail business have them too. The problem with this line of reasoning is it assumes you can cut off the loss leaders and just run the profitable lines. Generally speaking, you can't. The customers come to Amazon because everything is there. The second they think everything isn't there, they come less frequently, and those "amazingly profitable" categories become not so amazing or profitable. Rotisserie chicken is a loss leader for many supermarkets, and the supermarket makes a lot of money on those snacks near the register. They can't decide to be in the snacks only business tomorrow. Neither can Amazon. The story about the ambition and the growth and all that is nice - that story is true for Facebook, Google, Amazon Web Services, Microsoft and so on. They all got profitable within a decade and continued with high growth, high profitability operations.
Wolfenstein98k 5y ago
They had many fingers in many pies, and many failed. Jeff is first to admit this. It's survivorship bias to assume they had no real plans but lucked out - the gamble was part of the plan.
- danielmarkbruce 5y ago
  Lot's of their plans have worked out. It's the profitability part of AWS which makes them look so clever.
  - WoahNoun 5y ago
    You make a lot of claims in this thread about Amazon's e-commerce profitability, but I don't think you understand their e-commerce business at all. Physical ecommerce was massively profitable and paid for all the losses on the digital and device side along with part of the capital leases needed to build data centers for AWS for 15 years.
    - danielmarkbruce 5y ago
      Their filings don't suggest that. If you have specific examples I'd certainly be interested to hear them or see a link. They were doing physical only commerce for years before anything digital and it wasn't profitable. Now that's understandable, but the claim that physical e-commerce was massively profitable seems very overstated. When you say "digital" do you mean like Prime Video? Or kindle books? Or something else? When you say devices do you mean kindles? I'm struggling to believe that the kindle book line is run at a loss. I'd understand specific titles might run at a loss and I'd understand if the devices run at a loss but kindle books overall? Prime Video "losses" are sort of my point - they can almost be thought of as marketing expense. As for the capital leases - those are accounted for at the corporate level and mostly run through the cashflow statement. The numbers they quote as operating income for the non aws business don't include those capital lease costs. ie on page 17 of their most recent Q (https://www.sec.gov/ix?doc=/Archives/edgar/data/1018724/000101872421000028/amzn-20210930.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1018724/0001...) those reported operating earnings don't include the capital leases. If you look on page 3 of that filing (Principal repayment of finance leases) you'll see the (big) number there. All that said - you still could be right. But if you are it's almost like they are going out of their way to deliberately make their numbers look bad on the non-AWS side. There is a big difference between not caring and actively making it look bad.
hef19898 5y ago
Yeah, Amazon's profits come from AWS. The cash flow to enable stuff like AWS comes from its retail business. That combination is quite ingenious if you ask me.

ignoramous 5y ago

> But it's only obvious in retrospect that Amazon knew what they were doing. That's not the impression I get from this Bezos interview in 2000: https://www.youtube-nocookie.com/embed/6OVdcS4fuuw https://www.youtube-nocookie.com/embed/6OVdcS4fuuw

c7DJTLrn 5y ago

They may still have a reason to be smug. Quite a few people are of the opinion that Amazon (excluding Web Services) is on the decline. These days the site is crammed with scammers and shoddy, dangerous products. Customer support is degrading as they do a poor job of automating it away with chatbots. I rarely buy anything besides accessories and hard to get groceries on there anymore.

oarabbus_ 5y ago
> Quite a few people are of the opinion that Amazon (excluding Web Services) is on the decline. Based on what, anecdotal evidence from squeaky wheels on the internet? I've heard the same claims, but the 10K and 10Q filings the original commentor linked to suggest the opposite.
- gruez 5y ago
  Agreed. Public opinion polling shows something similar, eg: https://twitter.com/AlecStapp/status/1410453573100609538 https://twitter.com/AlecStapp/status/1410453573100609538
vadym909 5y ago
Amazon is a utility for most now and trumps everything except the most urgent. Here's my buying channels depending on how soon i need stuff - do i need it today- Costco, Walmart, Target, Safeway, Dicks Sporting Goods - can i wait till tmrow- Amzn next day to my doorstep. No? resort to above options - can i wait 2 days for a better choice- Amzn Prime - No hurry- a week ok?- Amzn marketplace, eBay
- axiolite 5y ago
  Your "today" options can push their way into Amazon's market, and eliminate the unnecessary Amazon step... Wal-mart is certainly trying to do just that. Amazon had to drop their the minimum order value for free shipping back down when Wal-mart took the offensive. As far as I'm concerned, Amazon is already imploding. Their search engine has become nearly useless, returning whatever the hell it wants, rather than what you searched for. It keeps getting worse, not better. Have you compared the item counts when you sort by Relevance versus Price Low to High? Where did they disappear to? What the hell is wrong with their site? I used to place thousands of orders from Amazon every year, now I'm down to dozens, just occasionally checking them before buying a large ticket item to see if they've got an incredible price on it. And even then I only go through and buy from Amazon when nothing leads me to believe it might be a scam / counterfeit / mislabeled / etc.
  - throwawayboise 5y ago
    I had mostly stopped using Amazon by early 2020 due to the counterfeits and fake reviews, and swore off the platform entirely when they decided to play politics in the 2020 election.
    - tsimionescu 5y ago
      You think Amazon only started playing politics in the 2020 election? All big companies are deeply embedded in politics, all the time.

oarabbus_ 5y ago

>They started AWS, competitors sat idle for 5-6 years and they ran away in a giant market. Good for them, but had Google & Microsoft woken up earlier the amazon doubters might be the smug ones at this point. But, Google and Microsoft didn't wake up earlier. You mention it's only in retrospect Amazon knew what they were doing; but we also see Microsoft and Google didn't know what they were doing. It wasn't out of charity to Amazon, they simply lacked vision at the time. Had major auto manufacturers taken Tesla seriously 5-6 years sooner instead of sitting idle, the Tesla doubters might be the smug ones at this point. But Tesla had the vision and the execution. In both cases, the competition badly miscalculated while the company executed beautifully.

hattmall 5y ago
This isn't how entrenched businesses generally operate though. All those other companies have been making tons of profit the whole time. It doesn't make sense to take massive risks on an unproven business when you are actively making billions in a relatively non-competitive market. The growth dollars are generally better spent figuring out how to maximimally exploit and maintain your monopoly.
- chii 5y ago
  > It doesn't make sense to take massive risks on an unproven business when you are actively making billions in a relatively non-competitive market. which is interesting - because in almost all cases, it's this unproven market that end up upending the business. IBM is an early case, and now electric cars. So if an existing, well capitalized business would learn from this, they should buck the trend and invest heavily in risky ventures. However, shareholders, esp. conservative shareholders, would not want their existing, certain profit lines be endangered.
  - Retric 5y ago
    People tend to think about this in binary terms but there are three options. Innovate even when you don’t need to, the Facebook strategy of over paying for any competitor that gets real traction, or the Newspaper approach of just milking a money maker into the ground then selling off the remnants. They are all completely valid and profitable options. Facebook’s approach only works when regulators are asleep at the wheel, but standard oil style monopolies can just print money to cover these costs. Innovation is expensive and can fail regularly just look at Intel or most corporate R&D. Finally milking a dying business model can fail really quickly, just look at say blockbuster.

WoahNoun 5y ago

This is a myopic view. Amazon's physical retail has been amazingly profitable for a long time. And when you go into the oldest categories of physical retail (books, electronics, baby, fashion, etc), they were each massively unprofitable for a time until they became massively profitable. https://hurricanecapital.wordpress.com/2015/11/30/business-insider-amazon-ceo-jeff-bezos-interview-part-i/ https://hurricanecapital.wordpress.com/2015/11/30/business-i... >HB: So, let’s just establish this once and for all. Can Amazon make money? >JB: Well, yes, and in fact we have in the past. And you have to understand, there are many ways of thinking about this, but the reality is that Amazon is a collection of several businesses and initiatives. And we have some very significant, very profitable, more established businesses that are free cash-flow generating. Very significantly. And fortunately, the way I think about it, we have lots of opportunities to invest in this new initiatives, and we take advantage of those opportunities. So, it’s kind of like we built this lemonade stand, you know, twenty years ago. The lemonade stand has become very profitable over time. But we also decided to use our skills and the assets that we’ve acquired over time to open up a hamburger stand, and a hot dog stand, and so on and so on. So we’re investing in new initiatives. >JB: Look, you know. Warren Buffett has this great quote, he says: “You can hold a rock concert, and that’s okay. And you can hold a ballet, and that’s okay. Just don’t hold a rock concert and advertise it as ballet.” Investors come in all shapes and sizes. They have different investment horizons, different approaches, different beliefs about what the right kind of portfolio looks like. And, so it’s not when you know people use Wall Street as a shorthand. But there isn’t one type of investor, they come in different shapes and sizes. You have to be super clear about what kind of company you’re trying to build, what your approach is. We laid that out in our 1997 annual shareholder letter. We said we were going to take big bets. We said they were gonna fail. We said some of them hopefully were gonna work. We said we were gonna to invest for the long term, that we were gonna to take advantage of market opportunities as they arose. And there’s a certain kind of investor who is aligned with that approach. And so again, you could hold the ballet or the rock concert, and both can work. Just be clear about which one you are, and then people can self select.

danielmarkbruce 5y ago
This story of "profitable lines" has hung around forever. Every retail business has profitable lines and loss leaders. Many non retail business have them too. The problem with this line of reasoning is it assumes you can cut off the loss leaders and just run the profitable lines. Generally speaking, you can't. The customers come to Amazon because everything is there. The second they think everything isn't there, they come less frequently, and those "amazingly profitable" categories become not so amazing or profitable. Rotisserie chicken is a loss leader for many supermarkets, and the supermarket makes a lot of money on those snacks near the register. They can't decide to be in the snacks only business tomorrow. Neither can Amazon. The story about the ambition and the growth and all that is nice - that story is true for Facebook, Google, Amazon Web Services, Microsoft and so on. They all got profitable within a decade and continued with high growth, high profitability operations.

Wolfenstein98k 5y ago

They had many fingers in many pies, and many failed. Jeff is first to admit this. It's survivorship bias to assume they had no real plans but lucked out - the gamble was part of the plan.

danielmarkbruce 5y ago
Lot's of their plans have worked out. It's the profitability part of AWS which makes them look so clever.
- WoahNoun 5y ago
  You make a lot of claims in this thread about Amazon's e-commerce profitability, but I don't think you understand their e-commerce business at all. Physical ecommerce was massively profitable and paid for all the losses on the digital and device side along with part of the capital leases needed to build data centers for AWS for 15 years.
  - danielmarkbruce 5y ago
    Their filings don't suggest that. If you have specific examples I'd certainly be interested to hear them or see a link. They were doing physical only commerce for years before anything digital and it wasn't profitable. Now that's understandable, but the claim that physical e-commerce was massively profitable seems very overstated. When you say "digital" do you mean like Prime Video? Or kindle books? Or something else? When you say devices do you mean kindles? I'm struggling to believe that the kindle book line is run at a loss. I'd understand specific titles might run at a loss and I'd understand if the devices run at a loss but kindle books overall? Prime Video "losses" are sort of my point - they can almost be thought of as marketing expense. As for the capital leases - those are accounted for at the corporate level and mostly run through the cashflow statement. The numbers they quote as operating income for the non aws business don't include those capital lease costs. ie on page 17 of their most recent Q (https://www.sec.gov/ix?doc=/Archives/edgar/data/1018724/000101872421000028/amzn-20210930.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1018724/0001...) those reported operating earnings don't include the capital leases. If you look on page 3 of that filing (Principal repayment of finance leases) you'll see the (big) number there. All that said - you still could be right. But if you are it's almost like they are going out of their way to deliberately make their numbers look bad on the non-AWS side. There is a big difference between not caring and actively making it look bad.

hef19898 5y ago

Yeah, Amazon's profits come from AWS. The cash flow to enable stuff like AWS comes from its retail business. That combination is quite ingenious if you ask me.