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if 0.01% users are 1% of their revenue, that's a huge concerning consolidation. AWS IS indeed in this situation when the full discretionary spending sector stru

if 0.01% users are 1% of their revenue, that's a huge concerning consolidation. AWS IS indeed in this situation when the full discretionary spending sector struggles. AWS might be super high margins, but it does not exist in a vacuum. AWS cross subsidization powers AMZN retail to be able to run at a <1% margin.

moralestapia 4y ago
Could you elaborate? I don't seem to grasp your point. >AWS cross subsidization powers AMZN retail to be able to run at a <1% margin. I've never truly understood that number, how come they have such low margins where most of the products I see there have a 10-20% markup (at least) vs. the same product in classic "offline" retailers (costco, walmart, etc...)? "But they send it to your home", yeah but they charge you for that too.
- Spivak 4y ago
  Because in my area Amazon (including amortized cost of prime) is always cheaper and this includes wholesale clubs like Costco and GFS. Like if you need something right now the usual story is to go to a physical store and have them price match Amazon for a 10-30% discount. If I could save money by not shopping on Amazon it would be a no-brainer but it isn’t. Like I’m paying less for the conscience of having it shipped to me.
scarface74 4y ago
Any business on Amazon that uses AWS has to “pay” for AWS services as part of its cost of doing business. It’s counted as AWS revenue and an Amazon retail cost. https://www.lastweekinaws.com/blog/the-aws-service-i-hate-the-most/ https://www.lastweekinaws.com/blog/the-aws-service-i-hate-th... > For example, internal AWS accounts are known as Isengard accounts, after the fortress in “The Lord of the Rings” eventually controlled by the corrupted wizard Saruman. When internal game development teams use Isengard accounts, they must pay (via internal accounting) the same rates for AWS compute cycles that outside retail customers pay, according to people close to the teams. You will often here Disney talk about “transfer costs” to Disney Studios from Disney+ when talking about Disney+‘s content costs. This is similar.

moralestapia 4y ago

Could you elaborate? I don't seem to grasp your point. >AWS cross subsidization powers AMZN retail to be able to run at a <1% margin. I've never truly understood that number, how come they have such low margins where most of the products I see there have a 10-20% markup (at least) vs. the same product in classic "offline" retailers (costco, walmart, etc...)? "But they send it to your home", yeah but they charge you for that too.

Spivak 4y ago
Because in my area Amazon (including amortized cost of prime) is always cheaper and this includes wholesale clubs like Costco and GFS. Like if you need something right now the usual story is to go to a physical store and have them price match Amazon for a 10-30% discount. If I could save money by not shopping on Amazon it would be a no-brainer but it isn’t. Like I’m paying less for the conscience of having it shipped to me.

scarface74 4y ago

Any business on Amazon that uses AWS has to “pay” for AWS services as part of its cost of doing business. It’s counted as AWS revenue and an Amazon retail cost. https://www.lastweekinaws.com/blog/the-aws-service-i-hate-the-most/ https://www.lastweekinaws.com/blog/the-aws-service-i-hate-th... > For example, internal AWS accounts are known as Isengard accounts, after the fortress in “The Lord of the Rings” eventually controlled by the corrupted wizard Saruman. When internal game development teams use Isengard accounts, they must pay (via internal accounting) the same rates for AWS compute cycles that outside retail customers pay, according to people close to the teams. You will often here Disney talk about “transfer costs” to Disney Studios from Disney+ when talking about Disney+‘s content costs. This is similar.