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Ecommerce sellers have higher margins (gross margin 40%) than the other services and businesses you mentioned. So they have more money to spend on Ads. Also Go

Ecommerce sellers have higher margins (gross margin 40%) than the other services and businesses you mentioned. So they have more money to spend on Ads. Also Google competes with FB and has to split the advertising pie for those other services and businesses. Amazon owns basically the whole pie for the people who want to advertise products.

adam_arthur 4y ago
E-commerce has terrible margins Amazon itself had negative operating margins for its retail business last quarter. Amazon retail: "Its U.S. segment recorded $206 million in operating losses, while the international side lost $1.63 billion." Single digit margins at best, once a market is competitive. Edit: You edited your above, but gross margin is meaningless. It doesn't even include salaries for employees or infrastructure costs. Net margins for retail will always be slim, outside of specific first mover advantage in some subsectors. You think the Chinese companies selling $5 rubber spatulas are making 40% margins? Lol, try 5% or less. The theory that Amazon retail would grow revenues rapidly and then eventually expand to high operating margins will never come to fruition. Margins will be below 10% in perpetuity But sure, ignore all costs of running the business and look at gross margins.
- kevinsundar 4y ago
  A quick search says 40% gross margins for e-commerce. So Income - COGS. Which is pretty damn high. Most of these sellers are selling cheap Chinese goods so I bet it's even higher on Amazon. And Amazon retail margins is way different and in no way comparable to SELLER margins.
- londons_explore 4y ago
  Amazon loses money on every sale, yet somehow they are far pricier than ebay (which is profitable), and that is far pricier than aliexpress. A quick sample of like-for-like products shows that typical sale+delivery price on amazon is 30% more than aliexpress and 18% more than ebay. I really don't see how you can charge 30% more than a profit making competitor, sell in larger volume, yet make a loss.
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adam_arthur 4y ago

E-commerce has terrible margins Amazon itself had negative operating margins for its retail business last quarter. Amazon retail: "Its U.S. segment recorded $206 million in operating losses, while the international side lost $1.63 billion." Single digit margins at best, once a market is competitive. Edit: You edited your above, but gross margin is meaningless. It doesn't even include salaries for employees or infrastructure costs. Net margins for retail will always be slim, outside of specific first mover advantage in some subsectors. You think the Chinese companies selling $5 rubber spatulas are making 40% margins? Lol, try 5% or less. The theory that Amazon retail would grow revenues rapidly and then eventually expand to high operating margins will never come to fruition. Margins will be below 10% in perpetuity But sure, ignore all costs of running the business and look at gross margins.

kevinsundar 4y ago
A quick search says 40% gross margins for e-commerce. So Income - COGS. Which is pretty damn high. Most of these sellers are selling cheap Chinese goods so I bet it's even higher on Amazon. And Amazon retail margins is way different and in no way comparable to SELLER margins.
londons_explore 4y ago
Amazon loses money on every sale, yet somehow they are far pricier than ebay (which is profitable), and that is far pricier than aliexpress. A quick sample of like-for-like products shows that typical sale+delivery price on amazon is 30% more than aliexpress and 18% more than ebay. I really don't see how you can charge 30% more than a profit making competitor, sell in larger volume, yet make a loss.
- deleted 4y ago
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