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Amazon had about 460 billion dollars in revenue per as lazy a google as I could do. This makes a billion dollar fine less than 0.25% of revenue. Except Amazon

Amazon had about 460 billion dollars in revenue per as lazy a google as I could do. This makes a billion dollar fine less than 0.25% of revenue. Except Amazon has been doing this for years. So a cost of doing business on the order of 0.1% at worst. Or rounding error.

mc32 4y ago
Personally I think Amazon should have a regular Amazon marketplace and a third party seller marketplace that is more like Ebay. A lot of the third party stuff is untrustworthy and the listings gamed by the sellers. Could be a toggle, a checkbox, a separate searchbox, etc. I do not like having to separate the wheat from chaff myself.
- dawnerd 4y ago
  Imo they should just be done with third party sellers period.
  - rdtwo 4y ago
    I wish but the money is in 3rd . First party has barely any margins. The first party stuff is just cover for being a alliexpress reseller.
- culturestate 4y ago
  > Could be a toggle, a checkbox, a separate searchbox, etc. They already have a “seller” filter that lets you choose products sold directly by Amazon, but for reasons I don’t fully understand[1] it’s not shown on the default SERP. You can only get it by drilling down into a specific department. 1. I assume it’s related to the sheer number of sellers that can be present in the first set of results because any one query could include dozens of departments, but this seems like a solvable problem. Maybe it’s just not a revenue priority.
  - garblegarble 4y ago
    >They already have a “seller” filter that lets you choose products sold directly by Amazon, but for reasons I don’t fully understand[1] it’s not shown on the default SERP. You can only get it by drilling down into a specific department. This may have changed (and hopefully somebody will correct me if it has) but as I understand Amazon's Inventory Co-mingling strategy, buying from a given seller (even Amazon) doesn't guarantee you are buying that seller's physical inventory - you could still be shipped fake/defective products in to Amazon's warehouses from third party sellers of that same product.
    - culturestate 4y ago
      Amazon supposedly only allows commingling for FBA now, and anything they sell directly is meant to be inventoried separately. My hearsay understanding of this is that Apple, among others, forced them to make that change as a condition of their vendor contracts.
sebazzz 4y ago
Profit or revenue? Because renevue means money moving, profit means more money on the bank account.
- brudgers 4y ago
  For a sophisticated company, profit is just another number in the ledger. For example, the news of the fine can allow Amazon to take a charge against the value of goodwill in its books and thereby reduce profits. Or increase profits by increasing the value of goodwill.
tester756 4y ago
This is the only place where people unironically call billion dollars "rounding error"
piokoch 4y ago
Revenue is not telling us much, they have profit 33 billion dollars, so this is 3% of their profit. This is not very much, but something visible for sure. Stakeholders would not be happy.
- thechao 4y ago
  What percentage of their profit is attributable to these specific placed-items? If placed-item profit is < 1 billion, then it is no longer profitable as a subunit of AMZN.
legitster 4y ago
This would also set precedent, Amazon would have to change their practice or risk getting sued nonstop. Both would cost a lot more than just a billion dollars.
- rdtwo 4y ago
  They will settle
ahtihn 4y ago
It's a lawsuit in the UK, so only UK revenue is relevant. There's also the point about profit vs revenue made by someone else. And finally, even if the fine is "low", they still need to change their business practices (assuming they lose the lawsuit).
throw10920 4y ago
You're comparing global revenue to a fine in the UK. That's kind of dishonest. In 2021, Amazon's UK profits were £23.2B, or $26.2B - of which $1B is almost 4%. Big difference. To top that off, you're looking at revenue, instead of profit. I completely agree that the fines should be substantially higher, but being dishonest is bad.
- brudgers 4y ago
  I am not being dishonest at all. Amazon operates globally. The fine is just another cost of doing business for Amazon. From Amazon’s perspective there’s no significance to the fine’s relationship to UK revenue. Because the practice generates revenue globally. To be clear, I don’t have an opinion about the fine or Amazon’s practice because it is not worth having one. (And of course, the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money).
  - throw10920 4y ago
    > From Amazon’s perspective there’s no significance to the fine’s relationship to UK revenue. This is false. Amazon has the option to stop doing business in the UK, meaning that they lose the revenue, but are not longer to subject to fines from the UK's court system. Amazon very clearly balances the expected costs of doing business in a particular market with the expected benefits. Similarly, Amazon's use of the practice globally means that they are subject to fines from every market that they operate in. Which you did not count. > the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money These fines impact Amazon's decision of whether to continue to do the practice today. If the fines start to eclipse their current revenue, it literally does not matter if they'll still have made more money by doing it in the past - they'll cease the activity. Therefore, taking past revenues into account is irrelevant and dishonest.
- pbhjpbhj 4y ago
  Is that accounting for dodgy accounting? Selling IP rights to themselves, routing digital goods through the Channel Islands, selling through other countries (Luxembourg?)? I don't know exactly what shenanigans they do, just that they do them.
pb7 4y ago
If I sell a thing for $100 that cost me $99 to procure, is a $1 fine a rounding error in that transaction? In any case, the majority of the revenue certainly didn't come from the UK.

mc32 4y ago

Personally I think Amazon should have a regular Amazon marketplace and a third party seller marketplace that is more like Ebay. A lot of the third party stuff is untrustworthy and the listings gamed by the sellers. Could be a toggle, a checkbox, a separate searchbox, etc. I do not like having to separate the wheat from chaff myself.

dawnerd 4y ago
Imo they should just be done with third party sellers period.
- rdtwo 4y ago
  I wish but the money is in 3rd . First party has barely any margins. The first party stuff is just cover for being a alliexpress reseller.
culturestate 4y ago
> Could be a toggle, a checkbox, a separate searchbox, etc. They already have a “seller” filter that lets you choose products sold directly by Amazon, but for reasons I don’t fully understand[1] it’s not shown on the default SERP. You can only get it by drilling down into a specific department. 1. I assume it’s related to the sheer number of sellers that can be present in the first set of results because any one query could include dozens of departments, but this seems like a solvable problem. Maybe it’s just not a revenue priority.
- garblegarble 4y ago
  >They already have a “seller” filter that lets you choose products sold directly by Amazon, but for reasons I don’t fully understand[1] it’s not shown on the default SERP. You can only get it by drilling down into a specific department. This may have changed (and hopefully somebody will correct me if it has) but as I understand Amazon's Inventory Co-mingling strategy, buying from a given seller (even Amazon) doesn't guarantee you are buying that seller's physical inventory - you could still be shipped fake/defective products in to Amazon's warehouses from third party sellers of that same product.
  - culturestate 4y ago
    Amazon supposedly only allows commingling for FBA now, and anything they sell directly is meant to be inventoried separately. My hearsay understanding of this is that Apple, among others, forced them to make that change as a condition of their vendor contracts.

sebazzz 4y ago

Profit or revenue? Because renevue means money moving, profit means more money on the bank account.

brudgers 4y ago
For a sophisticated company, profit is just another number in the ledger. For example, the news of the fine can allow Amazon to take a charge against the value of goodwill in its books and thereby reduce profits. Or increase profits by increasing the value of goodwill.

tester756 4y ago

This is the only place where people unironically call billion dollars "rounding error"

piokoch 4y ago

Revenue is not telling us much, they have profit 33 billion dollars, so this is 3% of their profit. This is not very much, but something visible for sure. Stakeholders would not be happy.

thechao 4y ago
What percentage of their profit is attributable to these specific placed-items? If placed-item profit is < 1 billion, then it is no longer profitable as a subunit of AMZN.

legitster 4y ago

This would also set precedent, Amazon would have to change their practice or risk getting sued nonstop. Both would cost a lot more than just a billion dollars.

rdtwo 4y ago
They will settle

ahtihn 4y ago

It's a lawsuit in the UK, so only UK revenue is relevant. There's also the point about profit vs revenue made by someone else. And finally, even if the fine is "low", they still need to change their business practices (assuming they lose the lawsuit).

throw10920 4y ago

You're comparing global revenue to a fine in the UK. That's kind of dishonest. In 2021, Amazon's UK profits were £23.2B, or $26.2B - of which $1B is almost 4%. Big difference. To top that off, you're looking at revenue, instead of profit. I completely agree that the fines should be substantially higher, but being dishonest is bad.

brudgers 4y ago
I am not being dishonest at all. Amazon operates globally. The fine is just another cost of doing business for Amazon. From Amazon’s perspective there’s no significance to the fine’s relationship to UK revenue. Because the practice generates revenue globally. To be clear, I don’t have an opinion about the fine or Amazon’s practice because it is not worth having one. (And of course, the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money).
- throw10920 4y ago
  > From Amazon’s perspective there’s no significance to the fine’s relationship to UK revenue. This is false. Amazon has the option to stop doing business in the UK, meaning that they lose the revenue, but are not longer to subject to fines from the UK's court system. Amazon very clearly balances the expected costs of doing business in a particular market with the expected benefits. Similarly, Amazon's use of the practice globally means that they are subject to fines from every market that they operate in. Which you did not count. > the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money These fines impact Amazon's decision of whether to continue to do the practice today. If the fines start to eclipse their current revenue, it literally does not matter if they'll still have made more money by doing it in the past - they'll cease the activity. Therefore, taking past revenues into account is irrelevant and dishonest.
pbhjpbhj 4y ago
Is that accounting for dodgy accounting? Selling IP rights to themselves, routing digital goods through the Channel Islands, selling through other countries (Luxembourg?)? I don't know exactly what shenanigans they do, just that they do them.

pb7 4y ago

If I sell a thing for $100 that cost me $99 to procure, is a $1 fine a rounding error in that transaction? In any case, the majority of the revenue certainly didn't come from the UK.