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I don't think Amazon Advertising should be considered separately from Retail. A huge portion of it's money comes from people paying for the top search result o

by mabbo 4y ago

I don't think Amazon Advertising should be considered separately from Retail. A huge portion of it's money comes from people paying for the top search result on Amazon's retail site. Oh sure, they ad a very tiny "sponsored" but you have to scroll past three of those before you see the actual search result. But if Amazon Retail didn't exist, Amazon Ads wouldn't either. Meanwhile, AWS could be split off as an independent company and be quite successful.

JCM9 4y ago
+1. Not much different than Google probably losing a ton of money on core search to create a market for what does make them money (selling advertising on search).
- jjoonathan 4y ago
  Does it count as search or ads if every above-the-fold "result" is actually an ad?
timbray 4y ago
We agree, AWS is a clean break, ads is way more messy. But ads only works because of Amazon retail's sorta-kinda-monopoly position. It's still a big distortion of the market. But I don't have a bright idea what to do about it.
- jsnell 4y ago
  Isn't it kind of self-correcting? The more Amazon pushes products sold by third parties, the worse shopping at Amazon becomes. The worse shopping at Amazon becomes, the more people will shop elsewhere and not see the ads.
  - __derek__ 4y ago
    Absolutely. Every HN thread about Amazon retail is littered with comments about giving up on shopping there and finding a better experience (e.g., less junk, cheaper prices, better selection) elsewhere. If anything, the growth of Amazon Ads has pushed e-commerce spend to Walmart, the actual leader in retail.
    - thexumaker 4y ago
      lmao as someone who spent a couple months at Walmart global tech, they may be the leaders in retail but they are not stealing Amazon customers. If anything Target, Wayfair, Best Buy, TJ Max etc are taking more market share. Last time I shopped at Walmart, it was a mess and their e commerce is even worse, products come all beat up, 3rd party policies are a free for all atm, and the scams are even worse there
      - __derek__ 4y ago
        The other stores' taking e-commerce share would be consistent with the spirit of the comment, IMO. I agree on the third-party products/listings. I have to assume that Sam Walton is turning in is grave because it all seems like a perversion of old-school merchandising.
    - _rs 4y ago
      I agree 100%. However, a lot of my woes with Amazon are due to inventory commingling- because I make sure to only buy Ships & Sold by Amazon items. With that said, Walmart is beginning to push 3rd party sellers a lot online too, and filtering for items sold by Walmart can be difficult. A lot of times items show up as in stock in search results only to actually not be in stock when I finally load the product or cart pages, and Walmart will often switch these to in-store pick up automatically which is frustrating as the nearest store to me is quite far. I’ve had good luck shopping at Target but their prices are almost never as competitive.
      - __derek__ 4y ago
        That sounds like a frustrating experience. I don't shop at Walmart because Seattle is kind of a Walmart desert (whereas Amazon return drops are everywhere), but it always seems like there are comments promoting it in those threads.
- jacobr1 4y ago
  Also the ads are generally directed to some _other_ site, they are for hosted-on-amazon-retail storefronts or product listings.
- HDThoreaun 4y ago
  I'm not sure we do. Amazon retail at this point from a business perspective is nothing but a way to sell ads. Talking about retail losing money when not counting ads is like saying google search loses money when not counting ads. And no, Amazon would still be able to sell ads if they had a smaller market share.
- cbsmith 4y ago
  Amazon retail is a tent pole... Not unlike a blockbuster movie that might not even be profitable, but creates profits for all kinds of businesses around it.
qbasic_forever 4y ago
If AWS was split off it would be kind of funny if Microsoft or Google immediately purchased it outright.
- room271 4y ago
  There is no chance the competition authorities would allow that.
  - qbasic_forever 4y ago
    Microsoft has embedded itself deeply into the democratic party through huge PAC donations over decades. If anyone has sway with the democratic appointed FTC, it would be them. Acquiring AWS would absolutely be the kind of emergency/pull out every stop to make it happen event worth tapping every connection (and then some) to make happen. Overnight they would go from scrappy second place to the dominant provider of all cloud computing on the planet. Far more dumb mergers were greenlit in the past like AOL/Time Warner.
    - deleted 4y ago
      [deleted]
    - mikeyouse 4y ago
      Aside from a general lack of understanding of PAC funding, I take it you're unfamiliar with the work of Lina Khan who's the chair of this FTC? https://siliconangle.com/2021/12/23/report-ftc-chair-lina-khan-advancing-investigation-aws/ https://siliconangle.com/2021/12/23/report-ftc-chair-lina-kh... https://www.nytimes.com/2022/12/09/technology/lina-khan-ftc-microsoft-activision.html https://www.nytimes.com/2022/12/09/technology/lina-khan-ftc-...
      - qbasic_forever 4y ago
        https://www.opensecrets.org/orgs/microsoft-corp/summary?toprecipcycle=2020&contribcycle=2022&lobcycle=2022&outspendcycle=2022&id=d000000115&topnumcycle=2020 https://www.opensecrets.org/orgs/microsoft-corp/summary?topr... In the 2020 presidential election year Microsoft donated over 21 million dollars, almost all to democrats and the Biden campaign. They were the 26th largest donor, period. Biden appointed Lina Khan, she owes her job to him (and he can choose not to appoint her again!). Biden owes a substantial amount of his presidential campaign funding to Microsoft... not hard to connect the dots here. Go back decades--Hillary Clinton, Obama, Gore, etc. and Microsoft was always been donating enormous amounts of money to democratic candidates.
benjaminwootton 4y ago
I was going to make the same point. Their retail business could lose $billions if people are paying more $billions to advertise on top of the same platform. It’s a smart move to use single digit margins in retail as a route to making double digit margins in online advertising.
MuffinFlavored 4y ago
> A huge portion of it's money comes from people paying for the top search result on Amazon's retail site. What are some of the average metrics for the average Amazon seller doing paid advertising? Cost per impression, cost per click, cost per conversion/sale? I wonder how they compare to Google AdWords.
di456 4y ago
Per SEC rules, once a business reaches a certain size it has to be detailed out on the financials. That's why the ads business is reported separately now
- deleted 4y ago
  [deleted]
- alberth 4y ago
  I'm not certain that is accurate. E.g. Apple famously doesn't report App Store revenues. Instead it's just part of their "services" revenue which includes several other things.
  - di456 4y ago
    You can read more about it under "Accounting Pronouncements Recently Adopted" in this 10k report, page 48 https://www.sec.gov/Archives/edgar/data/1018724/000101872419000004/amzn-20181231x10k.htm https://www.sec.gov/Archives/edgar/data/1018724/000101872419... Edit: guess it was FASB, not SEC
    - alberth 4y ago
      > "In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) amending revenue recognition guidance and requiring more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this ASU on January 1, 2018 for all revenue contracts with our customers using the modified retrospective approach and increased retained earnings by approximately $650 million." The only section in the 10K referencing FASB is above. This is related to reporting CUSTOMER contracts, not a requirement to report Business Division revenue (like Amazons Ad Business). The reason for this change, which again is unrelated to the original topic at hand, is that it posses a financial risk to investors if X customer represents a significant portion of the companies revenue.
      - 4y ago
rhplus 4y ago
AWS brings in something like 16% of total revenue, but accounts for 74% of profits. No way would it be split off.
- chx 4y ago
  Let's see what Lina M. Khan has to say about that, shall we?
HillRat 4y ago
Advertising used to be treated as a Retail line item, but Bezos deliberately broke it out to put profitability pressure on Retail by not giving them a way to hide their losses in the bottom line.

by mabbo 4y ago

JCM9 4y ago

+1. Not much different than Google probably losing a ton of money on core search to create a market for what does make them money (selling advertising on search).

jjoonathan 4y ago
Does it count as search or ads if every above-the-fold "result" is actually an ad?

timbray 4y ago

We agree, AWS is a clean break, ads is way more messy. But ads only works because of Amazon retail's sorta-kinda-monopoly position. It's still a big distortion of the market. But I don't have a bright idea what to do about it.

jsnell 4y ago
Isn't it kind of self-correcting? The more Amazon pushes products sold by third parties, the worse shopping at Amazon becomes. The worse shopping at Amazon becomes, the more people will shop elsewhere and not see the ads.
- __derek__ 4y ago
  Absolutely. Every HN thread about Amazon retail is littered with comments about giving up on shopping there and finding a better experience (e.g., less junk, cheaper prices, better selection) elsewhere. If anything, the growth of Amazon Ads has pushed e-commerce spend to Walmart, the actual leader in retail.
  - thexumaker 4y ago
    lmao as someone who spent a couple months at Walmart global tech, they may be the leaders in retail but they are not stealing Amazon customers. If anything Target, Wayfair, Best Buy, TJ Max etc are taking more market share. Last time I shopped at Walmart, it was a mess and their e commerce is even worse, products come all beat up, 3rd party policies are a free for all atm, and the scams are even worse there
    - __derek__ 4y ago
      The other stores' taking e-commerce share would be consistent with the spirit of the comment, IMO. I agree on the third-party products/listings. I have to assume that Sam Walton is turning in is grave because it all seems like a perversion of old-school merchandising.
  - _rs 4y ago
    I agree 100%. However, a lot of my woes with Amazon are due to inventory commingling- because I make sure to only buy Ships & Sold by Amazon items. With that said, Walmart is beginning to push 3rd party sellers a lot online too, and filtering for items sold by Walmart can be difficult. A lot of times items show up as in stock in search results only to actually not be in stock when I finally load the product or cart pages, and Walmart will often switch these to in-store pick up automatically which is frustrating as the nearest store to me is quite far. I’ve had good luck shopping at Target but their prices are almost never as competitive.
    - __derek__ 4y ago
      That sounds like a frustrating experience. I don't shop at Walmart because Seattle is kind of a Walmart desert (whereas Amazon return drops are everywhere), but it always seems like there are comments promoting it in those threads.
jacobr1 4y ago
Also the ads are generally directed to some _other_ site, they are for hosted-on-amazon-retail storefronts or product listings.
HDThoreaun 4y ago
I'm not sure we do. Amazon retail at this point from a business perspective is nothing but a way to sell ads. Talking about retail losing money when not counting ads is like saying google search loses money when not counting ads. And no, Amazon would still be able to sell ads if they had a smaller market share.
cbsmith 4y ago
Amazon retail is a tent pole... Not unlike a blockbuster movie that might not even be profitable, but creates profits for all kinds of businesses around it.

qbasic_forever 4y ago

If AWS was split off it would be kind of funny if Microsoft or Google immediately purchased it outright.

room271 4y ago
There is no chance the competition authorities would allow that.
- qbasic_forever 4y ago
  Microsoft has embedded itself deeply into the democratic party through huge PAC donations over decades. If anyone has sway with the democratic appointed FTC, it would be them. Acquiring AWS would absolutely be the kind of emergency/pull out every stop to make it happen event worth tapping every connection (and then some) to make happen. Overnight they would go from scrappy second place to the dominant provider of all cloud computing on the planet. Far more dumb mergers were greenlit in the past like AOL/Time Warner.
  - deleted 4y ago
    [deleted]
  - mikeyouse 4y ago
    Aside from a general lack of understanding of PAC funding, I take it you're unfamiliar with the work of Lina Khan who's the chair of this FTC? https://siliconangle.com/2021/12/23/report-ftc-chair-lina-khan-advancing-investigation-aws/ https://siliconangle.com/2021/12/23/report-ftc-chair-lina-kh... https://www.nytimes.com/2022/12/09/technology/lina-khan-ftc-microsoft-activision.html https://www.nytimes.com/2022/12/09/technology/lina-khan-ftc-...
    - qbasic_forever 4y ago
      https://www.opensecrets.org/orgs/microsoft-corp/summary?toprecipcycle=2020&contribcycle=2022&lobcycle=2022&outspendcycle=2022&id=d000000115&topnumcycle=2020 https://www.opensecrets.org/orgs/microsoft-corp/summary?topr... In the 2020 presidential election year Microsoft donated over 21 million dollars, almost all to democrats and the Biden campaign. They were the 26th largest donor, period. Biden appointed Lina Khan, she owes her job to him (and he can choose not to appoint her again!). Biden owes a substantial amount of his presidential campaign funding to Microsoft... not hard to connect the dots here. Go back decades--Hillary Clinton, Obama, Gore, etc. and Microsoft was always been donating enormous amounts of money to democratic candidates.

benjaminwootton 4y ago

I was going to make the same point. Their retail business could lose $billions if people are paying more $billions to advertise on top of the same platform. It’s a smart move to use single digit margins in retail as a route to making double digit margins in online advertising.

MuffinFlavored 4y ago

> A huge portion of it's money comes from people paying for the top search result on Amazon's retail site. What are some of the average metrics for the average Amazon seller doing paid advertising? Cost per impression, cost per click, cost per conversion/sale? I wonder how they compare to Google AdWords.

di456 4y ago

Per SEC rules, once a business reaches a certain size it has to be detailed out on the financials. That's why the ads business is reported separately now

deleted 4y ago
[deleted]
alberth 4y ago
I'm not certain that is accurate. E.g. Apple famously doesn't report App Store revenues. Instead it's just part of their "services" revenue which includes several other things.
- di456 4y ago
  You can read more about it under "Accounting Pronouncements Recently Adopted" in this 10k report, page 48 https://www.sec.gov/Archives/edgar/data/1018724/000101872419000004/amzn-20181231x10k.htm https://www.sec.gov/Archives/edgar/data/1018724/000101872419... Edit: guess it was FASB, not SEC
  - alberth 4y ago
    > "In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) amending revenue recognition guidance and requiring more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this ASU on January 1, 2018 for all revenue contracts with our customers using the modified retrospective approach and increased retained earnings by approximately $650 million." The only section in the 10K referencing FASB is above. This is related to reporting CUSTOMER contracts, not a requirement to report Business Division revenue (like Amazons Ad Business). The reason for this change, which again is unrelated to the original topic at hand, is that it posses a financial risk to investors if X customer represents a significant portion of the companies revenue.
    - 4y ago

rhplus 4y ago

AWS brings in something like 16% of total revenue, but accounts for 74% of profits. No way would it be split off.

chx 4y ago
Let's see what Lina M. Khan has to say about that, shall we?

HillRat 4y ago

Advertising used to be treated as a Retail line item, but Bezos deliberately broke it out to put profitability pressure on Retail by not giving them a way to hide their losses in the bottom line.