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Amazon can't really avoid doing stuff like this, because their business model (retail) sucks, and makes very little money due to razor thin margins. So they tr
by codex 13y ago
Amazon can't really avoid doing stuff like this, because their business model (retail) sucks, and makes very little money due to razor thin margins. So they trot out every trick in the book.
- cma 13y ago> Walmart can't really avoid doing stuff like this, because their business model (retail) sucks, and makes very little money due to razor thin margins. So they trot out every trick in the book. Wait, no, Walmart avoids things like loyalty card discounts, etc. They also seem to have a decent business model. You're going to have to elaborate a little more.
- dave5104 13y agoI always thought it worked for Walmart because they have disgustingly high volume? (And therefore could have razor thin margins.)
- itistoday2 13y agoAnd Amazon doesn't have a "disgustingly high volume"...??
- shmerl 13y agoI've heard there was some other trick involved in Amazon's profits, that worked precisely because of high volume, and wouldn't work for middle / small size circulation. Something with reinvesting temporary resources during some time slot and etc. But I'm not sure how valid such claim is.
- philcag 13y agoWhat profits?
- shmerl 13y agoSomething like this. Let's say Amazon sells 1000 items from some manufacturer. Amazon pays manufacturer with delay (let's say 20 days after they get the merchandise). But Amazon manages to sell this 1000 in 10 days (because they have massive sales scale). In result Amazon has spare money for 10 days until they need to pay. So they have a potential to use them for 10 days. That's what I've heard, I'm not sure how valid this is.
- manojlds 13y agoThis seems very pertinent to the current thread. Amazon Coins means Amazon gets Customer's money before it is actually used.
- codex 13y agoIn this case, the vendor should just increase their prices to reflect the interest on the credit that they're extending Amazon for those twenty days. This is equivalent to Amazon borrowing from a bank for those 20 days, but perhaps for some reason the creditor's interest rate is lower than the bank's.
- shmerl 13y agoYes, it's equivalent to a loan with no interest rate. Whether vendor has to increase prices or not - that's up to the vendor. I just described how Amazon has a potential to profit from lower than common prices and fast shipping - it increases this loan time window.
- flyinRyan 13y agoWell, Walmart doesn't have razor thin margins. On some things they do (on some things they even lose money) but e.g. toys have a markup of over 40%, for example. That's probably not even the highest margin.
- codex 13y agoIt's possible that Walmart just repects their customers a bit more.
- flyinRyan 13y ago>Walmart avoids things like loyalty card discounts Walmart has "walmart cards" and while they don't give you a discount, what you will notice is that if you return something they might resist if you ask for cash back but saying "put it back on my walmart card" will result in a near instant refund in almost any situation.