7 ms·

This is what e-commerce balance sheets look like, though. Someone must not have told him that anything related to online (or offline) retail loses money for at

by rdouble 13y ago

This is what e-commerce balance sheets look like, though. Someone must not have told him that anything related to online (or offline) retail loses money for at least 3 years, making any money at all after 5 years is considered amazing, and Amazon.com lost money for 12 years before it made any. The main personal attribute you need as an e-commerce executive is a strong stomach.

rollo_tommasi 13y ago
But surely most e-commerce websites can't have a net negative margin for three years?
- RyanZAG 13y ago
  The smaller ones piggybacking off of Ebay and similar generally turn a (small) profit immediately. However, the large ones with innovative storefronts and the Google-like classy looking top notch websites are always making massive losses, often for many years at a time. The reason for this is that investors hope that the wave of people moving their lives/shopping online will turn these big players into the next Walmart - which is almost exactly what is happening with Amazon now. So the strategy is not a terrible one, just a risky one.
  - fyi80 13y ago
    Losses != negative margin. Amazon was not profitable for 10 years, because revenue did not exceed variable+fixed costs. But revenue exceeded variable costs. They had losses for 10 years, but had positive margine.
socalnate1 13y ago
This is just plain not true. There are many e-commerce companies who are profitable and healthy immediately. Start a store with Shopify or Miva Merchant for a low monthly cost, work of of your house and sell your goods for more than they cost you. Ton's of folks do this and are very quickly profitable on a small scale. If you are trying to be Amazon or Walmart and sell non differentiated products for rock bottom prices, then you are correct. But there are plenty of companies content to run $2 Million - $20 Million dollar businesses without having to go through the pain of losing money for 3 years.
- rdouble 13y ago
  I'd be interested in seeing some examples. E-commerce is brutal and it's rare that anyone makes money out of the gate.
  - abrudtkuhl 13y ago
    As socalnate1 mentions above this is very possible to scale up a small e-commerce operation and be profitable immediately - especially in niche products. There are several case studies for this. For example I sell cases for mobile bluetooth speakers. Our Jambox case was profitable instantly and I paid for the first batch of inventory with revenue from a pre-launch sales discount. The first batch of inventory was paid for with sales before I had the product on hand. I packaged and shipped them out of my home office until it was a pain in the ass and now we use Amazon FBA. We use profits to purchase additional inventory at greater quantities to increase the profit margin. Rinse & repeat. Granted this isn't Amazon scale but it's working. See Dodocase for another example (they are doing way better than us). http://mixergy.com/dodocase-patrick-buckley-interview/ http://mixergy.com/dodocase-patrick-buckley-interview/ One of the keys is to start small to prove the market so you don't end up with a shit load of inventory in your garage. Or better yet do what I did and sell them before you even have them made. We started with 50 units which I was fortunate to sell almost all of using pre-launch tactics before we ordered the inventory from our manufacturer.
- sachingulaya 13y ago
  Since I can't reply to the comment below me--Now that we understand ecommerce we're profitable from day one with our new brand launches. It usually takes about 2-3 months before we're doing 20k/mo revenue online with 100% margins.
  - davidandgoliath 13y ago
    100% margins? scratches head
Guvante 13y ago
Was Amazon running at a loss at the gross margin level or the profit level? Losing money at the profit level is fine, since that includes things like buying warehouses or developing technology. Losing money at the gross margin level means you aren't even being paid for the goods you ship out, let alone the money you spend in infrastructure.
- scott_meade 13y ago
  Good point Guvante. Amazon has always had a gross profit. Almost no comments here recognize the vast difference between Ecomom's and Amazon's income statements. Ecomom: never had a gross profit. Amazon: has always had a gross profit. http://www.wikinvest.com/stock/Amazon.com_(AMZN)/Data/Gross_Profit/1999/Q2?ref=chart http://www.wikinvest.com/stock/Amazon.com_(AMZN)/Data/Gross_... and http://www.nasdaq.com/markets/ipos/filing.ashx?filingid=426855 http://www.nasdaq.com/markets/ipos/filing.ashx?filingid=4268...

by rdouble 13y ago

rollo_tommasi 13y ago

But surely most e-commerce websites can't have a net negative margin for three years?

RyanZAG 13y ago
The smaller ones piggybacking off of Ebay and similar generally turn a (small) profit immediately. However, the large ones with innovative storefronts and the Google-like classy looking top notch websites are always making massive losses, often for many years at a time. The reason for this is that investors hope that the wave of people moving their lives/shopping online will turn these big players into the next Walmart - which is almost exactly what is happening with Amazon now. So the strategy is not a terrible one, just a risky one.
- fyi80 13y ago
  Losses != negative margin. Amazon was not profitable for 10 years, because revenue did not exceed variable+fixed costs. But revenue exceeded variable costs. They had losses for 10 years, but had positive margine.

socalnate1 13y ago

This is just plain not true. There are many e-commerce companies who are profitable and healthy immediately. Start a store with Shopify or Miva Merchant for a low monthly cost, work of of your house and sell your goods for more than they cost you. Ton's of folks do this and are very quickly profitable on a small scale. If you are trying to be Amazon or Walmart and sell non differentiated products for rock bottom prices, then you are correct. But there are plenty of companies content to run $2 Million - $20 Million dollar businesses without having to go through the pain of losing money for 3 years.

rdouble 13y ago
I'd be interested in seeing some examples. E-commerce is brutal and it's rare that anyone makes money out of the gate.
- abrudtkuhl 13y ago
  As socalnate1 mentions above this is very possible to scale up a small e-commerce operation and be profitable immediately - especially in niche products. There are several case studies for this. For example I sell cases for mobile bluetooth speakers. Our Jambox case was profitable instantly and I paid for the first batch of inventory with revenue from a pre-launch sales discount. The first batch of inventory was paid for with sales before I had the product on hand. I packaged and shipped them out of my home office until it was a pain in the ass and now we use Amazon FBA. We use profits to purchase additional inventory at greater quantities to increase the profit margin. Rinse & repeat. Granted this isn't Amazon scale but it's working. See Dodocase for another example (they are doing way better than us). http://mixergy.com/dodocase-patrick-buckley-interview/ http://mixergy.com/dodocase-patrick-buckley-interview/ One of the keys is to start small to prove the market so you don't end up with a shit load of inventory in your garage. Or better yet do what I did and sell them before you even have them made. We started with 50 units which I was fortunate to sell almost all of using pre-launch tactics before we ordered the inventory from our manufacturer.
sachingulaya 13y ago
Since I can't reply to the comment below me--Now that we understand ecommerce we're profitable from day one with our new brand launches. It usually takes about 2-3 months before we're doing 20k/mo revenue online with 100% margins.
- davidandgoliath 13y ago
  100% margins? scratches head

Guvante 13y ago

Was Amazon running at a loss at the gross margin level or the profit level? Losing money at the profit level is fine, since that includes things like buying warehouses or developing technology. Losing money at the gross margin level means you aren't even being paid for the goods you ship out, let alone the money you spend in infrastructure.

scott_meade 13y ago
Good point Guvante. Amazon has always had a gross profit. Almost no comments here recognize the vast difference between Ecomom's and Amazon's income statements. Ecomom: never had a gross profit. Amazon: has always had a gross profit. http://www.wikinvest.com/stock/Amazon.com_(AMZN)/Data/Gross_Profit/1999/Q2?ref=chart http://www.wikinvest.com/stock/Amazon.com_(AMZN)/Data/Gross_... and http://www.nasdaq.com/markets/ipos/filing.ashx?filingid=426855 http://www.nasdaq.com/markets/ipos/filing.ashx?filingid=4268...