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The missing profit is a blessing for Amazon. None of the other titans are challenging Amazon. They can't because Amazon's Earnings Per Share are... -0.23. Neg

The missing profit is a blessing for Amazon. None of the other titans are challenging Amazon. They can't because Amazon's Earnings Per Share are... -0.23. Negative 0.23. Investors often lump AMZN with GOOG and the like but GOOG's EPS is 33.59. TGT? 4.26. Walmart is 5.07. No other company with a market cap (100+Bn) as large as AMZN is allowed to get away with negative EPS. The only one that comes close is Vodafone, with a tiny positive EPS (0.13). It's important to note that if any other company spent until their EPS was negative, investors would flip. Amazon is playing with razor thin margins while trying to scale up a platform to end all platforms that we might someday use for everything without thinking about it. If successful, on that day/year/eon dollar bills might as well be printed with Jeff Bezos' face on them. Amazon won't be using UPS and Fedex trucks on that day. They'll be using Amazon trucks. You'll know that era when you see it, I think. If you're Walmart or Target its hard to justify trying to do something similar at this point, the stock could take a major dive from such a risk. They're at the "Ask-questions" phase, and the questions are always "What's the profit?" because these are publicly traded companies. Amazon has been playing it risky since the get-go. Bezos is in for a very long gamble, and that frustrates the hell out of some investors, but its lofty enough to still attract investment dollars while in the "build-first" stage. Hopefully they can pull it off for a few more years before the stock market shifts to asking questions. So Amazon gets to play the long game that other companies are literally disallowed from playing because investors that have seen profits want more. Amazon gets to do something bold that would cause the mother of all stock dives in any other 100+Bn company. They get a free pass because Bezos is convincing and for Amazon its sort-of-always-been-this-way. Walmart/Target/Etc do not have either of those luxuries - the incredible (or believable) visionary and being a company that's still in burn (build) mode. ~~~ All that said, an interesting question I think: What can we do to make more companies like Amazon? And is there a way to allow the older giants (such as Target) to ever be as ambitious again, without huge stock punishment?

S_A_P 13y ago
I think you hit the nail on the head where Amazon needs to go. Logistics and shipping are pretty much where that company must go to continue its path. I wouldnt be surprised if Amazon did try to venture into that arena by acquisition/merger.
- xsace 13y ago
  Here where I live, AMZ has partnered with some terrible delivery companies, and a lot of buyers are complaining about the awful shipping experience and are starting to look elsewhere. So I suppose that's correct, they need to handle that themselves.
  - mikeash 13y ago
    They use LaserShip for a lot of deliveries here. They seem to have improved lately, but they used to be tremendously bad. They'd deliver packages a day after their tracking system said they were delivered, they'd just lose stuff, once they delivered my package to the wrong city. On the flip side, I have to wonder if this is actually something of a benefit for Amazon. They get to save a ton of money by using a cheap delivery service, but the delivery service takes much of the heat for bad service. I'm a little annoyed with Amazon for using LaserShip, but I'm much more annoyed with LaserShip for sucking. If Amazon handled the delivery, they would have to do better just to get the same amount of satisfaction from me.
    - smackfu 13y ago
      It seems like Lasership is basically "some dude with a car". If you start measuring metrics in that situation, it tends to lead to people lying, like marking a package delivered when it isn't. Only 1% of people will actually complain. http://www.lasership.com/contact-us/independent-contractors http://www.lasership.com/contact-us/independent-contractors
      - mikeash 13y ago
        They really are hilariously unprofessional. They drive shoddy white vans with "PACKAGE DELIVERY" slapped on the side. It doesn't even say "LaserShip". The vans look like the kind of thing a pedophile would drive while looking for children to kidnap.
- peteretep 13y ago
  http://www.amazon.co.uk/gp/help/customer/display.html?nodeId=200742950 http://www.amazon.co.uk/gp/help/customer/display.html?nodeId...
Tloewald 13y ago
If you're working at an Amazon fulfillment centre, you might not want more Amazons.
- jdminhbg 13y ago
  Yeah, having other companies compete for your labor would probably be terrible for you, wouldn't it.
  - Tloewald 13y ago
    It all comes down to whether you think the market for unskilled labor is a buyer's market or a seller's market. What do you think?
    - jdminhbg 13y ago
      No, it doesn't at all. Increasing the demand for unskilled labor makes it slightly less a buyers' market than it currently is, regardless of how much of a buyers' or sellers' market it is to start out.
      - Tloewald 13y ago
        You're assuming labor is as mobile as capital, which it isn't. If labor were as mobile as capital, no-one would offshore factories.
        jdminhbg 13y ago
        No, I'm not. Labor and capital mobility affect the extent to which more demand for labor is a positive for your putative Amazon worker, they do not affect the direction.
        deleted 13y ago
        [deleted]
        13y ago
InclinedPlane 13y ago
This is a bit of a naive analysis. Amazon's margins aren't "razor thin". They're thin in some places but huge in others. AWS, for example, has a 50% gross profit margin, and their gross margins on digital goods (mp3s, ebooks) are also high. These aren't small potatoes, these are multi-billion dollar businesses in their own right. As for shipping, amazon already has a delivery service (amazon fresh) but I don't think they have a strong desire to completely own delivery, they have very cozy relationships with all of the major shipping companies. If you knew how much money amazon actually pays for shipping you'd be astounded, they're very good at using their volume as negotiating leverage. Logistics is at the core of amazon's business though, and it's a big reason why they are succeeding where others are not. If you order through amazon you can expect most items to be en route in less than 24 hours. That takes a lot of work especially considering the sheer quantity of stuff they offer. Aside from that, they aren't just trying to do one thing, they are trying to diversify the company, so that it will rest on multiple multi-billion dollar divisions over the next decade (retail, AWS et al, ebooks, mp3/VOD, etc.)
- Rimpinths 13y ago
  > They're thin in some places but huge in others. AWS, for example, has a 50% gross profit margin, and their gross margins on digital goods (mp3s, ebooks) are also high. How do you know this? I don't think they have ever released this information in their financial reports. Are you going by analysts' estimates?
- vidarh 13y ago
  In the UK, a lot of deliveries for Amazon is done by Amazon Logistics. They're not doing end-to-end deliveries, but have set up a bunch of "small" (50,000 square feet) warehouses to act as depots, and hired smaller local courier companies to do the final deliveries, apparently. So their cozy relationship with the big shipping companies might not remain so cozy.
  - bpicolo 13y ago
    I've seen a few Amazon vans in the US as well. (Midwest)
dfxm12 13y ago
To make more companies like Amazon, I think you answered your own question: They get a free pass because Bezos is convincing and for Amazon its sort-of-always-been-this-way. You're right in thinking that would only really work for new companies (with strong leaders), but if the stock punishment is an issue, then these two happenings will allow older giants to be this ambitious too: 1) Amazon succeeds wildly & shareholder demand these older giants copy that success 2) These older giants' stock starts to tank and must scramble to try something new. There are certainly more, but this is what I can think of from the top of my head.
rubberband 13y ago
I think that's a great point that they can get away with it because they've been doing it for so long. It's built into the core of the company. In the boom days, while Pets.com was betting on sock puppets and others were making ludicrous Super Bowl half-time ad buys, Amazon was building warehouses. And they still are. The seem to understand that infrastructure, over all other things, is what will let them win in the long run, no matter how unsexy it seems. Their own logistics / delivery component would be a gargantuan undertaking, even for them. They seem to understand what businesses they can get into and do very well in (cloud computing, generic branding (Amazon Basics), eBooks), and which ones to steer clear of. I suppose they could launch this in urban areas, but that would be shortsighted in an area that they are particularly smart, so I wouldn't count on anything past a pilot program. Regarding what could be done to make more Amazons... You can't. Walmart is the closest competitor (although they are a bigger company, but let's see about that in 15 years). If there is one company on Earth that can beat Amazon at efficiency (warehouses, shipping, and general business ops), it's these guys. They've made an empire around it. But it seems their only strength here is their storefronts, so it seems like their online strategy would be to go the "pick up in store" route, which is a giant hassle for most. So as Amazon finds ways to improve selection and reduce costs, Walmart will go the way of Borders, and a lot of other brick and mortar stores that came before it, albeit very very slowly. Unless one of the big box retailers is willing to say "screw this storefront crap, we're totally up-ending our business model", there is absolutely no one.
- deleted 13y ago
  [deleted]
snowwrestler 13y ago
> If successful, on that day/year/eon dollar bills might as well be printed with Jeff Bezos' face on them. I see this sentiment all the time--that Amazon is simply still in its growth phase, and once it's "big enough" it will pivot and reap huge profits. I don't see any reason to believe that is true. I can't remember Bezos every saying anything like that, for instance.
- tptacek 13y ago
  With negative EPS and stratospheric market share, doesn't it stand to reason that everyone involved in AMZN believes it to be in a growth phase?
  - snowwrestler 13y ago
    Of course; the question is whether they have a secret plan to crank up prices and profits once they hit some particular level of market saturation. I don't think so. I think Amazon expects to run at essentially break-even forever, or at least until Bezos leaves.
- roc 13y ago
  There's no pivot required. Once they're "big enough" they simply won't need to spend as much as they're currently spending on infrastructure and growth, and the profit (re)materializes without any business change at all.

S_A_P 13y ago

I think you hit the nail on the head where Amazon needs to go. Logistics and shipping are pretty much where that company must go to continue its path. I wouldnt be surprised if Amazon did try to venture into that arena by acquisition/merger.

xsace 13y ago
Here where I live, AMZ has partnered with some terrible delivery companies, and a lot of buyers are complaining about the awful shipping experience and are starting to look elsewhere. So I suppose that's correct, they need to handle that themselves.
- mikeash 13y ago
  They use LaserShip for a lot of deliveries here. They seem to have improved lately, but they used to be tremendously bad. They'd deliver packages a day after their tracking system said they were delivered, they'd just lose stuff, once they delivered my package to the wrong city. On the flip side, I have to wonder if this is actually something of a benefit for Amazon. They get to save a ton of money by using a cheap delivery service, but the delivery service takes much of the heat for bad service. I'm a little annoyed with Amazon for using LaserShip, but I'm much more annoyed with LaserShip for sucking. If Amazon handled the delivery, they would have to do better just to get the same amount of satisfaction from me.
  - smackfu 13y ago
    It seems like Lasership is basically "some dude with a car". If you start measuring metrics in that situation, it tends to lead to people lying, like marking a package delivered when it isn't. Only 1% of people will actually complain. http://www.lasership.com/contact-us/independent-contractors http://www.lasership.com/contact-us/independent-contractors
    - mikeash 13y ago
      They really are hilariously unprofessional. They drive shoddy white vans with "PACKAGE DELIVERY" slapped on the side. It doesn't even say "LaserShip". The vans look like the kind of thing a pedophile would drive while looking for children to kidnap.
peteretep 13y ago
http://www.amazon.co.uk/gp/help/customer/display.html?nodeId=200742950 http://www.amazon.co.uk/gp/help/customer/display.html?nodeId...

Tloewald 13y ago

If you're working at an Amazon fulfillment centre, you might not want more Amazons.

jdminhbg 13y ago
Yeah, having other companies compete for your labor would probably be terrible for you, wouldn't it.
- Tloewald 13y ago
  It all comes down to whether you think the market for unskilled labor is a buyer's market or a seller's market. What do you think?
  - jdminhbg 13y ago
    No, it doesn't at all. Increasing the demand for unskilled labor makes it slightly less a buyers' market than it currently is, regardless of how much of a buyers' or sellers' market it is to start out.
    - Tloewald 13y ago
      You're assuming labor is as mobile as capital, which it isn't. If labor were as mobile as capital, no-one would offshore factories.
      - jdminhbg 13y ago
        No, I'm not. Labor and capital mobility affect the extent to which more demand for labor is a positive for your putative Amazon worker, they do not affect the direction.
        deleted 13y ago
        [deleted]
        13y ago

InclinedPlane 13y ago

This is a bit of a naive analysis. Amazon's margins aren't "razor thin". They're thin in some places but huge in others. AWS, for example, has a 50% gross profit margin, and their gross margins on digital goods (mp3s, ebooks) are also high. These aren't small potatoes, these are multi-billion dollar businesses in their own right. As for shipping, amazon already has a delivery service (amazon fresh) but I don't think they have a strong desire to completely own delivery, they have very cozy relationships with all of the major shipping companies. If you knew how much money amazon actually pays for shipping you'd be astounded, they're very good at using their volume as negotiating leverage. Logistics is at the core of amazon's business though, and it's a big reason why they are succeeding where others are not. If you order through amazon you can expect most items to be en route in less than 24 hours. That takes a lot of work especially considering the sheer quantity of stuff they offer. Aside from that, they aren't just trying to do one thing, they are trying to diversify the company, so that it will rest on multiple multi-billion dollar divisions over the next decade (retail, AWS et al, ebooks, mp3/VOD, etc.)

Rimpinths 13y ago
> They're thin in some places but huge in others. AWS, for example, has a 50% gross profit margin, and their gross margins on digital goods (mp3s, ebooks) are also high. How do you know this? I don't think they have ever released this information in their financial reports. Are you going by analysts' estimates?
vidarh 13y ago
In the UK, a lot of deliveries for Amazon is done by Amazon Logistics. They're not doing end-to-end deliveries, but have set up a bunch of "small" (50,000 square feet) warehouses to act as depots, and hired smaller local courier companies to do the final deliveries, apparently. So their cozy relationship with the big shipping companies might not remain so cozy.
- bpicolo 13y ago
  I've seen a few Amazon vans in the US as well. (Midwest)

dfxm12 13y ago

To make more companies like Amazon, I think you answered your own question: They get a free pass because Bezos is convincing and for Amazon its sort-of-always-been-this-way. You're right in thinking that would only really work for new companies (with strong leaders), but if the stock punishment is an issue, then these two happenings will allow older giants to be this ambitious too: 1) Amazon succeeds wildly & shareholder demand these older giants copy that success 2) These older giants' stock starts to tank and must scramble to try something new. There are certainly more, but this is what I can think of from the top of my head.

rubberband 13y ago

I think that's a great point that they can get away with it because they've been doing it for so long. It's built into the core of the company. In the boom days, while Pets.com was betting on sock puppets and others were making ludicrous Super Bowl half-time ad buys, Amazon was building warehouses. And they still are. The seem to understand that infrastructure, over all other things, is what will let them win in the long run, no matter how unsexy it seems. Their own logistics / delivery component would be a gargantuan undertaking, even for them. They seem to understand what businesses they can get into and do very well in (cloud computing, generic branding (Amazon Basics), eBooks), and which ones to steer clear of. I suppose they could launch this in urban areas, but that would be shortsighted in an area that they are particularly smart, so I wouldn't count on anything past a pilot program. Regarding what could be done to make more Amazons... You can't. Walmart is the closest competitor (although they are a bigger company, but let's see about that in 15 years). If there is one company on Earth that can beat Amazon at efficiency (warehouses, shipping, and general business ops), it's these guys. They've made an empire around it. But it seems their only strength here is their storefronts, so it seems like their online strategy would be to go the "pick up in store" route, which is a giant hassle for most. So as Amazon finds ways to improve selection and reduce costs, Walmart will go the way of Borders, and a lot of other brick and mortar stores that came before it, albeit very very slowly. Unless one of the big box retailers is willing to say "screw this storefront crap, we're totally up-ending our business model", there is absolutely no one.

deleted 13y ago
[deleted]

snowwrestler 13y ago

> If successful, on that day/year/eon dollar bills might as well be printed with Jeff Bezos' face on them. I see this sentiment all the time--that Amazon is simply still in its growth phase, and once it's "big enough" it will pivot and reap huge profits. I don't see any reason to believe that is true. I can't remember Bezos every saying anything like that, for instance.

tptacek 13y ago
With negative EPS and stratospheric market share, doesn't it stand to reason that everyone involved in AMZN believes it to be in a growth phase?
- snowwrestler 13y ago
  Of course; the question is whether they have a secret plan to crank up prices and profits once they hit some particular level of market saturation. I don't think so. I think Amazon expects to run at essentially break-even forever, or at least until Bezos leaves.
roc 13y ago
There's no pivot required. Once they're "big enough" they simply won't need to spend as much as they're currently spending on infrastructure and growth, and the profit (re)materializes without any business change at all.