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"0.5% for a retailer is an incredible amount of money." It's not nothing, but Amazon makes pretty healthy margins on a lot of what it sells. It's $.50 on a $100

"0.5% for a retailer is an incredible amount of money." It's not nothing, but Amazon makes pretty healthy margins on a lot of what it sells. It's $.50 on a $100 purchase, which is cheap for an Amazon leader. It's just really smart. Surely less than the difference between Prime shipping costs and the annual subscription fee, and with the same purpose: chipping away at the reasons people would buy anything anywhere else ever.

ethanbond 13y ago
Wait, how can you say that Amazon makes "healthy margins" when they've been operating at a very-close-to-loss, or at a loss since their creation? Their last quarter was a loss of $25,000,000.
guiambros 13y ago
> Amazon makes pretty healthy margins on a lot of what it sells I guess you're not following Amazon earning reports closely. In Q2 this year, Amazon's margin was number 1,428, out of 1,515 US companies [1] [2]. That's barely 1% after-tax margin. In several quarters they reported close to break-even or losses. At these levels, a "mere" 0.5% donation would be unsustainable for shareholders, unless there's a way to claim most/all donations to reduce their own tax payments. Margins got better in Q3, but still (intentionally) low. [1] http://www.forbes.com/sites/greatspeculations/2013/05/21/amazons-thin-margins-do-not-support-sky-high-valuation/ http://www.forbes.com/sites/greatspeculations/2013/05/21/ama... [2] http://247wallst.com/investing/2013/07/25/amazon-com-company-earnings-keep-margin-heading-to-zero/ http://247wallst.com/investing/2013/07/25/amazon-com-company...
- devinmontgomery 13y ago
  Margin on an item is different than gross operating margin. Amazon makes 20%+ margin, "pretty healthy", on "a lot of what it sells" (almost all retail items that are marked down 30% or less from their MSRP) and .5% isn't a lot of that. It is less than Amazon loses on popular books, and less than they lose on prime shipping. Of all the things Amazon loses money on to incentivize customers, it's a small one. Gross operating margin is only tangentially related and can be increased by them at any time by spending less money on other investments.

ethanbond 13y ago

Wait, how can you say that Amazon makes "healthy margins" when they've been operating at a very-close-to-loss, or at a loss since their creation? Their last quarter was a loss of $25,000,000.

guiambros 13y ago

> Amazon makes pretty healthy margins on a lot of what it sells I guess you're not following Amazon earning reports closely. In Q2 this year, Amazon's margin was number 1,428, out of 1,515 US companies [1] [2]. That's barely 1% after-tax margin. In several quarters they reported close to break-even or losses. At these levels, a "mere" 0.5% donation would be unsustainable for shareholders, unless there's a way to claim most/all donations to reduce their own tax payments. Margins got better in Q3, but still (intentionally) low. [1] http://www.forbes.com/sites/greatspeculations/2013/05/21/amazons-thin-margins-do-not-support-sky-high-valuation/ http://www.forbes.com/sites/greatspeculations/2013/05/21/ama... [2] http://247wallst.com/investing/2013/07/25/amazon-com-company-earnings-keep-margin-heading-to-zero/ http://247wallst.com/investing/2013/07/25/amazon-com-company...

devinmontgomery 13y ago
Margin on an item is different than gross operating margin. Amazon makes 20%+ margin, "pretty healthy", on "a lot of what it sells" (almost all retail items that are marked down 30% or less from their MSRP) and .5% isn't a lot of that. It is less than Amazon loses on popular books, and less than they lose on prime shipping. Of all the things Amazon loses money on to incentivize customers, it's a small one. Gross operating margin is only tangentially related and can be increased by them at any time by spending less money on other investments.