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Did Amazon Prime previously operate on a loss or are they just trying to make more money since it has gained enough momentum?
by piggyback 13y ago
Did Amazon Prime previously operate on a loss or are they just trying to make more money since it has gained enough momentum?
- baldfat 13y agoI think Prime has always been a money loser for them. There is no way that my shipping charges was less then $100 for the past 4 years.
- simias 13y agoIf it made you buy product you wouldn't normally have bought through amazon then they can still make a profit even if the prime membership does not finance the whole shipping charges.
- phantom784 13y agoPlus, increased shipping costs are counterbalanced by the fact they don't need to run lots of brick-and-mortar locations.
- thaumasiotes 13y agoPrime was famously a money loser. Since, as they point out, it's been the same price for nine years, it might well still be a money loser.
- josefresco 13y agoAmazon would almost be considered a money loser as their strategy has always been to go long ... very long (which urks many investors)
- SpikeGronim 13y agoPrime is considered a marketing expense. Amazon absorbs hundreds of millions or even a billion dollars in shipping charges through prime. It's a huge reason they have a thin profit margin.
- newaccountfool 13y agoThey shouldn't even have a profit margin, they pay no tax inside the UK.
- pawn 13y agoA business shouldn't make money? Surely that isn't what you meant...
- snoonan 13y agoThat's populist propaganda. Businesses are taxed on profit, not revenue. Even if they were 100% based in the UK, they'd still probably pay very low corporate taxes (if any) due to the thin margin. They actually do pay an enormous amount of tax in the UK in the form of payroll taxes, VAT collections, etc. It's sad to see people propagate this crap. It's really about veiled protectionism. A big, efficient player comes in and is willing to forego profit indefinitely. Can't tax them legally, so shame them. Tax on 0 is 0. That's how it works for UK companies too. Try reading between the lines...
- sudomal 13y agoThen why is Luxembourg such a magnet? It's not just Amazon, companies that exclusively cater for the UK market moved their base there.
- Consultant32452 13y agoLuxembourg is a magnet because the UK government is stupid and creates taxes that are easily avoidable.
- newaccountfool 13y agoExactly my point, if Amazon are making little now through tax loopholes what happens when they are fixed.
- rickyc091 13y agoAs SpikeGronim mentioned, they are operating at a very small profit. Investors are starting to get wary about it so they need to do something to increase those numbers. Financial Info. https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=C7AhU8iIH6mY6AHiKQ https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=...
- foobard 13y agoI seem to recall reading they made money on each Prime customer and a quick search turns up several articles[0] confirming as much. [0] http://business.time.com/2013/03/18/amazon-prime-bigger-more-powerful-more-profitable-than-anyone-imagined/ http://business.time.com/2013/03/18/amazon-prime-bigger-more...
- inyaface 13y agoAmazon barely makes any money, and they actually have been losing money the last several quarters.
- iends 13y agoAmazon's quarterly losses are largely do to not caring too much about quarterly reports and focusing more on long term investments.
- inyaface 13y agoSpending 10 million on warehouses doesn't reduce their profit by 10 million for that quarter. The point is they do not make money, and people who somehow overlook this by suggesting they are focused on longer term infrastructure investments needs to brush up on accounting (profit vs cash flow). Capital expenditures are not treated as expenses.
- iends 13y agoInteresting. I would love to learn more about accounting. Do you have a suggestion on where to start? (book or otherwise).