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> Yet, how do you tell when Amazon are about to do that? Amazon will never do that, because it can't. It's in retail. Retail is and always will be a low margin

by maratd 13y ago

> Yet, how do you tell when Amazon are about to do that? Amazon will never do that, because it can't. It's in retail. Retail is and always will be a low margin business. Is there an example of a large retailer that doesn't manufacture its own goods that has profits in the double digits?

adwf 13y ago
Normally true, but if Amazon trade in high enough volume (which they do), turning up the price by pennies across the board will generate quite a large bump in profit. And whilst they are definitely in the low margin, price sensitive business, programs like Amazon Prime generate quite a bit of stickiness to their brand, regardless of price. I know that I find it a pain to shop elsewhere now, not just because of price, but because I've grown so used to the reliable delivery times of Amazon/Prime. I know almost to the hour when my packages are going to arrive. That's a killer feature worth at least a moderate bump in price before I'd shop elsewhere.
jasontsui 13y ago
“We believe in the long term, but the long term also has to come,” says Bezos, explaining that periodically Amazon wants to “check in” with its ability to make money. Thus, in 2007, Amazon more than doubled its profit, to $476 million, on a 38% increase in sales to almost $15 billion. http://management.fortune.cnn.com/2012/11/16/jeff-bezos-amazon/ http://management.fortune.cnn.com/2012/11/16/jeff-bezos-amaz...
riggins 13y ago
Retail is and always will be a low margin business. what would you rather invest in (assume there are no costs other than inventory to keep it simple). A store that has $100K of inventory that turns inventory once a year with a 20% profit margin or A store that has $100K of inventory that it turns 10 times a year with a 5% profit margin
heroh 13y ago
> Retail is and always will be a low margin business. tell that to apple.

by maratd 13y ago

adwf 13y ago

Normally true, but if Amazon trade in high enough volume (which they do), turning up the price by pennies across the board will generate quite a large bump in profit. And whilst they are definitely in the low margin, price sensitive business, programs like Amazon Prime generate quite a bit of stickiness to their brand, regardless of price. I know that I find it a pain to shop elsewhere now, not just because of price, but because I've grown so used to the reliable delivery times of Amazon/Prime. I know almost to the hour when my packages are going to arrive. That's a killer feature worth at least a moderate bump in price before I'd shop elsewhere.

jasontsui 13y ago

“We believe in the long term, but the long term also has to come,” says Bezos, explaining that periodically Amazon wants to “check in” with its ability to make money. Thus, in 2007, Amazon more than doubled its profit, to $476 million, on a 38% increase in sales to almost $15 billion. http://management.fortune.cnn.com/2012/11/16/jeff-bezos-amazon/ http://management.fortune.cnn.com/2012/11/16/jeff-bezos-amaz...

riggins 13y ago

Retail is and always will be a low margin business. what would you rather invest in (assume there are no costs other than inventory to keep it simple). A store that has $100K of inventory that turns inventory once a year with a 20% profit margin or A store that has $100K of inventory that it turns 10 times a year with a 5% profit margin

heroh 13y ago

> Retail is and always will be a low margin business. tell that to apple.