Okay look at their balance sheet: http://www.google.com/finance?fstype=ii&q=NASDAQ:AMZN http://www.google.com/finance?fstype=ii&q=NASDAQ:AMZN Their R&D was ne

Okay look at their balance sheet: http://www.google.com/finance?fstype=ii&q=NASDAQ:AMZN http://www.google.com/finance?fstype=ii&q=NASDAQ:AMZN Their R&D was nearly $7 billion in 2013. Could you cut that in half while running Amazon exactly the same way (i.e. not improving it but not making it worse)? I think so, and that would improve profits by roughly 10 fold. Suddenly Amazon's earnings multiplier isn't 500, it's 50. Furthermore there's another $12 billion in the selling/admin/general expenses line item. What's that? Could some of their building spree be contained within that item? Quite possibly. It's safe to say that it's coming from SOMEWHERE. I would be surprised if it cost them $300 per square foot between the building, the shelving, the conveyors, etc to build a new distribution center. At that kind of price a 1.2 million square foot building is a $360 million dollar expense. From what I gather they're building a couple of those every year. That adds up. What happens when they don't need to build new ones and can instead just operate their existing ones profitably? Do you hear stories of people being worked to death at Target and Wal-mart? I hear that at Wal-mar they keep their employees just shy of full-time to deny them benefits, but I don't read stories about how they're asking to do inhuman amounts of work. But I do hear those stories about Amazon. Sounds to me like they probably have a more efficient workforce coupled with cheaper real-estate and very low "shrinkage" (stolen merchandise). If their supply chain is more efficient than Wal-mart or Target and they aren't selling stuff much cheaper (seems like the Amazon discount is about 10% at best these days) then it stands to reason they might be able to make more money. I'm not saying that Amazon has crazy huge margins, but I do think that their margins are quite reasonable. They (Jeff Bezos really) just keep spending all the money they make to keep making the business better. Given how big retail is in the US I find it unlikely that they'll accidentally overbuild and find themselves in quite the predicament. It's not as though Amazon is building giant distribution centers on tiny islands where it makes absolutely zero sense. They're putting them near population centers, where people already buy stuff. Wal-mart did $450 billion in revenue in 2013. Amazon only did $80 billion. Target also did about $80 billion. So Amazon is now as big as Target but not as big as Wal-mart. The reports of Amazon's impending demise seem a bit overblown to me.