Amazon has been running at a loss or close to 0 profit by design.
They could be profitable if they wanted but the choose to use the revenue to expand their expanding business (e.g. building warehouses, buying a fleet of planes etc.) or fund other businesses (e.g. successful Kindle tablets or failed Kindle phones, or Alexa or opening physical bookstores or opening physical grocery stores).
When they run out of warehouses to build (or crazy ideas to invest in) their costs will drop and that will turn into profit in an instant.
And there's not much competition there (Walmart, maybe) for the kind of ecommerce + physical commerce combination so we can assume that Amazon will grow in that space and other players will, collectively, shrink.
Walmart made a smart play with Jet.com, but I think they'll only ever do retail. They won't do AI which Amazon uses to drive more sales of Prime, etc... I also think they don't need to compete with them necessarily. Its good to have both Walmart and Amazon.
I think the closest competitor to AMZN is BABA. Souq purchase was huge to fend off that competition.
I'm long Amazon because they're the best company i see at figuring out a problem and solving to it for the long term with innovative, scalable, solutions.
Being long is a stock market term that means you are invested in a company and believe the stock price will increase. It's the opposite of being short.
> When they run out of warehouses to build (or crazy ideas to invest in) their costs will drop and that will turn into profit in an instant.
I don't think there's any evidence to back that up. There are two types of costs- fixed costs and variable costs. Costs associated with setting up new warehouses are variable in the short term, and sure, those will drop to zero when they choose to stop building them. But there are substantial fixed ongoing costs associated with operating warehouses and any change in market dynamics (high unemployment, lower consumer confidence, market crashes) can cause their costs to outstrip their revenue. Just because they are Amazon doesn't make them immune to the same P&L considerations that affect every other retailer.
I just don't see much evidence looking back at Amazon's history to suggest that they can suddenly become wildly profitable when they haven't been able to in 20+ years.
It doesn't really matter what Bezos says - if they keep growing their business, some day they will find themselves in the same position as Apple, Google and Microsoft: they generate so much revenue that they don't know how to invest it intelligently.
It'll take Amazon longer because their margins are lower and their expenses (warehouses, planes etc.) higher than very generous programmer salaries but there will be a time where it won't make sense for them to build another warehouse in, say, California.
My comment was also in context: some people apparently believe that AWS is the only business that matters in context of Amazon and ignore massive revenue and continuous growth of the ecommerce business. I believe that ecommerce business will ultimately be more profitable (as total profits, not profit margins) to Amazon than AWS. And yes, it might take a couple of decades.
Not to mention half of all households in the US have a Prime membership at roughly $99/yr. Allows them to leverage in to video, music, etc with a different value/cost model than Netflix for example.
< half of all households in the US have a Prime membership at roughly $99/yr.
Back of the envelope - of 300 deliveries ~45 are prime (15%) and 2 are Amazon Fresh (0.7%)
The prime patrons are addicts of prime and online in general.
But still the most in one day I have ever seen is 25 parcels for one person. One is the norm. Two once in a while.
Imo cell carriers taught people "free" (free long distance) and Amazon was smart to use that already popular notion of "free" free shipping - you just have to pay once annually.
You can be certain that someday Bezos will no longer be in charge of Amazon, and if it is not already Day 2, then in short order it will be and Amazon will turn a profit.
Amazon has been running at a loss or close to 0 profit by design.
They could be profitable if they wanted but the choose to use the revenue to expand their expanding business (e.g. building warehouses, buying a fleet of planes etc.) or fund other businesses (e.g. successful Kindle tablets or failed Kindle phones, or Alexa or opening physical bookstores or opening physical grocery stores).
When they run out of warehouses to build (or crazy ideas to invest in) their costs will drop and that will turn into profit in an instant.
And there's not much competition there (Walmart, maybe) for the kind of ecommerce + physical commerce combination so we can assume that Amazon will grow in that space and other players will, collectively, shrink.