Amazon and the "profitless business model" fallacy
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Amazon and the "profitless business model" fallacy
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Re: Amazon and the "profitless business model" fallacy
#2Think about it this way. Profits are dollars that leave the company. By sitting on low profits, Amazon turns all its cash towards itself.
Re: Amazon and the "profitless business model" fallacy
#3" I sell a used book on Amazon, it takes a cut of the transaction, I am the one packing and shipping that item to the buyer. "
In true Amazon "dominate all retail by making it accessible to consumers" their relatively new "Fulfillment By Amazon" service drastically simplifies consumer reselling by eliminating the need for the consumer to do the "packing and shipping".
It's an amazing service, and they are getting darn close to the "just ship us a box of your stuff"
I bet that we see that inside of the next five years, there are lots of problems (like what is / is not valuable) but you can see them already working around these issues by only accepting items with modern barcodes, charge small warehousing fees if something sits too long in inventory, etc.
(1)http://services.amazon.com/fulfillment-by-amazon/benefits.ht...
Re: Amazon and the "profitless business model" fallacy
#4I think Amazon is a great example of the kind of company that makes genuine long term fundamental change to the way the world functions. I really wish that more companies had a less quarterly mindset and would pursue things similarly.
Re: Amazon and the "profitless business model" fallacy
#5Amazon is the proof that corporations are not all short-term-focused, and the shareholders have amply rewarded Amazon for that with a huge P/E.
Re: Amazon and the "profitless business model" fallacy
#6Think about it this way. Profits are dollars that leave the company. By sitting on low profits, Amazon turns all its cash towards itself.
That's the opposite of what those words mean. Profits are dollars that stay with the company. Dollars that leave the company are expenses, some other company's profits. I don't find redefining profit to mean its opposite enlightening here. They're spending cash now in hopes of future profits -- that seems clear enough in plain english.
Re: Amazon and the "profitless business model" fallacy
#7Think about it this way. Profits are dollars that leave the company. By sitting on low profits, Amazon turns all its cash towards itself.
That's the opposite of what those words mean. Profits are dollars that stay with the company. Dollars that leave the company are expenses, some other company's profits. I don't find redefining profit to mean its opposite enlightening here. They're spending cash now in hopes of future profits -- that seems clear enough in plain english.
Money not spent is money that isn't working for you, but instead is just sitting in reserve, at best accruing interest. Amazon is betting it can get a much higher return, and so far, has been right.
Re: Amazon and the "profitless business model" fallacy
#8Earlier quoted context omitted.
That's the opposite of what those words mean. Profits are dollars that stay with the company. Dollars that leave the company are expenses, some other company's profits. I don't find redefining profit to mean its opposite enlightening here. They're spending cash now in hopes of future profits -- that seems clear enough in plain english.
Money not spent is money that isn't working for you, but instead is just sitting in reserve, at best accruing interest. Amazon is betting it can get a much higher return, and so far, has been right.
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Re: Amazon and the "profitless business model" fallacy
#9Think about it this way. Profits are dollars that leave the company. By sitting on low profits, Amazon turns all its cash towards itself.
That's the opposite of what those words mean. Profits are dollars that stay with the company. Dollars that leave the company are expenses, some other company's profits. I don't find redefining profit to mean its opposite enlightening here. They're spending cash now in hopes of future profits -- that seems clear enough in plain english.
Right, but presumably, the company that spends all it's cash gets something in return for all this money, ideally of equal or greater value to said company than cash spent.
Management (jeff and co) elect to spend cash on bettering the position of the company, (and thus keeping the wealth within the company) opposed to just sending money to the owners (spreading the wealth to stock holders/entities external to the company)
Re: Amazon and the "profitless business model" fallacy
#10" I sell a used book on Amazon, it takes a cut of the transaction, I am the one packing and shipping that item to the buyer. " In true Amazon "dominate all retail by making it accessible to consumers" their relatively new "Fulfillment By Amazon" service drastically simplifies consumer reselling by eliminating the need for the consumer to do the "packing and shipping". It's an amazing service, and they are getting dar…
I wasn't aware of that service. So to some extent Amazon is doing to Craigslist and eBay what Craigslist and eBay did to the classifies and Nickel Ads?