31–40 of 136 posts
This drives me mad. I have no idea why Amazon even bothers with the retail side. It barely pays for itself, they are already the biggest player by a mile, and there is no horizon in which economies of scale start paying off (the uptick of demand from Covid probably lost them money!) The only thing that makes sense to me is some political long play. The Amazon retail operation employs a lot more people in a lot more p…
50 years from now, historians will say... Amazon's online store was basically an incubator that allowed the company to pivot to its real profit center: virtualized online services for startups and companies seeking to move to the cloud.
This drives me mad. I have no idea why Amazon even bothers with the retail side. It barely pays for itself, they are already the biggest player by a mile, and there is no horizon in which economies of scale start paying off (the uptick of demand from Covid probably lost them money!) The only thing that makes sense to me is some political long play. The Amazon retail operation employs a lot more people in a lot more p…
If investments into efficiency and scale can produce AWS, and create an entirely new market segment; couldn't continued investments into efficiency and scale produce the next-AWS?
This drives me mad. I have no idea why Amazon even bothers with the retail side. It barely pays for itself, they are already the biggest player by a mile, and there is no horizon in which economies of scale start paying off (the uptick of demand from Covid probably lost them money!) The only thing that makes sense to me is some political long play. The Amazon retail operation employs a lot more people in a lot more p…
> It barely pays for itself Because they're constantly reinvesting for even bigger economies of scale. All investors are well aware that Amazon can start turning on major retail profits at any time it chooses. But the more it grows first, the more entrenched it is, the fewer competitors remain, and the even larger those future profits will be. Seeing as AMZN's stock price has increased roughly 25% since COVID started…
This may have made sense 5 years ago, but this doesn't make sense when their margins have only gotten lower and their number one expense is employees, which is a marginal cost. They are well into the "diseconomies of scale" territory. And there are more competitors now then when they started!
> You don't seem to actually understand Amazon's business model at all
Source: I have worked in and out of the Amazon ecosystem for 5 years.
This drives me mad. I have no idea why Amazon even bothers with the retail side. It barely pays for itself, they are already the biggest player by a mile, and there is no horizon in which economies of scale start paying off (the uptick of demand from Covid probably lost them money!) The only thing that makes sense to me is some political long play. The Amazon retail operation employs a lot more people in a lot more p…
Earlier quoted context omitted.
I wonder what the equivalent is for tech people. What is an enormous industry-specific business we have never heard of?
Agriculture, including farming (mid sized or larger), fertilizer distribution and manufacturing and seeds.
I think many people have heard of John Deere and Monsanto but what about McGregor? They may not be as big as AWS but even with Ag experience I bet there are bigger similar organizations.
I bet there are big custom harvest operations too. We had a two man operation on the Palouse but I heard stories about huge operations out of Texas that migrated through the midwest following harvest cycles.
First, data centers require A LOT of upfront capital. This capital is then capitalized over years, which is how it ultimately affects "profit". So depending on the capitalization schedule, how much they are investing in future growth, etc. will all affect this number. It's why, in short, Bezo's doesn't ever look at these numbers, but instead free cash flow (FCF).
“Percentage margins are not one of the things we are seeking to optimize. It’s the absolute dollar free cash flow per share that you want to maximize, and if you can do that by lowering margins, we would do that. So if you could take the free cash flow, that’s something that investors can spend. Investors can’t spend percentage margins.”[0]
So, the real metric to look at is the FCF/DCF generated by AWS. If we had that number, I think you could basically conclude that it's "printing money".
[0] - https://25iq.com/2014/04/26/a-dozen-things-i-have-learned-fr...
Earlier quoted context omitted.
> It barely pays for itself Because they're constantly reinvesting for even bigger economies of scale. All investors are well aware that Amazon can start turning on major retail profits at any time it chooses. But the more it grows first, the more entrenched it is, the fewer competitors remain, and the even larger those future profits will be. Seeing as AMZN's stock price has increased roughly 25% since COVID started…
"Constantly reinvesting for even bigger economies of scale." This may have made sense 5 years ago, but this doesn't make sense when their margins have only gotten lower and their number one expense is employees, which is a marginal cost. They are well into the "diseconomies of scale" territory. And there are more competitors now then when they started! > You don't seem to actually understand Amazon's business model a…
In and out of Amazon or Amazon's eco-system. You should qualify this as they are very different perspectives.
This drives me mad. I have no idea why Amazon even bothers with the retail side. It barely pays for itself, they are already the biggest player by a mile, and there is no horizon in which economies of scale start paying off (the uptick of demand from Covid probably lost them money!) The only thing that makes sense to me is some political long play. The Amazon retail operation employs a lot more people in a lot more p…
It's way easier to build good tools when your first customer is you. It's also easier to pitch AWS when you can say it works at "Amazon scale".