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Warren Buffett dumps $1.7B of Amazon stock

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Re: Warren Buffett dumps $1.7B of Amazon stock

#31

Post by Aurornis »

legitster wrote: post #23

Amazon's core business does not make sense. Despite being so massive, their retail operation makes almost no money. There is little market share left for them to win, the best they can do to grow is shave expenses. AWS has been their real money maker, but also the explosion of AI and server farms has worked against them in threes ways: there is much more competition on infrastructure, the costs to run infrastructure…

> Amazon's core business does not make sense. Despite being so massive, their retail operation makes almost no money.

Net profit margins for retail are only around 3% across the industry.

Amazon isn't actually doing anything unusual in that regard. Retail is just a very low profit margin business whether it's physical or online.

These numbers are always confusing to those of us in the tech world where SaaS net profit margins are always very high.

Re: Warren Buffett dumps $1.7B of Amazon stock

#32

Post by wodenokoto »

novia wrote: post #25
legitster wrote: post #23

Amazon's core business does not make sense. Despite being so massive, their retail operation makes almost no money. There is little market share left for them to win, the best they can do to grow is shave expenses. AWS has been their real money maker, but also the explosion of AI and server farms has worked against them in threes ways: there is much more competition on infrastructure, the costs to run infrastructure…

they could improve their product search page so it's actually useful

They say one of the reasons supermarkets move isles layout is so people don’t learn to navigate the store and they put milk in the back to make sure people have to walk the isles.

The purpose is to get shoppers to look at more stuff and impulse buy.

I honestly believe search is bad for the same reason.

Re: Warren Buffett dumps $1.7B of Amazon stock

#33

Post by zeroonetwothree »

legitster wrote: post #23

Amazon's core business does not make sense. Despite being so massive, their retail operation makes almost no money. There is little market share left for them to win, the best they can do to grow is shave expenses. AWS has been their real money maker, but also the explosion of AI and server farms has worked against them in threes ways: there is much more competition on infrastructure, the costs to run infrastructure…

Their profit margin on retail is similar to other discount retailers like Walmart. Retail just doesn’t have huge margins.

Re: Warren Buffett dumps $1.7B of Amazon stock

#35

Post by taeric »

legitster wrote: post #23

Amazon's core business does not make sense. Despite being so massive, their retail operation makes almost no money. There is little market share left for them to win, the best they can do to grow is shave expenses. AWS has been their real money maker, but also the explosion of AI and server farms has worked against them in threes ways: there is much more competition on infrastructure, the costs to run infrastructure…

I am not so sure this is an accurate analysis? Notably, a major thing that kept it so that retail made no money, was the massive expense of expanding the retail operations. That is, expanding retail footprint is a massive cost. And you have to expand if you want to reach more customers.

This is different from AWS where your reach is essentially "all of the internet" for anything that you launch. But this really just meant that reinvesting the revenue from AWS was harder for them to do, compared to revenue from retail. As a result, they didn't. Not nearly as aggressively.

Re: Warren Buffett dumps $1.7B of Amazon stock

#36

Post by phil21 »

PaulDavisThe1st wrote: post #12
SilverElfin wrote: post #9

After Amazon has been a great friend to the Trump administration, by partnering with Flock, by funding the Melania documentary to basically bribe Trump, etc - why should Americans or others trust them or give them business? Amazon isn’t that interesting anymore. You can buy most things directly from a trusted manufacturer or other websites. I don’t see them doing anything innovative at all. What’s the last useful thi…

> You can buy most things directly from a trusted manufacturer or other websites. My experience over the last year has been the opposite. More and more of the specialized bits and pieces I need or want are only sold online via Amazon. Extremely depressing.

I don't share the Amazon hate everyone has, I've had very good experiences with Amazon retail. But I do sometimes try to spread out my purchases to other vendors due to monopoly concerns.

It's amazing how many times you buy direct from a vendor and then it comes via Fulfilled by Amazon.

The other issue is when anything goes wrong I've had a hell of a time with some vendors. It's a crapshoot - some vendors ship quickly and competently, and handle customer service like returns quite well. Others you might end up with your product not even shipping for a week much less arriving, even though the store says "in stock ships tomorrow". Due to this, when I really must have something on time or if it's a risky purchase I have a good chance of needing to return I tend towards just getting it with Amazon.

A lot of smaller shops simply don't want to deal with logistics and customer service - it's hard to compete on Amazon for shipping costs. And warehouse/returns/etc. is just a nightmare for a small shop. I absolutely understand why a small speciality manufacturer with a few dozen low volume SKUs would prefer to just use FBA and be done with it.

Re: Warren Buffett dumps $1.7B of Amazon stock

#38

Post by kypro »

legitster wrote: post #23

Amazon's core business does not make sense. Despite being so massive, their retail operation makes almost no money. There is little market share left for them to win, the best they can do to grow is shave expenses. AWS has been their real money maker, but also the explosion of AI and server farms has worked against them in threes ways: there is much more competition on infrastructure, the costs to run infrastructure…

Depends how you define their "core business" I suppose.

You're right, but their retail business does support the bulk of their ad business which is extremely profitable. Arguably it might actually make sense for them to run their retail business as a loss leader to support their high-margin ad business.

Re: Warren Buffett dumps $1.7B of Amazon stock

#40

Post by chickensong »

semiquaver wrote: post #15

Berkshire Hathaway has my favorite website (or, WEB page, as they style it) of any big company: https://www.berkshirehathaway.com/

Incredibly clear and direct. Amazing to see a big company like that keeping it so old school. Thanks for pointing it out!
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