I hear working at Amazon requires being available on call and working long hours. If this is the future I'm worried.
Amazon and the "profitless business model" fallacy
71–80 of 141 posts
Re: Amazon and the "profitless business model" fallacy
#72The writing style and grammar in this post interfered with my comprehension. In the end, I was unable to finish reading it. Some examples: "Giant, heavy electronics items that Amazon sometimes ships for free when the shipping cost is clearly non-trivial and cost more than the usual thin margins on such goods are another." "But if you sell a glass of lemonade for $2 and it only costs you $1 to make it, and you decide…
Out of curiosity, are you a native English speaker? I had no problems at all reading the article. A couple of the sentences are a little awkwardly phrased, but things like "The vast vast majority of products Amazon sells it makes a profit on." are both grammatically fine and reasonably idiomatic.
Re: Amazon and the "profitless business model" fallacy
#73Earlier quoted context omitted.
281M of stock-based compensation ... ended the quarter with about $100 million more cash than they started with. This looks like a loss to me. They could have sold $281M of stock and gotten $281M in cash; instead they ended up $181M short of that.
In general when you're a CEO or board member you'll make more money by granting yourself $x million in stock than you'll make by paying a dividend of $x million which has to be shared among all investors.
Bezos doesn't take any stock-based compensation and takes only a minimal salary (less than 90K/year).
He makes money by increasing the value of his existing stock.
Re: Amazon and the "profitless business model" fallacy
#74" 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…
This service is even more useful to merchants and manufacturers. Amazon handles :fulfillment, customer service, offering you a global supply chain using simple tools, good financing options for some sellers and options to sell on amazon and outside of it. And from what I read it's priced quite well.
Re: Amazon and the "profitless business model" fallacy
#75The writing style and grammar in this post interfered with my comprehension. In the end, I was unable to finish reading it. Some examples: "Giant, heavy electronics items that Amazon sometimes ships for free when the shipping cost is clearly non-trivial and cost more than the usual thin margins on such goods are another." "But if you sell a glass of lemonade for $2 and it only costs you $1 to make it, and you decide…
Out of curiosity, are you a native English speaker? I had no problems at all reading the article. A couple of the sentences are a little awkwardly phrased, but things like "The vast vast majority of products Amazon sells it makes a profit on." are both grammatically fine and reasonably idiomatic.
Yeah, I'm a native English speaker.
The sentence you quoted is not impossible to read, but it is more difficult to comprehend than it should be. A simple rewrite will make it more clear.
Many of the sentences in the article are much worse.
Re: Amazon and the "profitless business model" fallacy
#76Earlier quoted context omitted.
i'm a big fan of Bezos, honestly, but to say that pricing your products in such a way as to make >$100 billion in cash is a "mistake"... that's just crazy talk.
In the short term. Bezos point is that by pricing everything this way, proposing to compete with Amazon is crazy talk for most people: Their margins are razor thin, so you need to be able to beat them consistently on cost to have a chance of surviving, and beating them on cost will requires economies of scale that are impossible for a lot of people. Apple on the other hand, is marketing high end products with ridicul…
Today there's plenty of competition in the cloud space. But amazon had a pretty long run without serious competition and had managed to create pretty strong ecosystem, and probably lockup on its platform.
Re: Amazon and the "profitless business model" fallacy
#77There are some issues with this explanation. The main issue is that the rules of accounting have a very good provision to take into account investing into the future. It is called capitalization. Thus, if a company spends money to build or acquire a new asset, it is called capital spending and it is not subtracted from the profits. Thus, for example, if a company had a million dollars of profit and decided to spend t…
The accounting rules (GAAP) have only a loose correlation to how most modern large companies actually operate the levers of their businesses. Management teams of well-run companies spend very little time thinking about the formal financial statements. Accounting bears the same relationship to actually running a business that the Efficient Market Hypothesis does to actually effectively investing -- which is to say, al…
While I agree that GAAP only vaguely represents reality, Management teams of all well run companies /DO/ think about formal financial statements.
These statements require thought or liability to potential jail time. In addition, the impact of these statements on financial markets (ie: stock price) is tremendous. Management damn well should be thinking about shareholder value.
Re: Amazon and the "profitless business model" fallacy
#78I hear working at Amazon requires being available on call and working long hours. If this is the future I'm worried.
Only until you're replaced by a robot.
Re: Amazon and the "profitless business model" fallacy
#79Would it be so terrible if Amazon just stayed as a break-even company forever?
It would certainly be terrible for the shareholders. The whole point of investing in a company is to share in the profit.
Being a shareholder, you have a share in the ownership of the company. You make money when the value of the company increases. This is especially true with Amazon, which does not pay dividends (a share of profits to investors).
Re: Amazon and the "profitless business model" fallacy
#80Earlier quoted context omitted.
Can you explain how capital expenditures do not affect profits? Doesn't capitalization just mean that expenses are applied over time? They don't disappear, correct?
Capital expenses do not affect profits for the reporting period they happen in. It is true that after that reporting period there is a depreciation cost applied to take account of loss of value of an asset. For example, if a company buys a distribution center, it will not expense the cost of the distribution center as an expense. But as time goes on it will expense a depreciation expense that accounts for the loss of…
Capitalizing doesn't help you "get" more income, it simply allows you to write some of the same income in an earlier year.