Comment on Amazon Artificially Discounting Items $0.01 Below the Free Shipping Limit
DicJacobus@lemmy.world 3 days agoI dont think you understand how “Amazon” exists as we know it.
Amazon, the store. the store that sells stuff at “unbeatable” prices and has convenient fast shipping options. exists because Amazon, the corporation, makes most of its money through platforms that are NOT the store.
for example the AWS division, which handles web hosting, Makes money hand over fist compared to the store. so they can afford to sell stuff at either a loss, or breaking even. (and they’re still somehow making money off the ordeal. dont ask me where)
Amazon, the store. the store that sells stuff at “unbeatable” prices and has convenient fast shipping options. exists because Amazon, the corporation, makes most of its money through platforms that are NOT the store.
They were also famously unprofitable for a very long time, longer than most businesses would consider reasonable. They were founded in 1994 and it took until 2001 to make a profit.
Exactly. A systemic issue with capitalistic markets is that they inherently select for short term thinking.
Does it make sense to destroy 90% of your profitability 5 years from now for a 20% bump in profit this quarter? Well, yes, it does, because that’s 20% more profit to expand and take over the market.
Even if a business were to try to make good long term decisions, it would immediately be crushed and pushed out of the market by all of its competitors willing to make those shortsighted decisions for immediate profits.
Except in the case of Amazon, thanks to AWS they were able to make good long-term decisions with their e-commerce platform by making short term decisions with AWS.
AWS didn’t exist until after Amazon became profitable. They were already making good long-term decisions before AWS.
Right, back when they were just a bookstore. All I really know about Amazon is that they focused on long-term profitability over increased short-term profits to expand and capture more of the market, and it worked. The problem is that not everyone can do that. They spent every year since 1994 operating at a loss, when anyone else would have been snapped up by another company in the space, and it’s not clear how that didn’t happen. The landscape of e-commerce would have been very different if it had.
Walmart and Target already do it. Just get rid of the public facing store part and send it to me as cheap as retail.
There are companies in china already doing this.
ricecake@sh.itjust.works 3 days ago
I’m not sure that’s entirely true.
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Most of their money comes from retail, either the site, subscriptions, or the seller services they provide. AWS, while massive, isn’t what’s keeping them afloat.
You’re entirely correct though that competition with Amazon is difficult because of those additional sources of revenue. Having additional stable sources of income gives them the ability to accept lower margins in retail with less risk.
The way they make money selling things with no profit or at a loss is to ensure that someone else is always paying the difference. “Free shipping” with a paid subscription means that rather than providing shipping for a loss, they just need to do it for less than the subscription. Turns out “guy with a van” can deliver a lot of packages for quite cheap. So many that he’ll be out delivering from 3am to 9pm, and for $5 they’ll drop your package off first and call it overnight.
In some cases they can get the seller to pay for shipping as a promotional incentive, since Amazons conditioned people to look for free shipping as a precondition to considering a product.
Only give away for free what you got someone else to pay for.
NotMyOldRedditName@lemmy.world 3 days ago
Revenue is not profit.
Takumidesh@lemmy.world 3 days ago
Yes, but revenue pays for things like salaries, advertising, etc.
NotMyOldRedditName@lemmy.world 3 days ago
It helps with cash flow sure, but if it’s not profit you’re going into debt to pay that.