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User Info It Is March of 2000?; entered at 2017-05-04 13:16:22
Tickerguy
Posts: 148677
Registered: 2007-06-26
Quote:
Why doesn't Amazon just raise it's prices by 1% across the board on everything. And double their profit margins.

I buy everything from there and wouldn't even check for price. They've built a monster - why not let it eat? I just don't get it. Is profit a bad thing?

Because it won't eat -- it will starve, and they know it.

The dirty secret with Amazon is that they simply don't have margin to grab. They get the physical sales they get BECAUSE of their price and their pricing on AWS is being FORCED downward for the same reason.

Everything THINKS Amazon is killing people AND they have excess margin they can grab. The first is true but the second is FALSE. They are killing people BECAUSE they are underselling physical goods below their all-in costs, when one looks at delivery, fulfillment, warehousing AND ADMINISTRATIVE, which for them is ENORMOUS. Look at their SG&A line and how fast it has been going up.

AWS was a cash cow to start BECAUSE they had few competitors. Now they have a LOT of competitors and many of them have MUCH smaller administrative overhead percentages -- with hardware and such being a commodity scale is not necessarily to your benefit IF it comes with an overbloated SG&A line.
2017-05-04 13:16:22