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It's not just newspapers that are the new buggy whips

Discussion in 'Sports and News' started by heyabbott, Mar 6, 2014.

  1. Michael_ Gee

    Michael_ Gee Well-Known Member

    One of the biggest malls in the state is about two miles from my house. The last time I visited it was to Sears (!!!). My leaf blower's motor failed last fall and couldn't be repaired so I needed a new one and decided to just go get one. No problem, good price, but the store was so obviously dying it was a very depressing experience. Mall's doing OK because Nordstrom is the anchor store now, but really, aside from Lenscrafters when I get a new prescription, I never go. Boston traffic is a very good rationale for using electronic commerce.
     
  2. LongTimeListener

    LongTimeListener Well-Known Member

    The reason Amazon barely breaks even every quarter is not related to sales -- it's because they're pouring every profit dollar (and then some) into expansion with an eye toward world domination. They are already one of the top players (maybe the top?) in cloud storage and services, and they're building things like the drones Bezos was talking about a couple of months ago. Shit, I wouldn't be surprised at all if they are secretly building a fleet of trucks and a distribution team to keep their delivery in-house instead of propping up UPS.

    Their sales are fine, and when they're "done" with whatever they're up to, they're going to be rolling in it.
     
  3. The Big Ragu

    The Big Ragu Moderator Staff Member

    Amazon has sales, but they are near-zero margin sales. Which is the problem all of retail has. The retail business just sucks, no matter how you slice it. It is super competitive and the margins are so low.

    As a retailer alone -- Amazon's value is predicated on it transforming itself into something different that is more profitable, based on its size -- it isn't a huge money maker, and likely never will be. Its growth is constrained. Amazon Prime costs the company money, even if it drives volume, and its margins are razor thin. The profit on retail operations is made on volume, but there is no room for growth.

    Which means, Amazon has to transform itself into something else, using the customer base it has already garnered to drive business to other things that make money. Amazon is trying lots of things to do that, but it is not ntirely clear it will be able to. It has potential, but transforming your business into something new is never easy.

    To believe in Amazon as an investment, you have to take on faith that what it is reinvesting in new potential businesses is going to pay dividends some day in the relatively near future. A lot of people have faith in Jeff Bezos, and think he is a genius, but there is no roadmap or plan. It's more of a "trust me," thing, which is fine, because investors have had almost endless faith in Bezos. We're in a stock market environment in which he can get away with no earnings and not hurt the company's value, and he is taking advantage of it.

    If Amazon doesn't become something substantially different than what it is today, though, it can't go on at zero margins and low to no profit forever. It is going to be really difficult to jack up prices to try to become profitable, and expect people to stay with you.
     
  4. HanSenSE

    HanSenSE Well-Known Member

    This is something that's hit a couple of places I've worked. Say, Walmart will open in location A, then want to open a SuperWalmart in location B a few years later, leaving location A empty.
     
  5. Paynendearse

    Paynendearse Member

    So does anyone still think the Internet age has been good for this country's economy?
     
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