Forum Moderators: buckworks
"Amazon has provided a case study about how you can really ignite growth by decreasing prices," said Safa Rashtchy, an analyst with US Bancorp Piper Jaffray... Amazon said it sold 1.4 million copies of "Harry Potter and the Order of the Phoenix," shipping them to 175 countries and even Antarctica.
Is dropping prices to drive growth at the expense of profits a legitimate ecommerce strategy?
No, but it's a great stock market strategy :)
Amazon still had a huge Q loss. Most growth came from outside NA. They went from making $2 million on shipping to LOSING $20 something million dollars on shipping (with free shipping)
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I wonder how many guys here can say they've been selling online for years without a single Q of profitability.
My site was profitable the first month.
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How do you figure that Harry Potter cost them a buck (with free shipping) Heck, normal markups on books are pretty small.
How do you figure that Harry Potter cost them a buck (with free shipping) Heck, normal markups on books are pretty small.
I was just thinking of an example - I have no idea what Amazon's margin is.
Friends of mine work at a giant book distro in PA - nearly every computer book that I'm interested in I can have them pickup for $2-$5 (these are ones currently retailing for $50+) or get "damaged" ones for nothing...
I believe a weaker dollar also played a role in the recent figures.
You're right.
...benefiting from the euro's rise, which increased the dollar value of its European sales by $55 million.
Sounds like 1998: 250,000 people who will never buy a book elsewhere for the rest of their lives. Sure!
Truth is more likely that they have 250,000 new hotmail addresses good for two years max. Wonder how many were foreign bookstores who bought below their local wholesale?
International sales at Amazon were up 81% while NA rose 20%.
Loss for their second quarter: $43.3 million.
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I'm not impressed:
Vitually all of the world's great businesses started right off the bat making tons of money and charging high prices. I doubt that John D. Rockefeller ever sold any oil as a loss leader?
In most cases - I would agree with the negative comments, but amazon is a REAL company that will be around for a while.
I think they are still experimenting with branding and such. They are building the walmart of the internet.
They are the only stock I own that loses money - I don't know if that is good or bad, but I have made more % wise off of them than most of my others...
My site was profitable the first month.
Well it took me longer if you include my time.
Look at the bright side - - even if you are losing money - you can say your website makes more money than amazon.com (hopefully) :)
"Revenue rose 37 percent to $1.1 billion from $806 million last year." [that is for the quarter]
This is very important - growth in revenues are important in accessing the demand on the company and are harder to "fake" than earnings.
Amazon has one advantage over most other websites out there - they've got tons of people coming to their site with the INTENT to buy. I don't even shop around that much anymore - I have been so happy with them - if something is a dollar or two more somewhere else - I still buy from amazon.
I do get a little worried that Jeff Bezos doesn't ever seem to be that concerned with profit, but as long as the numbers keep getting better - I feel a little better. I just wish the PROFIT part would get better than ZERO.
It is kind of amazing that he is an internet superstar - and everyone one of us "makes" more money for our company than he does....
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Off topic: but in the late 80s Forbes used to publish an annual list of the "10 Poorest People in America." Not easy to have a net worth of NEGATIVE hundreds of millions of dollars.
Our neighbor across the street made the list. He had been a gangland lawyer in the 1950s and 60s. In the 80s he lost a lawsuit for about $50 million. But still lived in a mansion on 4 acres and drove a Lincoln. He died of natural causes a few years later. (the place WAS starting to be a little run down by then).
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Yep, easy to make a modest living on the web, but you have to be a visionary to lose $43 million every few months.
As for international sales (which we don't do), our attempted orders from Nigeria, Ghana and Indonesia have soared. And most of them are more than willing to pay their own express shipping costs!
..... $hane
