Can Someone Please Explain the Amazon Business Model???

[jk]

Re: Can Someone Please Explain the Amazon Business Model???

In the meantime can someone explain to this mystified observer exactly how this is supposed to work?

"...After the close Thursday, Amazon.com posted a quarterly loss of $41 million, or nine cents per share, matching analyst expectations. Revenue jumped 24 per cent $17.09 billion against expectations of $16.76 billion and its stock surged US$31.18, or 9.39 per cent, to $363.39..."

amazon is still a start up. its business model works on a different time scale than [all or most] other companies. that is how the company is being viewed by the market, just as it is being viewed by bezos.

[cobben]

Re: Can Someone Please Explain the Amazon Business Model???

Anecdotally, Amazon was the only available choice, aside from an obscure Swedish co., when my wife recently wanted to shop for Desigual.

Note that Amazon even gives us Euro peons the choice of ordering within the EU with VAT automatically added, or feeling lucky and ordering from the US and thus taking the chance of the local customs missing the shipment altogether, thus saving about 20%.


Desigual at Amazon UK

3609 hits


official site of Desigual Latvia

(Google translated from the Latvian)

Desigual clothes are not currently available for purchase Latvian, so here we summarize the online stores that deliver Desigual clothing worldwide:

Amazon UK, Amazon DE, Amazon FR, Amazon AT Amazon U.S. Tintin Style

Desigual purchase in the U.S., in addition to VAT will be added to the present (pre-payment). In addition to the Latvian receiving the order will not have to pay anymore.

To make sure that the chosen product is delivered worldwide, online shopping Checked to the seller of goods is Amazon - other vendors can not supply goods worldwide.

[lakedaemonian]

Re: Can Someone Please Explain the Amazon Business Model???

a small setback in the bigger Amazon scheme of things but one too close for comfort . . .

Publishing Executive at Amazon to Depart

By JULIE BOSMAN

I wonder if this could be described as a bit like the Apple Newton?

At the time the failure of the Newton was an embarrassment, but in retrospect it can be seen as a logical(but premature) step towards the future in the form of tablets/iPads.

As a rabid reader(and still collector of older/obscure specialty niche books) I have to admit I've gone almost completely over to the digital e-book darkside.

As e-book sales accelerate and physical book sales inevitably plunge over the long term I would think traditional publishing houses are ripe for disintermediation and the likes of Barnes & Noble will have to adjust their business models...who knows......maybe Amazon will become even more vertically integrated with physical locations for product pick up/returns/same day delivery of fastest moving products.....look, listen,feel of "hero" products...brand embassy(Apple)....and a place to compete with Barnes & Noble for people's lifestyle free time.

Maybe just premature?

Maybe a comparison(if available) of proportional digital/physical book sales would be useful?

[don]

Re: Can Someone Please Explain the Amazon Business Model???

a small setback in the bigger Amazon scheme of things but one too close for comfort . . .

Publishing Executive at Amazon to Depart

By JULIE BOSMAN

Laurence J. Kirshbaum, a stalwart of New York publishing who joined Amazon in 2011 to lead its New York publishing imprint, will leave the company in January, Amazon said on Friday.

Sarah Gelman, a spokeswoman for Amazon, said that Mr. Kirshbaum was “instrumental” in starting Amazon’s New York publishing office. “We’re sorry to see him go,” she said in an e-mail. Mr. Kirshbaum declined to comment.

Daphne Durham, the publisher for Amazon Publishing’s adult trade and children’s businesses, will take over Mr. Kirshbaum’s duties, Ms. Gelman said.

Mr. Kirshbaum’s departure is the latest sign that Amazon’s publishing performance in New York has failed to meet the initial expectations. Traditional publishers worried at first about Amazon’s growing power, and news reports speculated about whether New York was “facing a full-scale invasion from Seattle.”

Mr. Kirshbaum, whose background was in the more commercial side of publishing, was initially successful in signing some top authors, including Timothy Ferriss (“The Four-Hour Chef”), Penny Marshall (“My Mother Was Nuts”) and Billy Ray Cyrus (“Hillbilly Heart”).

But he was unable to persuade Barnes & Noble, the nation’s largest bookstore chain, to sell Amazon’s books in its stores. Independent booksellers, who tend to see Amazon as a discount retailer that undercuts their business, almost uniformly refused to sell its books.

That damaged Amazon’s ability to persuade authors and agents, who depend on print sales, to make deals with Amazon. Most book sales still come from print rather than digital.

Benjamin Anastas, whose book “Too Good to Be True” was published by Amazon in 2012, said that he knew the lack of brick-and-mortar sales would be a “stumbling block” from the beginning. But Amazon executives promised that their Web site was a major advantage.

“They said what they could depend on and what other publishers couldn’t was that they have this incredible retail space, which is the Amazon online bookstore,” Mr. Anastas said.

While he said he would consider publishing with Amazon again, he acknowledged that “it was frustrating not having the book in more bookstores.”

Shelf Awareness, an industry publication, first reported the news of Mr. Kirshbaum’s departure.

Mr. Kirshbaum, 69, began his career at Random House and eventually became the chairman and chief executive of the Time Warner Book Group. He retired in 2005 and became a literary agent. He is expected to return to work as an agent.

Ms. Gelman of Amazon said that the New York office would continue to grow and that new imprints were expected to be introduced soon.

Amazon Publishing includes imprints that are based in Seattle and focus on genre fiction like mystery, thrillers and romance.

[lakedaemonian]

Re: Can Someone Please Explain the Amazon Business Model???

It seems quite reminiscent of the 98-99 timeframe for Amazon when I was with the company.

Share price was getting silly combined with accelerated spending by the company.

The difference between then and now at first glance seems to be gross margins are holding(even growing a bit) which I view as a strong positive.

My guess(I've still got some good friends in senior roles there, but no knowledge of upcoming stuff) based on previous performance is truly long-term strategic investment being made with that blowout in overheads.

From day 1 Jeff has reiterated that short-term profit is not even at the bottom of a long force-ranked list of priorities.

And from having worked directly with the guy I believe it was then, and remains now, a genuine core principal of the company.

The company seems to be able to successfully resist shareholder pressure for short term profit as well as relatively immune from negative investor sentiment.

I'm obviously biased, but I think the combination of Amazon's virtual network of customers and its physical infrastructure network represents a pretty wide and deep "moat" in the words of Warren Buffett.

So I'm guessing Amazon is dredging a wider and deeper moat, maybe with some crocodiles.

But I have to admit the valuation/PE ratio is simply insane......but again...here I am biased as it's the first year since I left where my post Amazon cumulative investment return has been beaten by my alternative universe Amazon return had I stayed with the company.

Amazon's valuation is only 1/3 less than Walmart's and Walmart has 5 times the cash flow.

Interestingly, Walmart and Amazon both share quite similar inventory turns(10-ish) today...which Rick Dalzell formerly of Walmart(and now former Amazon) specifically mentioned back in the 90's the opportunities for exceeding Walmart in inventory turns....which don't seem to have been achieved.

I wouldn't put Amazon in the same category as Tesla, not by a long shot......but I think there are some very superficial parallels with Tesla/GM and Amazon/Walmart.

I suspect the reasons for the ramp up in Amazon share prices include(but not limited to):

*frothy FIRE economy share prices

*possibility of investors seeing Amazon able to continue growing(online sales as % of total retail) in even a lousy(maybe even shrinking in the future) consumer retail market.

*direct competition with not only Walmart for physical product delivery, but also the likes of Apple with digital content delivery.

*knowledge that if things got tough, Amazon could take a break on the investment side of things and see it flow through to the bottom line as their sitting on more cash than Walmart.

But NO WAY would I be a buyer at this silly price.....and I'm surprised how few shares are being shorted at this price(compared with 1/3 with Tesla).

So take it with a grain of salt......because I'm biased to the positive because I worked there and still believe in the company and the people it employs.......but also biased to the negative because I'm pissed that this past year I would have been financially better off having stayed with the company....arrggg.

[jpatter666]

Re: Can Someone Please Explain the Amazon Business Model???

Amazon is supposed to become the Walmart of the web. And I guess it is -- if you take the profit part out of it. :-)

[GRG55]

I can't help but think that some day this is going to make a classic HBS case study...no matter how it turns out. (I also couldn't help but note that several alleged "financial" news outlets confused the 9 cent per share loss and reported it as positive 9 cents per share earnings - so much for reading comprehension among financial journalists).


In the meantime can someone explain to this mystified observer exactly how this is supposed to work?

"...After the close Thursday, Amazon.com posted a quarterly loss of $41 million, or nine cents per share, matching analyst expectations. Revenue jumped 24 per cent $17.09 billion against expectations of $16.76 billion and its stock surged US$31.18, or 9.39 per cent, to $363.39..."

Here's the first part of the Amazon earnings press release:

SEATTLE--(BUSINESS WIRE)--Oct. 24, 2013-- Amazon.com Inc. (NASDAQ:AMZN) today announced financial results for its third quarter ended September 30, 2013.

Operating cash flow increased 48% to $4.98 billion for the trailing twelve months, compared with $3.37 billion for the trailing twelve months ended September 30, 2012. Free cash flow decreased 63% to $388 million for the trailing twelve months, compared with $1.06 billion for the trailing twelve months ended September 30, 2012. Free cash flow for the trailing twelve months ended September 30, 2013 includes fourth quarter 2012 cash outflows for purchases of corporate office space and property in Seattle, Washington, of $1.4 billion.
Common shares outstanding plus shares underlying stock-based awards totaled 475 million on September 30, 2013, compared with 469 million one year ago.

Net sales increased 24% to $17.09 billion in the third quarter, compared with $13.81 billion in third quarter 2012. Excluding the $332 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales grew 26% compared with third quarter 2012.

Operating loss was $25 million in the third quarter, compared with an operating loss of $28 million in third quarter 2012. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating loss was $7 million.

Net loss was $41 million in the third quarter, or $0.09 per diluted share, compared with a net loss of $274 million, or $0.60 per diluted share, in third quarter 2012. The third quarter 2012 includes a loss of $169 million, or $0.37 per diluted share, related to our equity-method share of the losses reported by LivingSocial, primarily attributable to its impairment charge of certain assets, including goodwill...