Exactly. Amazon's total years revenue was $107B in 2015. The fact that they spend $16B on shipping while charging $9B for shipping is just the statement that they shift shipping costs into the cost of products and prime memberships. As is well known. So sbierwagen's comment does nothing to dispute msandford's claim.
One look at their finances and it's clear why they're doing this. According to their SEC filings, last year Amazon brought in $6.5 billion in shipping revenue [1], and spent $11.5 billion on shipping costs. Take those numbers together and they lost $5.0 billion subsidizing shipping. They lose more money on shipping every year than most startups make in a decade. It's a huge cost on their budget, not hard to see why management is trying to cut costs.
[1] Includes some revenue earned from Amazon Prime memberships; excludes shipping revenue of third-party sellers not under the Fulfilled by Amazon program
Saying Amazon is absorbing a loss on shipping costs to get market share implies that that they're engaged in predatory pricing (i.e. they're selling below cost to get market share with the intent to raise prices once competition has been destroyed).
There might be some truth to that, but the better explanation for why Amazon isn't profitable is that it's simply plowing all of its profits back into the business. This link is older, but it does a pretty good job of going through the numbers and Jeff Bezo's thinking: http://a16z.com/2014/09/05/why-amazon-has-no-profits-and-why...
The exact price doesn't matter. The point is, it's wrong to conflate profits with income. You need to subtract costs before you can declare that Amazon "makes" a particular amount of money.
You are of course correct that this gives them revenue, my point is that the article is falsely framing this entirely as profit.
Most of Amazon's revenue is retail sales. Buying a product for $10 and selling it for $10.10 is not comparable to $10 of government spending. After deducting cost of sales and cost of fulfilment you're left with ~$60 billion.
Just look at how much money Amazon is spending on Prime shipping. It's insane. They're never going to turn a profit, because as soon as they stop subsidizing shipping customers will go elsewhere. There is no reason to expect Amazon's retail arm to ever be more profitable than Walmart is.
Why should we be surprised that the company whose business is in shipping and selling a wide range of physical products has more revenue than a range of companies whose income are either service fees or advertisements? We're not comparing like with like; Amazon's revenue is counted against by buying and stocking the physical products they sell to derive that revenue. None of the others on that chart have physical product to worry about and so retain a much higher percentage of revenue for themselves.
From the article: "Amazon has 237 million active customers but as a general rule makes almost no profit."
Does Amazon really make no profit? Or do they just have some creative accounting techniques that means they never declare their profits to avoid possible taxes?
Consider the case of the bookdepository.co.uk, purchased by Amazon in 2011. Not only does the bookdepository match most of Amazon's book prices, they offer free worldwide delivery too. Yet, unlike Amazon, they are profitable.
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