Amazon actually didn't have much competition at a key point in it's growth, i.e. just after the dot com crash. Amazon survived, many did not and Amazon then had a few years to cement their dominance in the online shopping space.

Amazon is also very different from Uber in that it a) went public earlier and b) didn't need huge outside cash injections like Uber and c) Wasn't making a huge gross loss on sales like people claim Uber is.

I believe Uber has already lost more money than Amazon has in it's entire existence!

http://s1.ibtimes.com/sites/www.ibtimes.com/files/styles/emb...

> Amazon actually didn't have much competition at a key point in it's growth

Except for every single brick & mortar store -- which has always been Amazon's biggest "competitor".

Brick and mortar stores were (and still are) extremely weak competition. That's why Amazon utterly crushed many of them and continues to do so. Not just small mom and pops either. Borders, which at one point was one of the largest bookstore chains in the nation, shuttered its doors because it didn't switch to an online model fast enough. Barnes and Noble at some point was in deep trouble as well.

Last numbers I saw had online sales across all categories at less than 10% of total retail sales. Hardly "weak competition."

https://ycharts.com/indicators/ecommerce_sales_as_percent_re...

(Note: that growth is still a good reason to be bullish about Amazon!)

If you look into the indicators that fall into the Retail and Services sales category, there are extremely big ticket items and high-volume items that aren't sold in high volume or at all due to regulation.

All auto sales, gas purchases, alcohol & tobacco, heavy industrial equipment (commercial farm equipment, etc) are included in that category.

Online sales only being 10% of that still probably looks massively outsized if you're drilling down to B&M clothing & electronics purchases. I haven't made a B&M retail purchase any more times than I can count on one hand since 2004.

Your spending habits may not be representative of the greater population.

And that last statement about my spending habits is tangential to everything I said previous to it.

> I haven't made a B&M retail purchase any more times than I can count on one hand since 2004

> (Amazon) didn't need huge outside cash injections like Uber

Amazon and Uber are very different companies, but this wildly oversimplifies the financing of Amazon. Amazon has taken on many billions of dollars in debt over the years in order to operate. If you add it all up, Amazon has taken (in very different terms) about as much money as Uber.

https://www.bloomberg.com/news/articles/2014-12-02/amazon-se...

Also a good point. Low margin doesn't have to mean unsuccessful. But it's taken 20 years for Amazon to get where it is. Uber's valuation seems pretty premature. Amazon lost money for years because it was building infrastructure. Uber is losing money because it is subsidizing its sales. Amazon may have been low margin, but I don't know that they ever took investor money and gave it directly to customers in the form of price subsidies.

Great contrast – and you're not really saying that Uber is not building infrastructure but that one is happening faster than the other one:

1) Uber: a) subsidize sales b) build infrastructure 2) Amazon: a) build infrastructure, b) grow sales at a sustainable rate even if it takes 20 years.

I think Zappos had the same business model. But we'll see.

Zappos is an Amazon subsidiary even if it does operate quasi-independently (and quirkily from a management perspective). It looks a lot more like Amazon though with generally far less emphasis on building out infrastructure. Ultimately it's sort of a niche because of the nature of selling shoes online.

Zappos is now an Amazon subsidiary. It grew sustainably for a decade before Amazon acquired it.

Yes. In many ways they grew more in the vein of many traditional mail order catalogs than Amazon.

Amazon also has crazy AWS profits to subsidize major investments. Uber lacks such a super profitable but tangential revenue stream.

People seem to underestimate just how much money AWS makes.

AWS makes almost no money compared to their core business, it's around 10%, maybe a little bit more. The profit from AWS, however, is something like 50% of Amazon's total profit. That said, it's not hard to occupy a huge percentage of profits from Amazon since they purposefully run almost every other facet of the business at razor thin margins.

3.2 billion of revenue in one quarter [1] is is nothing to scoff at. However the more important point is without the profit from AWS, Amazon would still be posting huge deficits [2] and would probably face much higher shareholder pressure to produce.

[1] http://venturebeat.com/2016/10/27/aws-reports-3-2-billion-in...

[2] http://www.geekwire.com/2016/amazon-without-aws-online-retai...

Isn't that an invalid assumption that Amazon would do nothing else differently if they didn't have AWS?

I always understood "make money" as referring to profit, not revenue. A business with $1 trillion in revenue and $1 trillion in expenses makes no money.

"I have a trillion-dollar business: I take dollar bills from one person and give them directly to another and repeat that a trillion times a year."

Maybe there can be profit to be made from this business too with a bit of _delay_ in between receiving and giving. I'm trying here just to imagine this company. I think it will work because of the scale. I'm thinking: I take dolar bills from one person, I keep them 10 days and then I give them to another one. And I repeat this for 1 trillion dollar value. Even if the profit in 10 days is 0.1% then you will have 1 million dollar remaining to you. What I am trying to say is that it seems to be a value in being so big, because of how big numbers math works but also because people are impressed by it (think going to a bank asking for money)

This is how Amazon benefits from free cash flow in their retail business. With payment days of >90 days to their suppliers but almost immediate payment from their customers they get 90 days to reinvest that money at a profit before paying it back. Essentially an interest free loan from their suppliers.

> almost immediate payment from their customers Isn't there a gap between customer making the credit card payment and the bank transferring the actual money into Amazon's account?

Probably. And they also won't always sell an item as soon as they receive it, which eats into free cash flow. But generally speaking, they get paid for goods by customers before they need to pay the supplier, which creates free cash flow.

And now with them having become an online-only warehouse club [1] with Prime, there is even less reason to switch away.

[1] https://en.wikipedia.org/wiki/Warehouse_club

As a long time Prime user I've recently considered dropping my prime subscription. I need to spend a lot of money (even more than I already do) to make the P&P work and the film offering is getting worse and worse.

Since Amazon seems to have shifted to generate profit instead of subsidizing prices, it went downhill (at least in Berlin). Amazon Logistics is a huge pain (several lost packages, Saturday and 8pm delivery to business) and the prices of most goods at Amazon is mediocre.

As a very good and Amazon customer for a very long time, I've reached the point to jump to something else should it materialize.

While I haven't experienced this sort of thing very often in the US, whenever it does happen Amazon has either sent another package, refunded the cost of the order, and/or offered a free month of Prime. And it usually only takes 5-10 minutes in an online chat with customer service to figure out. There are definitely plenty of meh things about Amazon, but customer service is certainly not one of them.

YMMV, I'm not happy if paying for Prime and 50% of packages get lost, I call, and get them some days later than expected or get them later as expected and payed for next day delivery in the first time.

Amazon got kicked by Zalando for Fashion at least in Germany and despite heavy investments and promotions for fashion can't compete with Zalando.

If someone starts an electronics site on the same professional, data drive, aggressive level as Zalando, I'm sure Amazon is in trouble here in Germany.