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The Almighty Buck

Amazon Tries to Turn a Profit 108

Posted by michael from the not-as-think-as-you-easy-it-is dept.
The NYTimes is carrying a story I thought was interesting about Amazon.com trying to actually, gasp, turn a profit. When you have a small business it isn't terribly difficult to make sure you're selling things for more than they cost you. For an outfit like Amazon, it's a little more challenging.
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Amazon Tries to Turn a Profit More

Amazon Tries to Turn a Profit

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  • Keeping Inventory at Minimum (Score:1)

    by Anonymous Coward
    The main idea of amazon, and indeed all dot.coms, is to keep inventory low, yet when a customer orders items, it is able to ship everything in one box.

    I was unfortunately one customer that was caught on a bad day. Being my birthday, I decided to buy some music from Amazon. The music I ordered was some ambient and spacy stuff (John Serrie, Constance Demby, Thomas Koner, and so on).

    Ok no problems, but almost 8 weeks after I ordered the items, they still weren't shipped. A few days later, I recieve an email saying that they are unable to ship my John Serrie CD's. Annoyed, I let the order continue. Within a week, almost all items were unable to be shipped [surely my music taste isn't that obscure!].

    Then, the Constance Demby CD I ordered changed its availability from 1-2 days to 4-6 weeks. Now, this isn't really a problem, rather the fact is that they had 1 on-hand for me, and then sold it before my order was complete!

    The point is, I had to change my order so much that I got basically nothing from the original order. Plus, now my shipment is arriving in three boxes sometime over the next week... this is worsened considering I live in Australia and everything has to be shipped via international couriers...

    Just my rant... but nonetheless amazon shouldn't treat its customers as such.

    - Saba

  • Re:800K Equations = Amazon.Bomb (Score:1)

    by Anonymous Coward
    Well compared to some fortune 500 insurance companies I've worked for, they would laugh at 800K. I think this is just an area where you don't have much experience and therefore would be shocked to learn how things actually work. But it is nothing out of the ordinary.

  • Too Broad Product Range. (Score:2)

    by Anonymous Coward
    polyp@tesco.net writes ... The problem with Amazon , is there product range , most people associate Amazon with books , or CD's
    Did you realise you can actually order Cars ? on Amazon. Cars [carsdirect.com] ! Me thinks they are going slightly over the top. For me one of the best things about Amazon is the speed of which they dispatch orders. As the above article suggests they could begin to make a profit by reducing the amount of stocked items, if this leads to a noticable drop in the speedy service, people will start to notice and go elsewhere. polyp@tesco.net (nicholas fellows) support my tunez [polyp.co.uk]

  • New model (Score:2)

    by Anonymous Coward

    Last summer, he moved from Bayer Chemical to Amazon.com and has built an 800,000-equation computer model of the company's sprawling operation

    They should ditch the 800,000 equations and try these:

    profit = revenue - expenditure
    for +ve profit, require revenue > expenditure
    +ve profit good

  • What a concept! (Score:4)

    by Anonymous Coward on Monday May 21, 2001 @02:47AM (#208878)
    A Dot-com turning a profit? Has Hell frozen over? What's next...will Slashdot actually proofread articles & correct spelling errors? Only time will tell.
  • Are you sure you didn't give your name to your College or anything? I know the instant I got in college my name was on EVERY credit card companies hit list (Particularly GTE, who will not stop hounding you until you remember (at 7:00 Saturday morning!!!) to tell them to take you off of their list). Basically, you can expect to spend your first couple of semesters trying to get off of everybody's calling list.

    As far as I can tell, Amazon has never sold my name to anybody, as I never got calls at my co-op apartments or once I got out of college.

    Then again, I may just be lucky and missed all of the telemarketers Amazon sent my way...

    Down that path lies madness. On the other hand, the road to hell is paved with melting snowballs.
  • Interesting theory:

    Selling one book costs us $5, we sell it for $4.50.
    Now we sell a million of them and make a profit (when the integer holding your "profit" underflows perhaps?)

    There are economic theories that allow you to reduce costs when working in volume, but if you sell everything below cost you will never turn a profit. See the previous post in this thread that goes into detail so gory it should be on The Stile Project [stileproject.com].

    Down that path lies madness. On the other hand, the road to hell is paved with melting snowballs.
  • It's overflow, you dumbass, no matter how you slice it, positive or negative. Underflow is when a (float) number is too small to store and gets reduced to 0, usually signalling this event somehow, depending on architecture.
  • Amazon did grow its user base and at a loss. And while cusotmers are fickle, Amazon has done a couple of things to turn that use base into a solid asset that you and the other Amazon-o-skeptics are overlooking.
    1. They have used those users to create a very good set of reviews of a wide range of items. This makes them one of the better places to research the items they sell. Of course, then its convenitent to buy the item there.
    2. They also suggest things that other similar customers have bought, which can encourage impulse buying.
    3. They have collected information about the preferences of a large number of individuals and are able to provide (occasionally) useful recommendations.
    Together these mean that the site is a lot more helpful than, say WalMart.

    OTOH, I am partially an Amazon defector. I have found that I can often order books for a brick and mortar store less expensively than through Amazon--- they can also order from the wholesalers and I don't pay shipping. Plus they recognize my face rather than my cookie.

  • Was it The Amazon management who claimed for years that they had to grow the customer base wide enough before they actually started charging more per book than it cost them to supply.

    Or was it the critics who claim that the moment Amazon started charging profitable prices the customer base would vanish because there is no such thin as "a good location" in cyberspace.

    All we gota do now is sit back and watch. This should be fun. Personally I think they are both right. Users will defect but not enough to cause Amazon much sweat.
  • "One fourth" is entirely legitimate English, and is more normal in statistics. "Quarter" is regarded as vernacular.
  • Amazon is supposed to be an e-business, where everything from the cost of capital to the quantity of sulfur exhaled when Jeff Bezos farts is supposed to be in some database somewhere.

    If at this point they can't close their books in a day, let alone 10 minutes, then what the fuck have they been doing with all this stuff?

    Everything they sell has a SKU and a barcode. It is all in the computer. Decent software should be able to handle this relatively easily, and decent hardware should push it thru very quickly.

    Go fig.

    Your Working Boy,
    - Otis (GAIM: OtisWild)
  • If you read the article, you'll find that the guy begind the model used to develop models for Bayer, a quite profitable company. There's nothing magical about models -- they are just more complicated versions of the sorts of things everyone creates with spreadsheets
  • I know! Lets just sell everything slightly below cost to draw EVERYONE to our site. Then we sell advertising on our site to cover make a profit.

    Yeah, yeah, thats it.
  • "But Yossarian still didn't understand how Milo could make a profit buying eggs for 7 cents apiece and selling them for 5 cents."

    - Joseph Heller, _Catch-22_
  • BTW,

    Their real prices + cost of shipping where still cheaper than if I would have had to buy the book in an actual store, at least an actual store here in the Netherlands. If I would have had to buy the books in a store in the UK it might not be cheaper.

    But cheaper or not, if a shop tries to trick me like that, I rather pay more elsewhere than do any more business with them. (As it was, I managed to find a better deal elsewhere. I don't think I would have looked around for better deals if they hadn't been deceptive.)

    --Tim
  • Well I tried it again, and for me it *again* comes up with 9 pounds for Thief of Time. After advertising it for 8.49.

    What country are you in? Perhaps they differentiate by country? Which is rather unfair because you already pay a different shipping rate for international.

    I selected "Netherlands" as country.

    Your observation that they don't lie to you about their prices makes me extra pissed about them. Good thing I found more honest online merchants!

    --Tim
  • Yesterday I wanted to order some books online. My first place to go was amazon.co.uk. They had the books I wanted and cheaper than in the retail store. They advertised 8.49 UKPound for the one book (Thief of time, from Terry Pratchett) and 13.59 UKPound for the other book (The Truth, also from Terry Pratchett). I proceeded to the checkout and ...

    Hey, that ain't right, suddenly the first book is 9.00 UKPound and the 2nd is 14.41 UKPound. I opened a new window and checked the prices. Sure as hell, they're advertised for one price, but actually sold for a higher price.

    I decided to take my business elsewhere.

    I went to uk.bol.com and they had the same books for 8.50 and 11.89, so I ended up cheaper, plus paying less for shipping. And they didn't try to sneak a more expensive price past my nose.

    It will be a while before I look at amazon.com again, if at all. This is not the way to profitability for them.

    --Tim

  • It sounds sort of like I always imagined Engineering Hell - reporting to a PHB with a journalism degree from Indiana U. *shudder*

    Caution: contents may be quarrelsome and meticulous!

  • Or was it the critics who claim that the moment Amazon started charging profitable prices the customer base would vanish because there is no such thin as "a good location" in cyberspace.

    Of course there is. [google.com]

  • And JIT from the publisher's warehouse doesn't work, because the publishers don't want to carry inventory either ( they get taxed on it too heavily ). They try to print not much more than they will have immediate orders for, so if you depend on their inventory you're likely to get "Sorry, that book's out of print." when you call them 4 weeks later asking for more copies.


  • Ebay's model is likely to be more profitable - the customers do almost everything themselves. E-bay just helps with the information - the very thing the WWW is good for.

    btw, Ebay has been profitable since its first quarter.

  • Re:Below cost at all times?? (Score:4)

    by King Babar ( 19862 ) on Monday May 21, 2001 @08:44AM (#208896) Homepage
    Of course all figures are higly fictive, but you should be able to get the "point" of it.

    In this way you will "loose" money for every book sold, but make enough money to cover that loss from fringe-business, such as advertising.

    For some reason, nobody has mentioned what I suspect will be the most valuable "fringe" of this business, to the extent that it might bail them out pretty nicely even if everything they sell themselves only comes in at break-even:

    Information on buying habits

    Amazon has (and uses) a phenomenally large amount of information about what their customers buy, and the whole "customers who bought X often were also interested in Y" angle of the site that always freaks people out at first, until they realize how useful that can be.

    I think that Bezos and company understood this pretty quickly, which is why they wanted to get into so many other product lines, since the richness of the customer database goes way up. It's nice and all to know that households who buy Object-Oriented Perl also buy the poetry of Wendy Cope, but it's way more important to know that such people also buy certain kinds of toys (for their kids), have a taste for certain clothing lines, and probably need a new car in the next 12 months. You don't have to be an e-merchant to make money on info like that, friends.

    Or, if you think that trading in or selling info on individuals really won't fly, you can aggregate it and sell it to brick-and-mortar outfits so that they can better plan where to put their next round of locations. This can be seriously big money, if you play the game right.

  • Re:Below cost at all times?? (Score:3)

    by smillie ( 30605 ) on Monday May 21, 2001 @03:52AM (#208897) Journal
    One of the big problems is actually finding out what your real cost of an item is.

    Cost is more that an items wholesale price. Things that add/modify that initial cost are:

    Shipping costs are billed per truck load not per item. Weight and size of items vary and cost of fuel is dynamic.

    Wharehouse costs. Size (shelf space) is only a part of this cost. There is also rate of turnover cost. Keeping one book for a year has higher wharehouse costs than keeping 10 books that sell out each month.

    There is also the cost of money. Most inventory is purchased with borrowed money. Turnover and interest rates make this part of the cost flucuate. Even when the money isn't borrowed from someone else the cost exists.

    People costs per item. This is all the salesmen, buyers, office personel that need to be paid. Their wages add to the cost.

    "shrinkage" Items are lost, stolen, and damaged in shipment. How fragil an item is adds to the cost. How likely an item is stolen adds to the cost.

    Having done accounting programs for companies, the best anyone could ever hope for was an approximation of an item's real cost. At the end of a quarter you compaired your estimated costs/profits with your bank balance. When they are close you are doing pretty good.

  • Take a look again, Amazon is an affiliate of CarsDirect.com. They would not be competitive getting into a very different business.

  • How can somebody make a profit selling below cost at all times?

    Sorry if I sound incredibly dumb, but I never got it.

    That's how magazines make their money. It really costs a bit more than $3 to get your copy of GQ. The problem is, the advertising-as-publishing-subsidy model has proven not to map very well to online media. However, that's what so many companies based their business model on: someone will be willing to pay for access to twenty million "qualified" customers. Prada pays for advertising access to however many Vogue subscribers, so why the heck won't they pay for the same number of people clicking through to www.ilikeclothes.com?

  • I used to try to get Amazon to accept e-gold (it's my job) along with plastic. I and a few others actually got to the middle-management layer, and managed to occasionally converse with Amazon management. What I discovered was an incredible quantity of pointy-haired attitude. There was a willingness to type out long emails telling why they didn't want to think about accepting a payment system alternative which they could later sell for a profit (or at least lose less on than they lose in plastic fees) but a complete UN-willingness to spend the five minutes it takes to try e-gold, despite my pleas.

    Then one day, things changed. http://www.bananagold.com/ [bananagold.com] appeared and I vowed never to e-mail Amazon again, and then http://www.metalproxy.com/ [metalproxy.com] happened quickly afterwards. Now I can buy anything I want at Amazon, Barnes & Noble, or Thinkgeek. It turns out that programmer-fans of e-gold want it at spot even if major, "mainstream" merchants don't. A good thing for me, and a good example to money-losing companies like Amazon of what they're missing by talking instead of DO-ing. Amazon, instead of accepting my currency, ended up giving me $150 worth of merchandise for switching phone companies for a month. I never gave them a credit card number, and I'll never have to now! :)
    JMR
    I speak for myself, as usual, and obviously Amazon is glad I've never been a shareholder. :)
  • I can assure you that e-gold is nothing like Beenz or Flooz, which are glorified loyalty schemes that merely CLAIM to be currencies. If I have 50 beenz and you have 50 beenz, there's no way for us to buy something that costs 99 beenz. If I have 50 grams and you have 50 grams, it's fairly trivial (assuming we trust eachother, that is) to get something worth 99 grams.

    I'm not sure, anyway, how you can spend "cash" at Amazon. You may be able to use PLASTIC, but credit is hardly cash, it's a conditional promise to (eventually) pay. Ask the Pron-merchants about chargebacks sometime, and you'll get an earful! (Adult sites are -- FINALLY, after much urging from me! -- getting the clue about my currency, BTW).

    e-gold is different because payments are instantly 'pushed,' so when you get paid you *STAY* paid (which can be a double-edged sword, plenty of criminals want e-gold for that reason and I have to deal with their victims every day). e-gold is not good for insecure computers or novice computer users who will click on any spam/attachment. We are working on improving all aspects of the currency, but I can't say what I know until it's not vapor, on penalty of the techs killing me slowly with dull knives.

    Anyway, to answer your first question, there are dozens of folks who'd be glad to exchange your metal grams for "real" cash (and if you studied history, in most countries the paper USED to be backed by the real metal, instead of just by faith!). For more on playing with the value of money, art, and faith, do a google search on "JSG Boggs" and see what comes up! He's the "yin" to my "yang." For proof that e-gold is better money, take a look at the site, and if you like what you see, try it, and (as for any slashdotter) I'll click you enough to play with and hopefully get you hooked! :)
    JMR

  • Re:What a concept! (Score:3)

    by e-gold ( 36755 ) <jrayNO@SPAMmartincam.com> on Monday May 21, 2001 @07:27AM (#208902) Homepage Journal
    Just think about slashdot turning in profit...

    I have. They mint a currency called mod points, which they currently give away! I can assure everyone here that if you're minting a currency, it's far better for your bottom-line if you SELL it. (I have a ten gram reward out there for the first person to hack the Slashcode so that site owners can sell mod points for e-gold, so yes, I have venal-profit-making motives for this post, but I also think it would be a cool thing for minor sites like Fairtunes and others to do. Besides, I've occasionally wanted mod points enough to pay for them, so why not sell me what I want?)

    Anyway, one of the few companies that actually might make profit would be google. It's so unbelievably cool that I'd be happy to pay a few bucks a month just to use it.

    I totally agree with you on this. What google might try could be an e-gold tipjar (there I go again, more venal-profit-making motives). They could accept e-gold, PayPal, and anything else they think they could sell, and many of us would give them tips because we like their service better than the other search engines. This (e-gold tipjars) can also be a solution to the "Napster problem," IMO, since if you listen to Courtney Love and other musicians, they get far less than a buck for a $15 CD.

    No, I can't guarantee everyone would tip (same as the local diner in that respect) but many folks would, just to keep the musician happy, and if the average tip were a buck's worth of gold, she would not have to get a tip from everyone to do better than the RIAA does for her! IMO.

    As usual, any slashdotter is free to contact me and get a bit of e-gold to play around with, just for the asking. Thanks for listening.
    JMR

  • No, you got it wrong. Shipping is expensive but it's not necessarily more expensive to ship, say a book, from the publisher's factory to say B&N's distribution center to a B&N store than to ship it from the factory to an Amazon warehouse to the customer's doorstep. You would think the first route is cheaper (and it is), but not necessarily so...

    What you are missing is two somethings called inventory and opportunity costs. When Barnes & Noble buys X number of books, hoping to sell, say 0.1X and planning to return 0.9X, it amortizes the logistic costs of returning 0.9X books into the profit margins of the 0.1X that it will sell (actual percentages are not as lop-sided but not too far off). Amazon on the other hand may not have to; so in the end, they could sell cheaper and ship directly...

    The problem with the brick model is that B&N ties up a lot of cash up front to buy X books. Which means it's losing potential return from these monies that it could have invested elsewhere (the stock market, for instance, ha-ha; in reality better-selling stock, Harry Potter books for example). The first cost is the inventory cost. The lost profits from investing elsewhere is the opportunity cost.

    Now, the Dell model of doing business is zero (actually *negative*) inventory cost: the customer has *pre-paid* his computer's components when they enter Dell's factories for assembly. That extra cash (billions of $$$ worth) Dell can use to agressively invest, expand, do whatever on earth it wants. More importantly, near-zero inventory means that Dell can change model lines on a dime. It's an agressive, ultra-efficient PC-making jugernaut.

    Amazon on the other hand, cannot use the Dell model and still try to stock every book in existence. Doing so means that it's tying up cash (see above) and warehouse space for low-selling items. So, Amazon has to try and do what retailers do already: aggressively manage its supply chain for that top-10% of items that bring in the majority of the profits. Not try to be the freaking Library of Congress via 1-Click (btw, I am a loyal Amazon customer and I love their service; it just doesn't make any logistical sense).

    Yeah, it's a tough problem; Supply chain optimization pushes modern computing hardware and software to its limits, and there's still a long way to go. Oh, did I mention my company is hiring? I need that referrer cash, so drop me a line [mailto] if you're interested (Atlanta; very, very good C++, Java required).

  • I'm in the UK.

    Just tried it again with a (made-up) Netherlands address and you're right, it does bump the price up to nine quid, so it looks like they do differentiate by country.

    Bit strange when you're paying for shipping seperately anyway...
  • Just tried this (well, for one of the books anyway).
    Thief of Time: 8.49 on the page 8.49 at the checkout too, so it this was happening it's obviously been fixed since.
    (of course, by the time you add on carriage it takes it up to not much cheaper than in the shops anyway...)
  • To sum up, there is no "correct" answer to whether you made money from the $6-$5 book. Over periods of time, the entire firm can be seen to make money or not, but it's always in the context of what came before and what position they'll be left in for the future.

    That's why I'm so amused to see those newspaper articles that claim such-and-such NFL team (for example) lost money last year.

    Accounting in sports (and e-businesses) is complex enough that a wide, wide range of results can be plausibly supported depending on the desired result.

    If you want to impress the shareholders, pick a lower loss reserve value and make other optimistic assumptions. If you want pity from the public, pick pessimistic assumptions. The questions are sufficiently subjective that either end of the range can be considered reasonable.

  • How can somebody make a profit selling below cost at all times?

    Maybe they could set themselves up as a government program, and plunder the populace. Hey, if they're a failure, it's because they didn't get enough funding and maybe they could get more money and keep the subsidized failure going for a few more years. Think of the lost jobs if they shut it down! It's for the children!

    Sorry, getting a little carried away...
    --

  • The only reason that I ever order from Amazon is because they stock those "slow-selling" books that I would have to special order from my local store. I don't want to pay extra for shipping (then wait for the book to arrive) when I can go to a local retail bookstore and buy the same "fast-selling" book and browse other new books.

    I typically only buy the slow-sellers--I am particularly interested in unpopular history (i.e, stuff not written by Court Intellectuals who are Lapdog Apologists For the Regime's Received Wisdom [tm] ). Nice to know I'm helping keep Amazon going. I do have an obscure book on order from Borders, but after four years of waiting, I think it's toast--never heard a thing from them about it. I did get it from Amazon 3-1/2 years ago.

    But there is nothing quite like the rush of wandering through bookstacks and thumbing through new books.
    --

  • I have never "stepped foot" into Amazon.com because of their reputation as "spamazon" from the early days. Maybe they are not like this anymore but too bad, the reputation with me was scarred from the beginning.

    I wonder how many other geeks are like this. If it's a large number, it must hurt them since geeks tend to buy a helluva lot of tech books...

  • If you put only 1 min per equation - (fast mathematician), work 24h/day (no sleep, no food) and 7 days/week (no holidays) that's roughtly 555 days of work. I'd say either the number is bogus or some equations were generated automatically.

    Beside, if Amazon would cut the marketing, it would already be close to profitability.
  • When thinking of the all the talk that has gone on over the .com craze.... I am reminded of something a prominent figure once said, "Bork Bork Bork". The words our beloved Swedish Chef spoke then still carry with them as much validity.

    Ok, so I am on crack? No, I am just tired of reading about .com failures or successes. Here on /. we talk so much of how you need to look past the whole internet approach. Still, we fail to realize, this is just another business. Just as some newly patented technology was merely the same old garbage repackaged with some electrons. Amazon is a business, if it does not do the things a business needs to do to survive, it will simply cease.

    So, lets not get to excited over a business wanting to make money. It was of course, the logical path to be taken.
  • If you read the article, you'd notice that they aren't planning on raising the prices at all.

    They're dropping the items that they don't profit from.

    They're going to have the items shipped from the distributers to you, reducing overhead and proccessing time.

    Low profit books will no longer be held in inventory, they'll be ordered individually as needed.

    You're right, this should be very interesting to watch.
  • dumping = You buy the stuff for 2 bucks, and sell it for 1 buck

    selling at pricess that do not cover cost = You buy for 2 bucks, spend a buck on bureaucracy and sell it for 2.10 buck, cos you have no idea that the bureacracy cost a buck, instead of the 0.05 bucks you thought it cost.

    1 is illegal, 2 is just stupid although the difference is trivial.

    //rdj
  • When you have a small business it isn't terribly difficult to make sure you're selling things for more than they cost you

    Maybe it's easy to take a look at the bottom line to make sure your net inflow was greater than your net outflow, but figuring that price ahead of time is no piece of cake.

    First, you may pay something for an item, but don't forget there are a bunch of other costs involved. Rent, taxes, licenses, salaries, benefits, capital costs (a cash register costs something), business services, tax prep, legal costs, repair bills, utilities, insurance, costs, etc., etc., etc.

    Now, a major corporation generally has major league accountants well versed in standard and acceptable (to VCs and institutional investors) accounting practices. A business usually has Quickbooks on an old PC and someone (if they are lucky) with an associate's degree in accounting.

    Now, all you have to do is put that PC, the software, and Quickbooks together and try to figure out a price that will move enough merchandise at a low price or less merchandise at a higher price to keep up with those (usually variable) expenses (not to mention your competition, who may be a huge corporation), oh, and make sure it happens so that you always have cash on hand to pay your bills when they're due.

    That may not be rocket science, but it ain't *easy*.
  • There are no surcharges or interest rate on credit either (for many many credit cards), unless you fail to pay off you bill every month. Hint: Spend credit like you would spend cash. Then you get the interst from the cash you kept in the bank until you had to pay off the bill. See 'float'.

    If you lose your credit card, you lose max $50. If you lose your wallet, you lose the cash period.
  • I think the idea is that you are buying something of worth that is easily convertible (gold), instead of a worthless token that specifically states that it is worthless and cannot be redeemed for cash. In a way it is a return to the gold-backed standard the US govt used to hold to (long long ago) except by a third party. Now, I still don't know why one would want to go this route, but there is an appreciable differente between arcade tokens.
  • Allow me to invite you to my 'world in the clouds'. I have used credit-cards for a long time and have only once paid a finance charge on them (I misplaced the bill). No annual fees, nice grace period, etc. Sure, use the *ATM* card has a fee, but that is a debit card, not a real credit-card.

    Yes, if I were to carry a balance on the credit-cards, I would be paying through the nose in interest. However I don't, so I don't care what the interest rate is. Pay your bill when it arrives (which is always inside the grace period) and cc's are great.
  • Many of the meetings and decisions in the first week of May concentrated on coping with the torrent of data from a new accounting system that for the first time calculates how much money Amazon makes or loses on each product it sells. The system takes into account the company's cost to ship, the frequency of returns and 47 other factors.

    Huh? Come on, they're an online business, they're supposed to have computers and stuff and all kinds of data readily available. And they haven't made use of it yet? Now that is really dumb, no wonder they don't make a profit. Even I can understand that it's a complex problem to sell at low prices and still be profitable. But I also know that it requires some brains to think of a workable solution.

  • I'd be happy to shop at Amazon as soon as they drop the foolish patents and stop spamming my email account (even though I've asked them 4 times now!)

  • Well, just so you know, it doesn't necessarily make sense for amazon to reduce their selection. Or at least, they've always had a good reason NOT to.

    Amazon started as a cheap place to buy books online. Pretty much EVERYTHING was a loss leader. And contrary to what other posts say, they are planning to raise prices, little by little. The thing is, there comes a point where the amazon price plus shipping is just about the same as running down to barnes and noble and picking it up - except that barnes and noble is probably on your way home from work, and you can have the book NOW instead of waiting 2-3 days, and there's no chance of a shipping error if you go pick it out yourself.

    Those things could combine to kill amazon. Unless they somehow maintain an advantage over b&n. Having a wide selection might just be that advantage. And that runs contrary to the advice given by Mr. MIT PhD. Of course they could still LIST a wide selection of books and actually order them after people request them, but that would increase the delay substantially... time will tell, I suppose, if people are willing to wait.

    If they decrease their selection of books, what exactly is the advantage of amazon over any bookstore in town?

    ---

  • Ever read Catch-22?

    Milo Minderbender would buy eggs at 3c and sell them at 2c. (maybe it was 5/3, whatever)

    "Everyone owns a share!"

  • is inane. The philosphy behind it's business is that by using the web it won't need brick and motar(B&M) stores and fewer employees. That means after it's intial investments are payed off it should have a much lower overhead and should have a greater profit margin that B&M book stores. So how come after this long with all the investment capital in the world at it's disposal it hasn't tuned a profit? Ans: Bezos is a chuckling moron.
  • I first ordered from amazon.com in 1997, and I cannot recall ever getting spam from Amazon. The only mail I've received from them are order confirmations, and announcements that I subscribed to (in my case, announcements that some new book matching my customized search terms is available).

    This is in fact my reason for liking Amazon; I know that other people have lower prices, but Amazon has respected my preference not to be bothered with email.

    (They're not completly perfect: when I visited family last Christmas I had an order shipped to this new address. While I was there a credit card company called and asked to speak to me. There's only one way the company could have known thought that I'd be there, and that's if Amazon told them. Sigh. But as far as email goes, I haven't been bothered by Amazon.)
  • The only reason that I ever order from Amazon is because they stock those "slow-selling" books that I would have to special order from my local store. I don't want to pay extra for shipping (then wait for the book to arrive) when I can go to a local retail bookstore and buy the same "fast-selling" book and browse other new books. --Sean
  • Why would I use eGold in place of cash. This is another business model that baffles me. Its like Beanz and Flooz and such. What it reminds me of is this: Remember when you used to go into video arcades? Sometimes the machines ran off tokens and not quarters. So you bought a bunch of tokens, and at the end of the day you always had a few worthless tokens left over?

    This is what all those alternative forms of web-currency reminds me of. Why would I spend my cash to get something that I can use...just like cash!

  • At the moment it is not cheap to ship lots of diverse stuff in small packages to numerous different locations.

    That's why hypermarts, stores etc rent/buy floorspace - to provide an area where customers can go get the goods themselves. Easy and cheap to move the goods in bulk from a few spots to a single spot

    The flip side to the shipping cost is the cost (mostly in time) that consumers have to pay to go get things themselves. If the consumer buys a lot of things at one--as they do at supermarkets--then it's clearly cheaper than shipping to the consumer's house.

    But if you're just getting one thing, it may be cheaper for you to pay for the shipping. Mostly it depends on how highly you value your own time.

  • I noticed you go a number of clueless answers to your question, so I decided I might as well give you a more informative reply.

    "Price dumping" is a term used largely to describe selling below costs in an export market. A corportation is encouraged to export at a price below the costs of production, which the corporation's government then makes up for by giving them money, below market access to materials, or other consideration. Governments typically engage in this kind of market manipulation in emerging industries which have 1] significant barriers to entry, 2] are lucrative, and 3] will result in significant numbers of high paying jobs.

    Dumping is not illegal, per se. It is a government backed practice. However it does piss off other countries, and will typically cause them to raise tarrifs.

    Selling below cost is not illegal. It happens all the time. Every time you see a going out of business sale, or even a regular "ultra discount" sale, the company in question is probably selling below cost. All they want is some money back on the product they weren't able to move within a certain period of time.

    Even attempting to "buy market share", which is what Amazon was doing, is not illegal.

    The only case where the law gets involved at all is with what is called "Predatory Pricing". This is where a big player attempts to establish a monopoly position by driving out the competition in order to later raise prices back up. By selectively engaging in price-wars with less deep pocketed competition, large owners can establish prices at a higher level than would otherwise be. This is illegal.

    There is also a provision against using market power to stifle technologies that might cause you to loose a monopoly you might have. This is what Microsoft ran afoul of.

  • Repeat after me: Distributing books is the concept of keeping a large store of books somewhere in the central US, or keeping several 'satellite' warehouses with smaller supply, but faster time to destination, or keeping very little stock on hand and trying to do JIT from publisher warehouses. Shipping and delivery of books is the business of Federal Express. Selling books and arranging for shipping and delivery from distribution points to customer is the business of Amazon.com
  • There's a big difference between 'having all the data in computers' and 'having all the data in computers with systems that can actually talk to one another.' If your accounting system, order tracking system, warehouse system, and shipping system can't trade data easily, you can't use the data together very well, can you? And things like data warehouses are big big big expenses in both time, money and expertise.
  • Well, you undoubtedly know the joke -- and there's probably more than a little truth in it -- but it goes like this: geeks who for whatever reason boycott Amazon (for spam, patent goofiness, high prices, whatever) are actually doing Amazon a favor and saving them money. The quickest way to run Amazon out of business is to actually buy stuff from them -- especially their "loss leader" products.

    The article in the NYT seems to indicate that the majority (or at least *a* majority) of their products are loss leaders.

    IIRC they gave the example of a roll of Polaroid film. After all the processing fees and whatever else needs to be extracted from the margin, Amazon actually loses a dollar on a 10 dollar (or whatever) roll of film.

    I think, though, despite all the snideness (some of justified, yes) directed at Amazon by various communities of people (geeks, publishers, authors) we'll eventually see that the struggles of the "new economy" as defined (and solved, I hope) by Amazon will probably benefit everyone -- at least those of us involved in the "new econonmy" (whatever that is).

    And -- but I'm sure this irony is lost on more than a few so-called "geeks" -- whatever solutions Amazons may uncover will most certainly preserve a good number of tech sector jobs that might otherwise be lost due to bad and idiotic managers too short-sighted (and *dumb*) to search for "profit solutions".

  • Shipping is a big problem. (Score:5)

    by TheLink ( 130905 ) on Monday May 21, 2001 @03:20AM (#208931) Journal
    At the moment it is not cheap to ship lots of diverse stuff in small packages to numerous different locations.

    That's why hypermarts, stores etc rent/buy floorspace - to provide an area where customers can go get the goods themselves. Easy and cheap to move the goods in bulk from a few spots to a single spot.

    The five warehouses are a symptom of this problem - Amazon still got floor space in the end.

    Dell does ok because it sells profit dense items and knows how to keep inventories low, and is quite specialised.

    So there's a point where shipping is cheaper than floorspace rental, but what?

    Ebay's model is likely to be more profitable - the customers do almost everything themselves. E-bay just helps with the information - the very thing the WWW is good for.

    Cheerio,
    Link.
  • "Remember, I didn't go to M.I.T. or Purdue, but I control the checkbook here."

    This is brilliant... truely Dilbert pointy-haired-boss management at its best. In the next few paragraphs she goes on to shoot down the optimization phd guy's quantitive analysis because her hunch is (paraphrase) "it's better for us to incur huge costs storing loadsa books than to only stock popular ones we might have a chance of ever selling".

    The fastest way for amazon to turn a profit would be to turf out Ms Blake because distributing books is a numbers game...

    not_cub

  • Oh fer crying out loud... When was the last time you checked prices Amazon is charging for, say, books? If the prices charged are less than costs, it's just because costs are outrageously high; Amazon's prices are bad enough that I'd rather buy from brick-n-mortar any day (thankfully other on-line book merchants like Bookpool have better prices). Amazon is assuming its brand fools people to buy from them with premium prices... Alas, it's working. :-/
  • Hell, even the article noted this by noting that her degree is in journalism.

  • Lessons of Amazon (Score:5)

    by e_lehman ( 143896 ) on Monday May 21, 2001 @07:01AM (#208935)

    I'm not a stocks-and-business person. But following Amazon as a sort of case study has taught me a lot. (Perhaps a real financial person can correct me where I err...)

    • Stock analysts generally suck. During the big tech-stock price run-up, analysts like Henry Blodget and Mary Meeker became famous for accurately predicting the rise. Of course, after the market began to collapse, they still predicted a rise. And after everyone else said, "Gee whiz-- I guess the bubble burst" and went home, they were still predicting a rise. Turns out they weren't analysts at all, just eternal optimists who, to a significant extent, created the bubble with their relentless, baseless cheerleading. (Sadly, while screwing investors who listened to their advice, they may have served their firms well-- in the short term-- by bringing in investment banking business.) Every now and then someone comes within a standard deviation of reasonable (Ravi Suria), and it really shakes up the house.
    • The financial media generally sucks. Blodget and Meeker didn't just "become famous", they were lionized by the breathless bimbos on CNNfn and in investing magazines who apparently wanted to make thoughtful investing into a sort of celebrity gala. To this day, these media buffoons love to quote the same analysts who completely failed to predict, observe, or even retroactively recognize the tech stock bubble burst. (WSJ rocks, though.)
    • Companies strive to deceive. Amazon, like many companies, reports a thing called "pro forma" financial results. These are sort of like real financial results, except that they throw out a half dozen or so things that make them look bad, such as interest payments on their massive debt. When Amazon says it will soon make a profit, they mean a pro-forma profit, which means a loss. It's intentional deception and should be outlawed by the SEC.
    • Analysts still suck? Amazon's stock has been up recently because their results in the last quarter were better than expected. To some extent, though, this seems driven by Christmas toy sales. Since there isn't a Christmas every quarter, things might not really be so rosy. I haven't seen discussion of this in the financial press, however.

  • Re:Easy! (Score:1)

    by xp ( 146294 )
    What Amazon really needs is a time machine [newscientist.com]. When an order for a slow-moving book appears they use the time machine to order it from their wholesaler a week earlier which would give them just enough time to ship it within 24 hours.

    In fact they could send this book out in the past so that the customer got it a few days before he thought about ordering it.

    Too bad this time machine paper didn't come out a year earlier. I could have used it to get VCs to give me millions of dollars.
    --
    Good-bye.

  • It sounds a good idea in that Google should charge access for using it - but it's unworkable. Why? The moment Google says 'Pay us to use our service', you'll get all the BigCo's saying 'Pay us to index our site'...
    At one point people were willing to pay to use Yahoo, but since Yahoo started charging for listings I haven't seen anyone.
    For search engines/directories, it's practically 'make money from advertising or selling the technology'...
    Richy C.

  • Nope, nope, nope! It's the other way around.

    Haven't you ever been to a department store? Put the things people want at the *back* so you have to wade through miles of purses and perfume to get to them...

    It works, I've gone to Amazon at least once to search for a specific book and ended up following a random link and buying something I didn't expect---just acting like a good consumer I guess!
  • I'd better go auction off my mod points on ebay right away!!
  • Just sell the One-Click-Patent. Someone will buy it!
  • Companies strive to deceive. Amazon, like many companies, reports a thing called "pro forma" financial results. These are sort of like real financial results, except that they throw out a half dozen or so things that make them look bad, such as interest payments on their massive debt. When Amazon says it will soon make a profit, they mean a pro-forma profit, which means a loss. It's intentional deception and should be outlawed by the SEC.

    You're absolutely right on this point. But the quick in/out investor doesn't really care. If the company beats analyst estimates (which aren't usually accurate) the stock will generally rise and you can take your profit. Anyone interested in staying in bed with a company for awhile will want to read 10K's filed with the SEC. These reports show the complete story and can be found at several places online. One place is Edgar Online [edgar-online.com].

  • 800K Equations = Amazon.Bomb (Score:3)

    by The Mutant ( 167716 ) on Monday May 21, 2001 @03:30AM (#208943) Homepage
    Anyone else think its a little much?

    How many profitable firms find it necessary to build such a complex model?

    And no, its not because Amazon.bomb' business is so complex.

    This is just more of Bezos' BS. Stuff that will hopefully impress folks in the capital markets so he can raise more money.

    800K equations. Shees!

  • Repeat after me:

    Distributing books is the business of Federal Express.

    Selling books is the business of amazon.com.

  • But if you sell below cost, no matter the volume your losses will be above your profits...

    Doh! ;^)

    ------
    C'mon, flame me!

  • Below cost at all times?? (Score:3)

    by Abreu ( 173023 ) on Monday May 21, 2001 @02:47AM (#208946)
    How can somebody make a profit selling below cost at all times?

    Sorry if I sound incredibly dumb, but I never got it.

    I get it when you sell items ever-so-slightly above cost to make a profit selling large volumes, and still out-profiting the small guy. (Wallmart, Barnes and Noble -bricks and mortar stores-)

    I also get it when you sell something below cost (or even give away), so that you can then sell other items at a hefty profit (razors, ink-jet printers)

    Could some of the Economic/Politic/Corporate knowitalls at Slashdot explain this to me?

    Or was it just the byproduct of the "our stock price will go up no matter our business plan" sort of thing that just blew up these last months?

    ------
    C'mon, flame me!

  • Inventory carrying costs (the value of the money spent multiplied by the time stuff sits) and the labor costs of handling/sorting are expensive, but shipping is cheap. That's why French *water* sold in the US has about the same price as bottled water from the US.
  • sports teams appear to lose money everywhere all the time, then they get sold for bigger scads of cash everytime... it is voodoo accounting.

    cynical people will manipulate any system they can, yes, but it should be stated that it is the goal of accounting to give an accuate financial picture, not a dishonest one. Accountants are always looking to close loopholes in accounting practices, but it's hard to get everybody. That's what analysts are supposed to do, BTW, keep track of the "meaning" of standard accounting in each industry to decode the financial statements more accurately. They only track big companies, though.

  • accounting 101... well, maybe 99 (Score:5)

    by swinge ( 176850 ) on Monday May 21, 2001 @04:10AM (#208949)
    You are using the word "cost" where you should be using the word "costs". Let's say that you buy a book for $5 and sell it six months later for $6. Did you make money? ... it all depends.

    • What is the inventory carrying cost, e.g., how much of the rent on the warehouse is due to that book? But the warehouse is extra large to leave room for future expansion... now how much?
    • Oh, you own the warehouse... outright or mortgage? What's the interest on the mortgage? And how much could you make on your equity in the warehouse had you invested it in other opportunities you had?
    • How much management and labor, and senior management time or other central corporate (yes, that's the same as /. "corprate") expenses are due to owning the warehouse?
    • But, in the middle of the six month period you built a new warehouse, and sold the old one. So split the "cost" of the new, and the capital gain from selling the old.
    • You considered "the opportunity cost of capital", that is, what else you could have invested the warehouse money in (and the book money, too). But what is your actual cost of capital? You got the money to pay for all this stuff (the new warehouse is much bigger, and you're dumping lots of new stuff in it) from investors. Bondholders expect interest, so we know how much we pay them, but they don't generally lend money to risky businesses like ours. Based on our current share price, vs our cash on hand, is it "worth it" to sell more shares to raise more money?
    • How long can we hold out at our current rate of expenditure? There is no "current" rate, all the numbers are growing every month, take that into account.
    • Oh, yeah, don't forget what are the "terms" we buy the books on, vs. those we sell on: how long after we got the book did we actually pay for it (accounts payable), and how long will take after we ship to get the money from the customer (accounts receivable). Even though we sell for more than we buy for, since we are growing, it turns out that we owe much more than we are due.

      Oh, and set some money aside to cover returned merchandise... how much?

    • Was the book sold to a new customer? Our marketing people tell us that a new customer will likely buy another $400 of merchandise in the next year, vs an existing customer's expected $200. How much of our advertizing and marketing costs should be applied to this book, vs how much the profit from expected future books sold to this customer?
    • If purchasing habits are so predictable, shouldn't all that expected future profit accrue to this book which did the heavy lifting?
    • What if we can charge this customer a higher price for those future books than they would ordinarily pay? (we just need cookies, and one click... STOP! I'm not talking about the ethics of it, or the public relations if anybody found out... books were bought and books were sold, we're just trying to figure out whether we made any money. Later we can decide whether the programmers of that system are more or less ethical than either the marketers, or the customers who take advantage of our generous return policy, never even thinking about what shipping costs us. Certainly all are less moral than we accountants who are honestly trying to arrive at the right numbers here.)
    • Of course, there's lots more...

    advanced accounting is a highly technical and extremely fascinating subject. 101 is kinda boring, but it's the only way to get there... To sum up, there is no "correct" answer to whether you made money from the $6-$5 book. Over periods of time, the entire firm can be seen to make money or not, but it's always in the context of what came before and what position they'll be left in for the future.

  • Advertising perhaps ?

    If you sell things below cost, you will probably sell quite a lot. Thus, you get many hits, thus you can make money anyhow.

    Obviously this has not happened yet, since they are trying to make a profit...

  • Perhaps if you read the entire first row of the post next time you reply to it ? Where did advertisement revenues go into your calculation ?

    Assume your example...
    Selling one book costs us $5, we sell it for $4.50.

    For every book sold, US Mail sponsors you with 50 cents, since they make money on people buying stuff via mail. Then, for every book sold you have 100 hits on your webpage. You get 1 cent for every hit.
    Now the calculation looks like this (for one book sold)

    Purchasing the book : - $5
    Profit from sale : + $4.50
    US Mail sponsor : + $0.50
    Ad's on WWW-page : + $1.00
    ------
    This sums up to : + $1.00

    Of course all figures are higly fictive, but you should be able to get the "point" of it.

    In this way you will "loose" money for every book sold, but make enough money to cover that loss from fringe-business, such as advertising.

  • Dr. Allgor's analysis is simple, but to Amazon veterans it is heretical: Amazon should increase its holdings of best sellers and stop holding slow-selling titles.

    Man, I'm so impressed about the 800k equation guy cranking out such a word of wisdom.

    Instead of stating the obvious, Amazon management should better consider the pissing-customers-off factor.

    When they lied to me (and 10'000'000 others of their customers) - forcing me in the process to send a certified letter - they sure as hell lost my business for all eternity.

    You get precisely one chance to screw - or even be dishonest with - your customers.

  • I think if they were to redesign their site, according to a simple law of organization I choose to call "Common sense", they would probably start gaining a profit quicker.

    They can't do that. If their site was better organized, they might have more sales. And if they have more sales, they'll lose more money!
  • "In some cases, it is raising prices or eliminating unprofitable products"

    This is scary - they might end up selling only porn videos.
  • Except the only thing people got used to was buying below cost.
  • Amazon makes not a dime on 'Advertising', in it's most traditional sense. They only push stuff on the site that they themselves sell (at below profit cost). They also have small 'ads' to companies they are partnered with (own?) like evineyard, drugstore.com..etc. This company operates 100% via pretend money. It's astounding.
  • for those of you who don't have one:

    username: slashdot_reader
    password: slashdot


    --
  • (e-gold tipjars) can also be a solution to the "Napster problem," IMO, since if you listen to Courtney Love and other musicians, they get far less than a buck for a $15 CD.

    it's called Fairtunes.com [fairtunes.com]

  • You get precisely one chance to screw - or even be dishonest with - your customers.

    Unless you're Microsoft.
  • Can someone tell me what he difference between "selling at prices that do not cover costs" and "price dumping" is ?

    Is dumping illegal ?

  • The ever-popular cipherpunk/cipherpunk also works (note the odd spelling). I think cypherpunk/cypherpunk also once worked, but they appear to have deleted that one.

    -db

  • Re:Below cost at all times?? (Score:3)

    by kyz ( 225372 ) on Monday May 21, 2001 @03:45AM (#208962) Homepage
    How can somebody make a profit selling below cost at all times?

    Well, you know the idea of the loss leader. Amazon.com used to have this loss leader, called 'inventory'. They used it to promote the purchase of something else in the store, called 'shares in Amazon'. These were sold with huge profit margins.

    Or was it just the byproduct of the "our stock price will go up no matter our business plan" sort of thing that just blew up these last months?

    This article is titled 'Amazon tries to turn a profit' for a reason, y'know....
  • Well bear in mind that they had to appear aggressive in order to keep the faith on Wall Street. I personally think that the Amazon model is a solid one, but with no capital they are gone. If they can turn a profit even in this "changing" economy, they can prove to Wall Street they are here to stay and that they deserve the investment. Otherwise they are toast like all the legendary Dot Coms who weasled away the venture capital I would have received for sending a Chipmunk to Mars in a milk carton. But I'm not bitter.
  • That'd work, but really, Amazon never ceases to amaze me. They went out and hired a PhD from MIT to tell tham that:
    Amazon should increase its holdings of best sellers and stop holding slow-selling titles. (It would still sell these titles but order them after the customer does)
    Gee. I could have told them that, and it wouldn't have cost them as much as hiring a PhD to figure it out. You'd think that venture capitalists would insure that business people are placed in the roles where they are needed, rather than letting technology geeks and their friends run the show... In fact, most venture capitalists have done that, but not,a aparently at Amazon. I guess it's possible that's the reason Amaon is one of the few .com outfits still around... Maybe venture capitalists don't know everything either (...NO! Herecy!). It'll be interesting to see how this all falls out over the next 9 months...

    --CTH

    --
  • Amazon doesn't really care about their customers all that much. They talk a good game (Bezos particularly) but those dumb patents tell the tale. I had spent thousands there and I am pleased to say that I am responsible for losing them tens of thousands in sales since the patents. By the time my students are counted it may be hundreds of thousands.

    I sent them e-mail letting them know my feelings before I stopped buying and before my company stopped buying. They still spam me!
  • They do claim to be making a profit selling books, for merchandise that they stock perhaps they should just stick with books and such.

    Get rid of the electronics, I am not buying anything from there mainly because of their limited selection.

    Amazon just needs to realize that they cannot be all things to all people. The internet will reward those who concentrate on getting one thing done and done right.

    If they can't make a profit now, just how do they plan to make one once the government starts taxing internet commerce? How much more of a free ride do these companies need?

  • Re:Below cost at all times?? (Score:3)

    by OpCode42 ( 253084 ) on Monday May 21, 2001 @03:21AM (#208967) Homepage
    Ack, didn't you attend dot-com economics 101?

    You dont make money over the web by making a profit, you make money by the volume of product you sell! More sales = more money coming in! Doh!

    ;-)

  • Interesting... (Score:3)

    by smari ( 257143 ) <spm.vlug@eyjar@is> on Monday May 21, 2001 @03:00AM (#208968) Homepage
    The idea of Amazon not allready making a good turnover is pretty neat, yet they are obviously not. And come to think of it - I can understand why. All right, they've got quite a good store going on there, but HOW THE HELL are people supposed to find things, expecially when going there for the first time! I think if they were to redesign their site, according to a simple law of organization I choose to call "Common sense", they would probably start gaining a profit quicker.
    But theres annother problem: The laws of information architecure are so simple when it comes to this: You cannot create a perfect database, whereas for each item of information in the database, the complexity of the database itsself goes up.
    They may therefore be better off the way they are today... who knows?
  • I doubt amazon brings in much money due to advertising! Its more like, "lets sell everything below cost and build a loyal cusatomer base who knows us for having the best prices anywhere and then slowly raise prices and hope the customer base doesnt notice. They're throwing millions away to ensure that they get a reputation for low prices.
    ---
  • (and if you studied history, in most countries the paper USED to be backed by the real metal, instead of just by faith!).

    And if *you* study history you'll find the endless problems caused by having a currency whose supply was limited by the amount of precious metal metal that 'backed' the currency.

  • 1) No touchy, feely. You can't actually touch or see what your buying and so, it doesn't seem as real as it is at Wal-mart.

    2) No Face to Face Confrontations. If you have a question, you have to send an e-mail, use your fingers to chat with them, or some other neanderthal form of communication.

    3) Delay of sales. Shipping takes time and, since time is money, this will cause loss of sales because people are willing to pay $5 more to have it today.

    4) Shipping > Sales Tax. Most goods bought on the internet are around the hundredish. Unless it is really light, $14 shipping on a $50 purchase is outrageous when I can go to the mall and get the same goods at $7 more but only $3 taxes and still save $4.

    5) Cash vs. Credit. I carry cash most of the time because it is more dispensible. Credit Cards are less dispensible and less secure then cash(and always will be). Their are no surcharges or interest rates(except inflation) on cash and so people feel more secore with it.

    If Amazon.com could overcome these obstacles, they would not only make a profit, they would build their own goldmine.
    -----
  • The major problems with all the dot-coms are that they are run by a couple of geeks that have no clue what so ever.

    Just look at all the open source zealots here on slashdot that actually thinks service&support is a working business model. Grab a calculator, check out any software development company and you will see that bankruptcy is what happens if they try to live on service&support alone.

    Just take salaries (it is a hell of alot more but anyway). A person typically costs twice his/her salary. Say a company develops a piece of software with 100 employees, each one earning around $3500/month.

    You do the math.

  • Profits fo Amazon!? (Score:3)

    by mscout1 ( 453409 ) <mscout1@@@uic...edu> on Monday May 21, 2001 @12:27PM (#208980)
    And so Amazon makes a profit.
    At the next stockholders meeting, Satan shows up.
    Instead of his usual pitchfork, he holds a snow shovel. He glares at the CEO, shakes the ice encrusted shovel. and shouts:

    "THIS IS YOUR FAULT ISN'T IT?!"

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