Saturday, August 10, 2013

The Miracle that is "Amazon": Brief Thoughts

I was around town today and happened to pop into a Garage Sale after the longest time.   I picked up a nice Big Bertha and a "Successfactors" Murial for my home office when I ran across somehow who used to work for Staples.  He had been with Staples for the longest time and recognized me.

I had a chance to chat with him and he reflected upon how a whole bunch of folks were laid off from Staples--including the long time Store Manager (Karl) that I had known for a number of years.    This led me to reflect upon the state of retail today and how Amazon and Walmart seem to be eating everyone for lunch. But here is what makes things especially interesting for Amazon as this "snapshot" I saw from Business Insider so eloquently notes:

Amazon is an excellent company for a number of reasons. 
It offers a great product with great service. It's willing to experiment. And, if you have a subversive streak, you have to admire how it confounds people. 
The most confounding thing about Amazon is that it doesn't seem to want to amass much, if any profit. 
Instead of collecting big profits, CEO Jeff Bezos prefers to take whatever he makes and plow it right back into the company. 
In a way, it operates like a big startup. Just keep investing for growth.
As a result, Amazon operates at break-even, or at a loss occasionally. Investors are okay with this. That's why the stock goes up after earnings that show losses. 
The idea is that eventually Amazon will make money.
Amazon says that it will "check in periodically" to make sure it can still make money. 
This model seems to drive people crazy. They just can't wrap their mind around the idea that Amazon can operate at break-even or a loss and get rewarded for it. 

Amazon only operates at either breakeven or even loses money.  Yet, people seem to continue to love Amazon.      This Assistant Manager seemed to understand the reality when he reflected how he bought a case from Amazon for $ 3 when his own store sold it for $ 15.      It was ironic as Staples went thru this how Mitt Romney used to marvel at Staples being one of his "Success Stories" during the election.  I am sure he did not know that an Amazon will be out there with a different mind set.  

Jeff Bezos has also struck out yet again with his audacious move to buy the Washington Post.      I could not help but wonder what Bezos will do.  He's doing it in a "private capacity".   But if he is able to do to Book Publishing, Electronics, Technology, Groceries and whatever else one could think of to newspaper publishing, the sky will be the limit.


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