Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers. The shareholders put up the equity, and instead of owning a claim on a steady stream of fat profits, they get a claim on a mighty engine of consumer surplus. Amazon sells things to people at prices that seem impossible because it actually is impossible to make money that way. And the competitive pressure of needing to square off against Amazon cuts profit margins at other companies, thus benefiting people who don’t even buy anything from Amazon. It’s a truly remarkable American success story.
But if you own a competing firm, you should be terrified. Competition is always scary, but competition against a juggernaut that seems to have permission from its shareholders to not turn any profits is really frightening.
That’s Slate on Amazon’s continuing run of horrible financial results that saw their shares magically rise in value this week.
“It’s much easier to sell goods at cost the way Amazon does than sell goods at a 40 percent margin like Apple,” said Colin Gillis of BGC Partners. “Once you’ve trained your customers to buy at cost, it’s difficult to train them away from it.”
Still, Mr. Gillis said: “Who’s going to undercut Amazon? They’re only making half a cent on every dollar. Who can run a business at less profit?”
And that’s from the NYT.
I know Amazon is expanding to the point where every human on earth buys and sells everything they own through the company, but I also half expect it to put every other company out of business before imploding overnight, leaving behind a barren wasteland, a sort of post-consumer apocalypse, where gangs of ragged survivors trawl the endless drifts of empty cardboard packaging looking for scraps.