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Amazon Loses $437 Million in One Quarter. More Losses to Come.

Written by Gary North on October 24, 2014

Amazon’s policy has always been to lose money. Lots of money. In rare years, it breaks even. This is called gaining market share.

Investors in Amazon stock used to see their shares rise. It was a great investment 15 years ago. But not this year. The stock is down 22%.

Amazon’s customers save money. They order all kinds of products, although not Amazon’s Kindle Fire. So, the company has introduced new models of Kindle’s tablets. “If at first you don’t succeed, try, try again.” I buy from Amazon at least once a week. I save money at the expense of Amazon’s shareholders. The longer this goes on, the better . . . for me.

I do not discourage this policy. I encourage it.

Why Amazon’s investors think it is a good way to make money, I do not understand. But they don’t have to explain it to me, as long as they keep letting Bezos do it. They buy and hold, because they dream of profits someday. They dream of the day when the founder, Jeff Bezos, decides to reverse policy, hike company commissions, increase profit margins, and let investors bask in dividends. All he has to do then is keep the firm profitable in a way 100% different from the way he has kept it unprofitable for two decades: volume.

It’s like marrying a man with one personality type on the assumption that he will soon adopt a different personality type. Women do it all the time.

This is the new age of retailing: buy low, sell lower. As long as people keep buying new issues of Amazon’s stock, the company can keep expanding market share. It has money to burn.

Burn it on me! Please!

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5 thoughts on “Amazon Loses $437 Million in One Quarter. More Losses to Come.

  1. Ironic. Today's newsletter is about two stores. One was my favorite fifty years ago. The other is my favorite today. When my wife and I were young with small children, the Sears catalog was our shopping bible. We could pick out what we needed, phone in the order and pick it up at the store. No time or gasoline wasted. Over the years the Sears business plan wasted away. Now, since we don't get around so well, Amazon has become our favorite. We can order anything and it comes right to our door. Love it. But they have a scary business plan. Some time they will follow Sears and waste away. Another genius with another business plan will come along. And so it goes…. See my blog at http://cranky-conservative.blogspot.com

  2. Good one. So absurd that people invest money in a company that intends to lose money.

  3. Buddybear53 says:

    How can anyone make a profit offering free shipping. Shipping cost have escalated to a point where E-bay is dead. It costs as much to ship a teddy bear as it does to buy it.
    I am not surprised the can't make money.

  4. oh, its not "free shipping" at all. The seller has to pay it, in addition to Amazon's hefty "referral fees". I sell on Amazon, though not so much of late. Other sellers are so desparate for some cashflow they are selling products that cost me ten bucks and should sell for twenty, but they sell them for twelve, maybe fourteen. Subtract Amazon's fees, they are maybe making two bucks, but then Amazon NEVER gets enough from the buyer to pay for the full shipping charges, which eliminates most of the two bucks. I guess these folks are operating out of their ktichen table and are happy making a few bucks a day. Amazon fail to realise they are slowly strangling the goose that is laying their golden eggs. The only items I sell much of are discontinued items still in demand, or items temporarily on backkorder from the manufacturer and I happen to have some. On those I can sell and make a viable margin. Hardly anyone sells at MAP, not even Amazon (thus in violation of manufacturer's terms of sale). I can hardly wait to get my own website up and running, and have done with these Amazon jungle bunnies.

  5. 1baronrichsnot1 says:

    I love buying from amazon! I usually just chec there first and last,the order!