To discount Amazon as something less than a major retailer is not reality as their retail sales are astronomical. It took a long time to get there, to be fair, but in the last five years they really exploded in sales volume as they scaled everything upward. Target Corporation does approx. $77B a year in total sales. Amazon's revenue is split almost 50/50 between retail and cloud computing, but their retail is massive. This last quarter Amazon brought in $92B in revenue. Half was AWS (Cloud Computing and other business services). So you're talking about over $45B in retail sales directly sold by Amazon - plus whatever was sold by third parties. Their retail sales for the 90 day quarter - in what was by all accounts a terrible underperformance - was 58% of what Target brings in over an entire year with their 2000+ store count.buckguy wrote: ↑October 30th, 2021, 6:03 am Amazon is a software company---the retail feeds data and cash. They don't have to function as a normal retailer and can fail at it. The book stores don't seem very successful. They were not the first online retailer or even the first online bookseller---there used to be a book seller based in Cleveland that pioneered online only but they didn't have the capital or software to adapt and grow with the web. Among other things, Amazon was always a software business and they figured out how to do online retail with minimal human activity and they're trying to do it with brick and mortar platforms. They lost money for years but were a Wall Street darling. They are now big enough that they can lose money on some things, as long as their most profitable business (software) is thriving.
Walmart is analogous in the sense that they are basically a logistics company that uses stores to push out merchandise. They got there in a different way than Amazon, starting as a conventional retailer that was anti-labor and driven to increase efficiencies from a normal way of doing business. Walmart is pretty rigid and that kept them from really exploiting the web until surprisingly late. Ultimately, their ham fisted approach to merchandise (though shalt buy only one size of pickles) and their need to squeeze more profits out of a lean model of operations has put them in an awkward position of having few options for growth and a horrible image among many shoppers.
No one really needs to shop at either place on a regular basis. I use Amazon mostly for downloads and things I truly can't find elsewhere and I was a very early adopter of them. I only go to Walmart out of the same kind of necessity or out of curiosity to see how they're functioning. I went to Amazon Fresh to kill time waiting for a pizza across the street. I'm not missing much with either. Neither is the bargain they once were and they both are predatory businesses with too much power and distorting effects on the marketplace. OTOH, markets are always distorted and looking for who/how is more useful than acting as though markets are organisms we can't stop.
The challenge Amazon is facing is that they're reinvesting all of that retail profit into capital expenditures - new store builds for Fresh, new delivery hubs, new distribution centers, and more airplanes. So retail becomes a breakeven enterprise by design. At this time the only profit is coming from AWS which is Cloud services. It takes a lot of data centers which are expensive to equip and operate to bring in that revenue, so it is not as profitable as you might expect.
So if Amazon retail misses sales plan, which it did this last quarter, then it leaves them in a rough place because the projected profits are already spent and there is little the data business can do to offset. Hence the strange accounting activities such as taking a building in Huntington Beach, CA - rushing construction 24/7 to get it done early - then mothballing it at the end of the project in an attempt to roll the capital expense into a later quarter.
A company doing $45B in direct retail sales either online or in stores is a massive, massive retailer. The only retailers larger at this point are Walmart, Home Depot, and Costco.