Will Amazon be profitable? Or is it a question of when it will be profitable? Even with a lost of $39 million last year, investors have placed a lot of value on the company (AMZN $359.62). The attached articles and information blogs provides a little more insight into Amazon's strategy to "dominate" the global retail market with its' "profitless" business model.I believe that Amazon approaches profitability with a long term perspective (Although no one knows how long is long term). To the extend that Amazon on makes only a small margin from the products it sells, and sometimes, even a lost, it does make up on customer acquisition. Amazon is slowly building and acquiring competencies while cutting off its competition. It understands that the customer is of most importance and is buying its time while it slowly weeds out the competition. Of course, the most amazing part is that investors believe in the future value that this would bring. But in the mean time, investors are sustaining Amazon's profitless business model.
Article links:
http://www.eugenewei.com/blog/2013/10/25/amazon-and-the-profitless-business-model-narrative
http://ben-evans.com/benedictevans/2013/8/8/amazons-profits
http://www.theatlantic.com/magazine/archive/2013/11/the-riddle-of-amazon/309523/
No comments:
Post a Comment