Author Topic: How big is Amazon? How big will it become?  (Read 1436 times)

PonoBill

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How big is Amazon? How big will it become?
« on: September 17, 2019, 08:32:13 AM »
From one of my favorite tech news sources--AdaFruit:

Amazon is in the running for the biggest company in the world. It’s already hit $1 trillion in market cap (it’s at around $894 billion right now) — only Apple and Microsoft can make such a claim. They are well known as *the* retail giant, but their business reach goes well beyond that. Even if you have heard of Amazon Web Services, you might not know that “…with more than $25 billion in revenue just from Amazon Web Services last year, Amazon is the world’s largest cloud services provider.”

It can be hard to keep track of everything Amazon has a hand in, but thankfully BuzzFeed put together a list of the known businesses they own. The famous ones like Whole Foods and Zappos are on there, among a lot of lesser-known retail-related brands, but they own a wide and diverse collection of businesses: a wind turbine farm, a lending company, a video game production company, healthcare providers, and more. They even own IDMB!

Amazon will make up an estimated 38% of the US e-commerce market this year, according to the online commerce research firm eMarketer, and already dominates 67% of the online books, music, and video market; 46% of the online computer and electronics market; 45% of the online toy market; and 34% of online furniture sales.

The antitrust accusations against Amazon have been picking up speed, and while its valuation alone has been remarkable, when you take the BuzzFeed list in as a whole, you can see where some of the criticism is born. Amazon is not only massive — it's entering more and more markets and it’s not clear where it won’t go. This list will likely grow, and if political pressure mounts this will be an important resource to come back to.

The buzzfeed list: https://adafruitdaily.us10.list-manage.com/track/click?u=86903b65c84293425f40fa9a5&id=fa3017d596&e=8dce67b92e
« Last Edit: September 17, 2019, 08:35:42 AM by PonoBill »
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eastbound

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Re: How big is Amazon? How big will it become?
« Reply #1 on: September 17, 2019, 09:02:02 AM »
it's a ponzi scheme of sorts--they cannibalize businesses, losing seemingly unlimited investor $$ to do so, and then control those businesses, and then raise prices to pre-cannibalization levels--but they arent really profitable, despite the breakneck (hah) growth

kinda like home depot---always stock up when they open a new one in your town---prices wont be that cheap once mom and pop are outta business, working minimum wage
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Bean

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Re: How big is Amazon? How big will it become?
« Reply #2 on: September 17, 2019, 10:43:54 AM »
Could not agree more. 

Last year on "book" net income of over $11b they paid no tax.  That means they are deferring a ton of tax through tax timing differences, (which of course will reverse at some point in the not too distant future as capital expenditures slow down.)

Going back to the failed NYC deal, Amazon claimed the city was foregoing 25k jobs with average annual earnings of $150k.  Not even sure how that's possible since the average annual wages at Amazon is apparently south of $30k.

Beasho

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Re: How big is Amazon? How big will it become?
« Reply #3 on: September 17, 2019, 12:59:50 PM »
One of my Forest Gump moments was in business school in 1997.  We were doing a case on a little start-up named Amazon. 

50% of your grade was on class participation.  I ran the numbers on revenue, cost of goods and expected profit because that was how I survived business school.  I raised my hand and said "There is no way this company can make money and survive selling books.  They will have to do something else."

Jeff Bezos was sitting in the classroom taking notes.  At the end of the case he stood up, gave a little speech and thanked us for our perspectives.  Mmmmmmffffff!

Here is a nice graphic on 10 year history of Market Captialization:




Beasho

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Re: How big is Amazon? How big will it become?
« Reply #4 on: September 17, 2019, 01:02:54 PM »
Here is another longer term perspective on Revenue.  Interesting to contrast vs. Market Capitalization above:

Only Apple and Amazon in the Top 10 of Revenue:

« Last Edit: September 17, 2019, 01:07:24 PM by Beasho »

Bean

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Re: How big is Amazon? How big will it become?
« Reply #5 on: September 17, 2019, 01:33:42 PM »
Here is another longer term perspective on Revenue.  Interesting to contrast vs. Market Capitalization above:

And that is of course because the value of any business is ultimately predicated on future cash-flows available to the investor.

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Re: How big is Amazon? How big will it become?
« Reply #6 on: September 17, 2019, 02:34:40 PM »
One of my Forest Gump moments was in business school in 1997.  We were doing a case on a little start-up named Amazon. 

50% of your grade was on class participation.  I ran the numbers on revenue, cost of goods and expected profit because that was how I survived business school.  I raised my hand and said "There is no way this company can make money and survive selling books.  They will have to do something else."

Jeff Bezos was sitting in the classroom taking notes.  At the end of the case he stood up, gave a little speech and thanked us for our perspectives.  Mmmmmmffffff!
When I went back to college in the late 90's, I had a young guy in one of my classes who had just got a job working for Amazon. I told him good luck with that. At the time I had an online sales and distribution company for cold form steel. We fabricated and sold construction related steel products and tools. We did well until the 04' steel shortage shut us down. We couldn't get the steel coils we needed because China was buying up all the steel and paying a premium. The Amazon business model just seemed like a weak middleman position. I figured another .com bust ready to happen. Apparently not. BTW, I love my Amazon Prime:)

PonoBill

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Re: How big is Amazon? How big will it become?
« Reply #7 on: September 17, 2019, 10:38:44 PM »
Back when the dot com bubble was roaring the private equity firm (TA Associates) that invested in us dragged me to an investor conference in San Francisco to watch companies pitch big investors en masse. TA was tired of me talking about profit (we had a lot) and wanted me to get religion: Profit bad, growth good. I sat through a bunch of presentations where any pitch team that mentioned profit was immediately discounted. If you are making a profit you aren't optimizing your opportunity for growth. OK, I got it. Then the bubble burst and all those fast-growth folks were back living with their folks. I felt vindicated, and then I thought it through. Profit is bad if there is an opportunity for growth and the business model is valid.

Is Amazon a Ponzi scheme? In your dreams, Eastbound. If they don't get regulated into a coma they are on track to own the means of consumption if not the means of production. They will soon be measuring results in percent of GDP (if they don't already). Only a fool would open a store in a town anywhere to sell stuff, unless the stuff or the value they add to the stuff is unique to their store.

Instead of Facebook doing Blockchain currency for no particularly good reason (what do they have to sell??), imagine Amazon doing so. Suddenly a significant percent of the world's transactions take place without sovereign currency and the ability of governments to gauge the value of transactions. What do you tax? Information flow? Take the model and carry it forward. Transactions don't need money. they need an exchange of value. Who could do that other than Amazon? No one.

Does it matter that Amazon and Tesla, and any other company with an opportunity for huge growth with a valid business model doesn't make a profit? Yes, it does. If they make a profit they didn't grow as fast as they could have, didn't build as much advanced infrastructure as they could have, didn't erect as effective a moat as they could have. Does it matter that Uber won't make a profit? Yes, it does--their business model has clearly limited potential, so the only way they can remain a company is to either pivot into something that offers more potential or be immediately profitable.

Profit is for wimps.

I'm not a fan of Amazon BTW, I think they are ultimately destructive. But they are what they are. A huge and growing element of life in the disrupted age.
« Last Edit: September 17, 2019, 10:56:45 PM by PonoBill »
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Re: How big is Amazon? How big will it become?
« Reply #8 on: September 18, 2019, 02:58:46 AM »
Pono

I am always amazed at how you are able to distill things down to a the point that I can understand. You seem to have been able to arrive at a detached viewpoint that produces clarity.

“Profit is bad if there is an opportunity for growth and the business model is valid.”

Very simple and thought provoking. You can see how share holders may become “blood sucking leeches” that can destroy good companies.

Ride on Bill!

Cheers

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Re: How big is Amazon? How big will it become?
« Reply #9 on: September 18, 2019, 03:07:11 AM »
Perhaps not a classic pyramid but i would agree that it certainly has that feel of a “ponzi scheme of sorts”.  The virtual storefronts are indeed “layered”.

The mechanism in the tax code for cashless transactions (bartering) is FMV and the burden of proof is on the taxpayer (in this case Amazon and the individual storefronts).  It will be interesting for sure.

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Re: How big is Amazon? How big will it become?
« Reply #10 on: September 18, 2019, 03:23:18 AM »
Even on the retail side Amazon is much more than a website.  Third party retailers are the largest part of that business.  Amazon is in many cases the primary financier, the payment form and processor, the third party fulfillment center, the advertising agency, the shipping company (trucking company and airline company)  not to mention that they are also the competitor with Amazon brands etc.  Many of those and other companies also rely on Amazon for their non Amazon website hosting (through AWS), Amazon Pay for processing, Amazon loans for financing, etc.  I would venture that all online retailers use SWS in many ways to complete every transaction.  That is to say that Amazon has a piece of the pie for virtually :) every online sale now (much larger than just amazon.com sales). 



« Last Edit: September 18, 2019, 03:24:55 AM by Admin »

eastbound

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Re: How big is Amazon? How big will it become?
« Reply #11 on: September 18, 2019, 05:42:56 AM »
reminds me of company stores in industrial towns (way back when we had functioning industrial towns!), where all transactions happened in company "script" (steinbeck), with the company controlling all elements of that  microcosm economy--food, shelter, medical, clothing and retail goods--blah blah

only amazon's not a company store---it's the whole damned world's store---whatever, i am a prime member---dont tell my daughter the writer!!

much as i am resigned, it saddens me how these huge corp entities have completely delocalized our country--and, yeah, it's prolly just tough luck, move on--but it's changing our culture in huge ways that aint always so great... horse long since outta barn tho

no more mom and pop businesses--no more local bookkeeping and accting services, no more local lawyers, no local designer and builders of stores blah blah............replaced with a few working-poor-paylevel jobs

point taken, PB--re growth vs profit--but, with many of these entities, it's all about investor perceptions--often, well into an entity's start cycle, if entity couldn't go back to the investor well, it would fail--at what stage can it be characterized as viable or not??

i cant buy these types of names as individual stox--have plenty imbedded in index etf's etc--but the dinosaur in me resists actively buying these

think WE---what a joke---pls explain why this POS is other than a pile of shitty long term comm'l lease liabilities, with no other side of the bal sheet --a failing WE will signal a serious downturn in comm'l RE--sell REITs when WE's shit starts to hit fan

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Re: How big is Amazon? How big will it become?
« Reply #12 on: September 18, 2019, 06:43:17 AM »
EB, 'Company towns' were almost before my time - a command economy. I was raised in an era where all your shopping was done 'downtown'.  There was a central 'drag' with appliance stores, men's and separate ladie's stores, bakeries and often a 'Department Store'.  Even medical services were done in <10 story buildings.  Every town in the Midwest had a predictable, similar layout. Only things like hospitals and schools that had large footprints were on the edges. 

I'd venture that the bulk of you were raised during the heyday of the Mall.  The Mall was a scourge to business downtown. They had established comfortable cashflows and now a bunch of carpetbaggers was sucking the air out of Main Street.  Now, look at the Mall ... a ghostland with crapo shops and failing giants packed with mediocre inventory.

I love Amazon. There is no-F'ing-way I would have access to much of the stuff I buy without it.  Even a 2hr ride to a midsize town or 3hrs to a large city would have me wandering all over the place looking for specific pieces - likey to hear; "We can order that."

I can understand why someone who got fat on their local market is upset - they feel entitled. SEARS felt entitled. Walmart felt entitled. GM (yeeech!) still feels entitled.  I am waiting for a seachange in insurance, real estate, finance and other 'rent seeking', entrenched institutions.  There is a lot of deadwood in our economy.  Press on Amazon.

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eastbound

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Re: How big is Amazon? How big will it become?
« Reply #13 on: September 18, 2019, 07:27:38 AM »
centralization is unarguably more efficient than old school, and internet combined with improved transport and delivery make this feasible

and i know my lament that locals get hurt is tired--the wheels of progress always grind up innocents

but amazon crypto transaction currency??

nah i dont like that---enough is enough
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PonoBill

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Re: How big is Amazon? How big will it become?
« Reply #14 on: September 18, 2019, 08:28:29 AM »
Stand by, everything is going to get a lot weirder.
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