Amazon and the “profitless business model” fallacy — Remains of the Day
#Amazon wants to eat global retail. (...) Given that giant mission, Amazon has decided to continue to invest to arm itself for a much larger scale of business. (...) the amount of capital required to grow a business that has to ship millions of packages to customers all over the world quickly is something only a handful of companies in the world could even afford. (...)
Amazon has seen that lowering its shipping costs and increasing the speed of shipping items to customers is like a shot of adrenaline to customer’s propensity to buy from them, and so it has doubled down on building more and more fulfillment centers around the world. When I joined Amazon it had one fulfillment center. Today it has dozens just in the US alone, and I would not be surprised if it has more than 100 fulfillment centers worldwide now.
That is a gargantuan investment, billions of dollars worth, and it takes a significant bite out of Amazon’s free cash flow.
(...) There are very few people in technology and business who are what I’d call apex predators. Jeff is one of them, the most patient and intelligent one I’ve met in my life. An apex predator doesn’t wake up one day and decide it is done hunting. Right now I envision only one throttle to Jeff’s ambitions and it is human mortality, but I would not be surprised if one day he announced he’d started another side project with #Peter_Thiel to work on a method of achieving #immortality.
hé hé ! #disruption te voilà…
If I were an Amazon competitor, I’d actually regard Amazon’s current run of quarterly losses as a terrifying signal. It means Amazon is arming itself to take the contest to higher ground. The retail game is about to become more, not less, punishing.