Ok sure. Everything could be different in generational time spans. There could be a technological advancement like another internet that changes the way society works.
In that time, I’m also expecting a resurgence of lizardmen from beneath the surface though. So we will see how that goes.
Matt, I think you should change your username to Matt Likes Amazon.
^ boo
investing without thinking about how your investment is going to go sour and when, isn’t really investing. just saying. i don’t think i’m that far off with how things will transpire. if we see manufacturers gaining control in media and where brand value is strong, i think there will be trickle down to those with less easily deliverable products and those with less brand value driving sales.
also, i’m fully prepared for King Gekko and his band of lizardmen. my pointy stick and tannery businesses are counting on his arrival.
Personally, I’m ambivalent about the company. While I see continued opportunity for growth, and I understand that their strategy is to increase their market share, I feel that there are quite a few issues that make Amazon, at best, a hold position.
Over long, long term one will expect to see increased income inequality, which will likely affect the retail industry overall profits. The biggest hit from income inequality will be to discretionary income, which is the area that is assumed will lead to increased profitability for AMZ. The stuff consumers buy on AMZ is generally gadgetry, tools, and entertainment products. You can see for yourself that best sellers on Amazon are hardly things that you would consider essential in American households: http://www.amazon.com/Best-Sellers/zgbs. Amazon is still a small player when it comes to grocery products and produce (which are essential), and it’s unlikely that they’ll ever best the brick-and-mortar stores in this product segment.
Some people on this forum say that AMZ could easily increase its profits by increasing the price of their products by 2-5% across the board. First, AMZ is smarter than that. They will not increase the prices indiscriminately, but rather change prices based on fluctuating demand&supply for each specific product. Second, we talk about this possible increase in profits as if AMZ will implement this practice in the future , when they are and have already implemented this. Haven’t you seen how prices on their products go up and down based on whatever parameters their algorithms see as important? See an example of this here: http://www.businessinsider.com/amazon-price-tracking-2014-8.
What does this mean? It means that one should not get their hopes up because of a possible 2-5% increase in product prices that AMZ could implement in the future. Their current growth already reflects this increase.
the top selling products are cheap as hell. worsening income inequality isn’t going to cause a major decline in sales or slow growth by much if at all. as income inequality is a hot topic and likely will be until something is done, i see the trend of income equality reversing as greater redistribution occurs. we’re already seeing this and i could argue, with more confidence, that income inequality is actually a tailwind for AMZN rather than a headwind.
of course when we say, raise prices by 2-5% across the board, we mean on average. the effect is the same.
AMZN can choose to treat its engineers better within a week. i don’t see this being a major issue. losing more warehouse jobs to robots is a good thing. especially for engineers who get stock for comp.
Greater redistribution? I’ll let the data speak for itself: http://www.r-bloggers.com/the-unreported-war-on-americas-poor/
This doesn’t answer the fundamental question: Is the raise in prices a future expectation or is it something that AMZ already has implemented? If it is something that AMZ already implements/implemented, then you can’t expect a future boost in growth due to raised prices.
It can choose to treat them better, but it doesn’t. And when it doesn’t, its reputation goes down the drain. When your reputation goes down the drain, it is very hard to convince regulators and consumers that you are a reputable company (in the sense that you treat your empoyees well). AMZ is already stuggling to maintain its talent because of high turnover.
do these “income” numbers include EITC and other low income benefits? as this website clearly has an agenda, i’d expect it doesn’t include these redistributive efforts. i don’t see any explanation of what income is on that webpage. the top marginal tax rate is up ~8% from 10 years ago and minimum wages are set to spike in a meaningful portion of the country. also, even if those charts include such things as EITC and other benefits and we assume minimum wage hikes over the next 5 years have no effect (which is basically impossible to assume according to Piketty), the bottom 10-25% have far underconsumed their representation in society and likely represent a very small portion of AMZN’s revenues so the plight of the very poor is negligible to AMZN.
of course AMZN hasn’t implemented the price increase yet, they don’t have the market power yet. they need to destroy retail as we know it before they acquire the scale and power to raise prices without affecting expected revenues. the “price hike event” won’t occur for a decade or so.
reputation doesn’t matter as much as you think. also, you’re focusing on just a few news articles that BB posted recently but not the positives of working at AMZN. do they pay better than most? yes. do they actually treat their TOP employees worse than most other places? no. there is far more opportunity at AMZN compared to anywhere else and AMZN’s vision is much easier to see than anywhere else. MSFT’s and GOOG’s models could be turned upside down far easier than AMZN’s. as i happen to know a higher up at AMZN, i know that their stars are treated very well, make 50% more and are given full automony, better even than at GOOG.
That website does have an agenda: the agenda is to help people use R to analyze a variety of data configurations (http://www.r-bloggers.com/)
EITC?? Really??? You think the analysis is going to change markedly if you add an extra $1000 to the bottom 50% of the income distribution? And as for transfer payments, the Welfare system is largely gutted since the late 1990s. The only reason there might have been more transfer payments is because of the extensions implemented temporarily during the Great Recession.
As mentioned above, the website hosts articles where people share anything that is interesting about R. If you read the post carefully, you’ll find a link to the source where the data was taken from as well as a link to the code through which you can reproduce those graphs.
clearly i meant webpage, not website. the webpage has an agenda if it mentions bernie sanders and is potentially misrepresenting data to make a statement about income inequality being the worst ever. i’m a huge advocate curing income inequality through regulation and my ability to comment and my success in changing people’s minds is reliant on my understanding of the issue.
isn’t the average EITC benefit $2,300? (~$60B to 26M households). $2,300 on a lowest quartile income range of $0-$22,000 is HUGE! and exlcuding it makes any “analysis” useless in terms of are the poor better off or not. $2,300 is enough to feed a family for a year on a budget. we’re talking a > 10% increase in income so it is incredibly important to include the EITC in any income comparison. also, low income households with more kids get the lion’s share of that $2,300 on average so the redistribution is going to the households who need it the most.
i’m no expert on U.S. welfare programs, but i can easily see that enhancing the EITC has likely made U.S. working households better off. add legislated hikes in minimum wages across the country and i have no doubt that low income, working households will be better off in 5 years compared to the 2000s. unemployed households are another story.
I don’t know about you, but I don’t really care about how Amazon treats its workers when I’m buyings stuff on there. There are worse places to work than Amazon.
“$2,300 is enough to feed a family for a year on a budget”
This made me laugh…because I instantly imagined a family of squirrels who only live off nuts and don’t need much in terms of substance.
On a more serious note, it would be very difficult to sustain a family food-wise on $2300. That makes it $96 per person per month for a family of two people. Matt, try to feed yourself on $100 per month for three months and then come back to discuss the issue of income inequality.
I’m a graduate student, and even though one would think that the work I do is highly skilled and should be more valued, I’m basically part of the bottom quartile. I can tell you that there is no way you can raise a family and lead a comfortable life on an income below $20000. Have you figured in rising rental prices, that people need to pay for transportation to get to work, that any form of insurance is out of reach? And that this is happening despite the fact that the bottom quartile is getting more educated? Let’s not ignore the evidence that it’s disgustingly expensive to be poor.
So yeah, while a middle-class family, with plenty of discretionary income, will be able to buy all sorts of crazy junk on Amazon, the reality remains that the middle class is thinning and the retail industry will be hit by this trend.
A young person that my wife and I mentor spent the entire EITC check in about a week on clothes and air jordans. I joked with my wife that we are going to turn into republicans after another year or two of that!
Does the EIC check come in a special envelope with a bow on it? The year I qualified, all it did was reduce my tax bill. I got money back, but only because I had overpaid quarterly estimated taxes.
Even worse, the check was cashed at a payday lending type place where the fees were outrageous. At least the money wasn’t spent at Rent A Center!
lol
Nice article title!
“To justify it’s current valuation, investors have talked about Amazon’s ability to one day, “turn on the profits.” Right now the company is simply focused on taking market share and during this process they don’t care about making any profit at all, as the story goes. But someday, this will change, investors say.”
Haha yeah, I’ve never spent more than 60 seconds analyzing the stock. It just always struck me that it’s a non-profit business. Of course they are beating Wallmart, the competitors have real investors who demand they actually show a profit! The second AMZN tries to make a profit their market share crashes and we see it was all just bullshit. Doesn’t seem like a sustainable business model, at least not as a for-profit business that equity investors would care about.
If I was to make a forecast of a not-so-long long term business that disrupts Amazon, it would be the rise of 3D Printers. I often wonder how the world with 3D printers in mass use will look. Questions that arise from this are things like the very pressing “Will you be able to print toilet paper or just plastics” with this thing?
$2300 a year in food? If that is possible than I am doing something very, very wrong