back to article Amazon manages to find a mere sliver of profit – just $2bn – out of $61bn in end-of-year sales said its Q4 2017 net sales reached $60.5bn, an increase of 38 per cent from the $43.7bn reported by the tech giant during the same period a year earlier. Analysts had been expecting somewhat less, $59.83bn, according to Thomson Reuters. The earnings were revealed on Thursday, and lifted the book-selling, server- …

  1. Mark 85

    Why do I have this feeling that once Amazon drives most brick and mortar stores out of business that they're prices on everything will skyrocket? Is this why the share price is up where it is? High expectations that at some point, there will be more money coming in and actually more profit? And so more money for the investors?

    As for their labor costs, they seem to be doing a Wal-Mart and what some other companies are doing: pay low wages, keep the employees under 40 hours a week so no benefits, etc.

    1. Brenda McViking

      You're aware for example, that a lot of birck and mortar stores can list and sell their stock on amazon? and a lot of them do. Our local hobby store was going to shutter due to lack of footfall. They put all their stock up on amazon and are now shifting 5x as much which is paying the rent.

      Doesn't change the fact that the bricks and mortar store is economically unviable and from a business perspective, it is a questionable decision to keep it open, but as I keep saying to my Grandmother - shopping on amazon means that I don't have to go through to stupid rigamarole of driving to town, paying for parking and then finding it's a wasted trip because the shop doesn't have the item I want.

      In my opinion Amazon aren't exactly going to reverse their business model which has always been disruptive, high volume, low margin, and offering their infrastructure to competitors for a cut of their profits, so no, I doubt you will see prices on everything skyrocket anytime in the next decade. And even if they did, Amazon are not an uncontestable monopoly.

    2. a_yank_lurker

      @Mark 85 - the smart monopolists know they can not raise prices just because of their market share. When they raise prices they give competitors a chance to take market share from by undercutting the higher prices. Also, retail is fundamentally a high volume, low margin business no matter who you are. Plus, Amazon, though large, is not as big as other retailers such as Walmart or Target who actually have higher margins than Amazon.

      1. Mark 85

        The problem using Walmart as an example is that Walmart is running scared. They're losing business to Amazon and closing stores already. They're getting lean and mean by reducing employee counts, employee benefits, etc. OTOH, Walmart has increased it's online presence and also their stocks of goods using other suppliers.

        As for Target, we'll see. They're a bit of wild card but have closed stores.

    3. Anonymous Coward
      Anonymous Coward

      You got it right, 100000% right

      Amazon wants to be the ONLY store left standing in large parts of the western world. Everyone will be dependant upon them for pretty well everything they need to survive.

      Buying Wholefoods is just the start.

      Personally, I have reduced my spend with them by around 90% in the last year and am not a Prime cash cow. Once, I used them a lot but then I realised that their aim is to drive pretty well every other store out of business. They have learned well from WalMart who did do that to large parts of the USA but Amazon's view is much, much larger and Global.

      Now I shop locally and often direct from the producers.

      {note to self, must call in at the Brewery when I go past later today}

    4. LucreLout

      Why do I have this feeling that once Amazon drives most brick and mortar stores out of business that they're prices on everything will skyrocket? Is this why the share price is up where it is?


      Each major investor will have their own view, but the bank I work for has taken the view that the AWS platform alone would eventually justify the current share price. Only about 10% of data centers have been migrated to the cloud, and there's only one or two other big players.

      Next up comes its logistics platform. If volumes dropped they could diversify the operation relatively easily, setting themselves up as a global competitor to almost any other operator. Amazon will end up, post drone deployment & automated vehicles, with one of the most automated and efficient logistics platforms in the world, with a massive barrier to entry for competition due to the scale and cost of machinery, and various patents its likely to own.

      Then comes R&D. The reason Amazon don't make more profit is because they don't want to. That isn't the business model. Their earnings are mostly ploughed back into the business to expand their offering and locations in which they operate. Profit is taxable, business investment isn't.

      Finally, the sheer volume of what they sell. Stick 1p on each product and you'll hardly notice the sales fall. You will notice the profit increase.

      Whatever your personal moral view of Amazons operating model, you've got to see that it is highly effective, and impressively dynamic for a company of its size. Whether or not you like capitalism, Amazon has mastered the game like few other businesses. That's why the share price is where it is.... I just wish I had more disposable cash to buy shares in it.

    5. Chz

      To be honest, Amazon is already rarely the cheapest place to buy things. Okay, they're rarely *tremendously* more than the cheapest price elsewhere, but they've stopped the drive to undercut absolutely everyone, everywhere.

      They keep their customers because of convenience and customer service. Which, poor as it is sometimes, is still worlds better than most of their competitors. I hate them for their tax wizardry and Victorian attitude to staff, but I'm still waiting for something else to come along and at least offer me comparable service (better would be expecting a bit much).

      1. Anonymous Coward
        Anonymous Coward

        It's true

        Their service is good, unfortunately.

        1. Gene Cash Silver badge

          Re: It's true

          > Their service is good, unfortunately.

          And unfortunately, good service has become really rare, to the point it's worth paying for.

    6. Anonymous Coward
      Anonymous Coward

      It's upside down

      They're also squeezing cities for tax exemptions in order to gain the privilege of hosting their next large facility. It's pathetic to see governments trying to outbid each other for the favors of a corporation.

    7. Anonymous Coward
      Anonymous Coward

      "Amazon Web Services (AWS) revenue reached $5.1bn, "

      Behind Microsoft's cloud revenue run rate for a third quarter then. Looks like MS are winning that battle.

  2. Anonymous Coward
    Anonymous Coward

    "Amazon wants to be the ONLY store left standing in large parts of the western world."

    Oh no, I won't have to spend my Saturday afternoon going round 30 odd shops in the pouring rain, or driving 20 miles to the nearest shopping centre, only to be faced with the same boring shops you find everywhere else, struggling to find even the most basic things.

    I don't buy from "Farm Shops" for the simple reason, I'm cutting out several middle men, but it still costs more....How come?

    I'd shop at my local market, but this thing called work gets in the way.

    Gone are the days when the dutiful wife is able to pop to the shops on a Tuesday morning, before she gets back to do the washing and cleaning.

    1. TonyJ Silver badge

      You make some good points there, Lost all faiith...

      Throw in the inevitable extended journey to get to the town, where in our case, the parking is expensive in small bays.

      The local council has all but killed the market due to increasing rents to unsustainable levels and to be honest, I'd much prefer not to be in a place where it seems like every third shop is either a charity store one selling random cheap clothing and "jewellery" or a pound tat emporium.

      I can browse from my home, in comfort and read reviews etc before I commit to buying stuff.

      It also tends to mean, as someone who mostly works away in the week, that I can actually spend my weekends being a dad to my kids and a husband to my wife.

  3. dave 93

    $2B is a fucking big 'sliver'

    It is also 3.3% of earnings, which is not too shabby when Amazon is still investing strongly to grow...

  4. Anonymous Coward
    Anonymous Coward


    3.3% wow, what an amazing profitable business.

    > when Amazon is still investing strongly to grow

    You mean 'tweaking' the books to pay less tax?

    1. Anonymous Coward
      Anonymous Coward

      Re: Investing

      3.3% is a reasonable profit margin for any business.

      Remember it's profit, not margin.

      PS learn to use the Reply button.

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