Is This The End Of Amazon?
Maybe… but probably not (image via Wikimedia)
It must suck trying to compete with Amazon. You spend 24 hours every day perfecting a business model that allows you to provide a service to the public and make a little money at the same time. Then, just when you start to turn a profit, Amazon comes along and destroys you.
Amazon isn’t just big. It has a secret weapon, one that’s unavailable to most business owners. Their weapon? A bunch of investors who don’t seem to care if Amazon doesn’t make a profit. You can’t compete with a monolithic business that doesn’t care if it loses money.
But what if… just what if… shareholders cared if Amazon made a profit?
Last week Amazon announced that it might lose money in the fourth quarter this year. This happened the same week that its shares dropped more than expected. Investors aren’t always known for their patience. I watch Shark Tank; I know how things work. And if shareholders lose patience with Amazon NOT making money… (dramatic pause)… would that mean the end of Amazon?
I like Amazon, and I don’t want it go away. Amazon Prime is a great deal if you use it enough, and it’s changed my buying habits. The only reason I don’t do the Kindle Unlimited is because my local library is pretty good, and I can usually grab a new book before the blood stains and boogers show up. Either that, or the librarians do a good job cleaning up the books. That’s a job I wouldn’t want, the library-book-decontaminator.
I’m not an Amazon investor (or a competitor), so I don’t mind Amazon’s unprofitable business practices. If Amazon’s shareholders don’t mind the company’s lack of profits, then I don’t mind saving money off their speculation. In fact, I have an obligation to take advantage of Amazon while the deals still last. I wish I had more money to spend on saving money at Amazon.
At some point though, even Amazon’s shareholders are going to get worried over Amazon’s lack of profits. When the investors pull out, what happens? Will eager new investors take their place? Will a bunch of other investors panic and pull out at the same time, causing a jaw-dropping crash that destroys the entire American financial sector? Or will the reaction be somewhere in between?
Just because Amazon isn’t making a profit now doesn’t mean it never will. Trends don’t always last forever. After all, the last three letters in “trend” are E-N-D. I’m pretty sure Amazon can turn a profit when Jeff Bezos decides to do it. I mean, a bunch of real investors believe that, so it must be true. For Jeff Bezos’s sake, it had better be true. I wouldn’t want to be Jeff Bezos if Amazon tanks and a bunch of investors decide to sue (or do worse). Or maybe it’s a great deal, to take investors’ money and blow it. Arriana Huffington seems to be pretty good at that too. If I could get people to call me a genius and give me their money, I’d do it. But nobody’s ever called me a genius, and people usually try to take my money instead of giving me theirs.
I would like to invest in a growing company like Amazon, but I’m the kind of guy who can destroy a good thing. If I invest in stocks, the market crashes.
If I steer my car into the fastest lane, the cars in front of me slow down.
When I push my shopping cart into the smallest checkout line, the old lady at the front argues about coupons and pulls out a check book.
When I buy a house with a nice view, a high-rise blocking the view is built a couple lots away.
That’s just how it goes. It’s my X-Men mutant gift. I’m surprised Amazon didn’t go belly up as soon as I published my first ebook.
Maybe it’s a mistake for me to write about business stuff like Amazon because I don’t know much about business, but I’ve seen the talking-heads on cable business networks, and they don’t seem to know any more than I do (but they’re more attractive and speak with much more authority than I do). Now that I’ve asked if this is the end of Amazon, Amazon will start making huge profits, and I’ll look like a fool for even asking the question. But at least the good deals will continue.
*****
Enough about me! What do you think? Is Amazon getting too big for its britches? Is Amazon going to flame out and leave its shareholders with nothing? Or will Amazon start making mind-boggling profits to justify its shareholders’ faith? Is Kindle Unlimited a good deal? Should I vandalize the high-rise that ruined my view? What bad investments have you made? What’s your X-Men mutant power?
Dysfunctional Literacy 
I hope Amazon makes it big…the nearest anything is so far away. On an unrelated topic, by all means vandalize the high rise. What did they mean putting it there anyway?
It wasn’t personal. The point of the high-rise wasn’t to ruin my/our view. The point was to make a lot of money (like Amazon, I guess). I might try to build my own bigger high rise, but I’d need some investors (like Jeff Bezos).
The dangerous game here is that no-one or nothing fresh comes along to disrupt Amazon’s business model before it takes its profits.
And before you argue that isn’t going to happen, think of this: IBM looked unbeatable when the PC came along, Microsoft looked unbeatable before the internet and mobile computing.
The larger the monolith, the more wedded the company and shareholders to the wisdom of a particular the model, the more likely it is to be disrupted. It may not happen soon. It will happen one day.
“The dangerous game here is that no-one or nothing fresh comes along to disrupt Amazon’s business model before it takes its profits.”
Ouch! That would stink for Amazon’s investors, but Borders and Barnes & Noble might get a little satisfaction out of that.
I’m NOT hoping that happens, by the way. I like Amazon a lot (unless this new something fresh idea saves me even more money. Then I might be a little fickle).
Well said.
i hope it goes broke as soon as possible. Amazon is a parasite in all industries it enters. It destroys lives of hard working people and small businesses, diminishes product diversity and pushes it’s own (commercial) agenda at the cost of non powerful suppliers. In my view, it is the sickest corporation in the world.
I genuinely love Amazon and wonder how they can make a profit doing things the way they do them. I just want them to stay around for a hundred different reasons.
The question is whether you want to ruin Amazon, or whether you want to continue enjoying the deals there. Because if it’s the former, you just have to buy a few shares of Amazon.
If I ever tried to use my power for selfish purposes, it would come back on me in some ironic way, and I hate it when ironic things happen to me. Irony in real life is rarely good.
I’m not sure how selfishly buying a few shares of Amazon can lead to bad karma.
I’m not sure either, but that’s how bad karma gets you. You don’t see it coming.
Well I don’t really want the “End of Amazon” to happen because I love buying ebooks on Amazon for good prices..
I say get on TV and speak authoritatively. Probably people will overlook your vandalization of the high-rise then 😀
– Jaya
A large part of that loss is because of their phone Amazon Fire. The problem today is that everyone wants to sell a phone, its the ‘in’ thing.
Anyhow, I hope your mutant gift works because I want the discounts to continue 😀
It’s never been Amazon’s goal to remain the same size. They are ever-expanding. Shareholders who deem the company a moneypit are the ones who want a quick turnaround on their money and miss the bigger picture. They want it to be like Apple or Google. Well, that’s not going to happen.
Love Amazon. Hope it never falters, best prices, quick delivery and I have never had an issue. I wish I could say the same in my dealings with other book sellers or retailers. What will be, will be I guess.
I don’t think Amazon is going anywhere anytime soon. If anything, I think there’s a risk of Amazon monopolizing the market for…well….everything. They’re in the phone business, they’re in music, in books, in television, in freaking GROCERIES now (Prime Pantry is awesome, yo). They’re producing their own television shows a la Netflix for their Prime service. In ten years, I’m sure that anything you’ll ever want to do will be available through Amazon. It’s pretty normal for a company to have a bad quarter or two, especially when they’re going through a surge of growth/new products being offered. I’ve only seen Amazon grow in popularity, and I think they have a large consumer base to pay off these new products. It’s just going to take some time to get a ROI.
Amazon make profit losses on purpose to claim market share and steal sales from their competitors to hopefully drive them out of business. Not exactly an ethical way to work. Ironically though, i read an article about how they are starting to make themselves more like a completely different company here in the UK. One i happen to work for. 😉
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11155301/Amazon-has-found-a-surprising-new-retail-role-model-Argos.html
Reblogged this on The Book Ends.
I’m kind of surprised that a company that dominates its market like that isn’t rolling in free cash, but they do undersell Kindles and then (supposedly) make it up later in ebook sales. I hope they don’t go away, since I like them too.
Reblogged this on All About Books.
I hate everything…except Amazon. They’ve made it possible for my wife and me to do all our holiday shopping without ever going to the mall. And I’ll love them even more when I can buy a book and a robot plane can drop it into my backyard five minutes later. LONG LIVE AMAZON!
Good interesting article. And you’re right, it’s hard to compete if they aren’t bothered about making money! They’ll be around forever…
Reblogged this on My Blog and commented:
I hope amazon stays around. I have written 12 children’s book in a space of 12 months. Some libraries are stocking them in Italy, France, USA , Australia and the International Baccalaureate Organization in Geneva my books are going for early primary reading curriculum in 147 countries and 3,776 schools. They are on Amazon but not too much movement in the hills at this stage. Is it because big publishers pay for advertising to get the search up the top of the list? Anyway I wrote 2 adult romance books one is a spy genre, with erotic sex, action and a thriller mystery. LOVE DANGER AND SECRETS and one destiny romance MELTING LOVE MOMENTS. now I have written a different genre about miracles, and a paranormal slant with duel parallel universes. I hope my new book launches me into a best seller category? I probably will need amazon for that ? So hopefully I will know soon after the book is launched OR NOT. I was encouraged by everyone who has read it said they were breathless. Does that sound good or does that mean that have a respiratory problem? Should I get encouragement from those words or should I ask for a medical report? Just kidding the signs are promising. So I hope amazon stays around for quite some time.
Amazon has been Walmart-ing bookshops for ages now. I am not saying that we should support higher priced retail stores. But I am genuinely afraid that one of these days, i might walk into a store and find only magazines and not books. A bookshop is wonderful space, something that i hope will last forever.
It’s all a conspiracy. They pretend they don’t make money so they don’t have to pay taxes. 🙂