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Eugen Tarnow


      Amazon’s Profit Picture - One Strike & It Is Out?

      Eugen G Tarnow  August 10 2017 11:37:52 AM
      By Eugen Tarnow, Ph.D.
      Avalon Business Systems, Inc.

      I knew that Amazon makes most of its money from its Amazon Web Services (AWS) and not from selling products online.  But I never really knew the numbers.  Here they are:

      Image:Amazon’s Profit Picture - One Strike & It Is Out?

      Amazon makes the bulk of its revenue from non-AWS sources but the most of the profit comes from AWS and the profit margin is all AWS.  In fact, the profit margin on non-AWS revenue is only 0.9%, about the same as for a supermarket.

      The acquisition of Whole Foods with a profit margin of about 3% then makes Amazon less vulnerable to a downturn. But is seems that if there is ever a long strike at Amazon, it might just kill the business. As a comparison, the profit margin of Alphabet is 16%, though declining 4% per year.

      But Amazon also may be an example of why worker salaries are increasing so slowly: There just is no room for salary increases at Amazon and since they are killing the competition, neither is there room for salary increases elsewhere in retail.

      The shareholders are presumably hoping that Amazon will kill its competition and then raise the prices and make a real profit. But if it raises the prices on the customers it may open the door to anti-trust action...

      Numbers are taken from https://revenuesandprofits.com/amazon-revenues-profits-analysis-2017-update/

      As always I reserve the right to be wrong.
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