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Profits are low because its still monopolizing by lowering profit margin it chokes out smaller businesses who cannot compete with their low prices and pushes them out of the market
Simply not the case. Small businesses are on Amazon, and beating the competition is not a sign of monpolies. If they have to aggressively cut margins to maintain their position, they are simply not a monopoly.
@@samsonsoturian6013 you mean small businesses are being consumed by Amazon. Amazon is continuing to increase their own Amazon branded product lines based on what is selling on the platform, pushing these small businesses out. It's one thing if Amazon just provides the platform for businesses to compete against each other. It's a different thing if Amazon also competes with these businesses when it's in charge of the very platform these businesses have to use.
but if they did, And followed up with an increase of price, that is textbook monopoly They will be forced to justify their rising prices with inflation only There is this rule in anti-trust laws that. Operating at a loss/near loss is okay, given that they NEVER increase price once the competition is gone/ this is due to not all big companies/huge marketshare necessarily=monopoly and they added that rule to distinguish the two I wasn't a fan of it until I looked around and saw Google which im sure 90-95% agrees that their free service is mostly good. Imagine having to pay google on top of paying your ISP's I'm fine with using my data (for products, not for propaganda. Propaganda ruined my country. We voted for a guy that glorified a dictator and smeared the era of democracy) It's good/accurate. One "Not interested to this topic/advertiser" The ads change almost immediately Coca-Cola, not entirely a monopoly (plenty of competition), still some would argue that coca-cola's share is still dangerous enough. Lack of competition between giants etc. But honestly, I expect giants to barely move. and there is enough space for the lil guy to overtake. (Case in point, my country has 2 new pizza chains, being able to compete with giants/"giants that barely compete", It's soooo good, I expect them to branch out to Asia then Globally) So good that said giants copied their flavoring (still failed)
doesn't low profits just translate to "we're spending all our money, despite making tons of money. so it's just not hitting the books". like how uber says low profits while they simultaneously invest in their helicopters
@@perfectallycromulent right, but it's pretty obvious these big tech companies are making unbelievable amounts of money, and just because they spend it...on themselves and their co....doesn't mean they didn't actually profit. (that includes insane CEO bonuses, etc)
If your paying an employee to retrieve an item in some warehouse, then your paying another employee to pack the item, then another to deliver the item, and then consider how many items get returned, and on top of that this occurs with a lot of super cheap products. Imagine paying a bunch of employees to process a $7 product for shipping only for that item to get returned and the customer refunded.. i realize they’ve gotten more lean over the past few years with layoffs and better efficiency but still….
Amazon is less of a monopoly than it is a monopsony. Consumers have many choices to buy from, but sellers have real trouble if they don't also list on Amazon. Minor point, though. A monopsony is just as bad for a free market as a monopoly, and they still need to be broken up. It's just a lot harder to do so since a monopsony harms suppliers more than consumers, and US laws are much more focused on protecting consumers.
Broken up? It’s basically one company doing one thing. What would you do, only allow them to sell certain knick knacks and not others? Or allow them to sell stuff, but not have third party sellers? You could spin off AWS, but I’m not sure it’s not already separate.
Monopolies are legal in USA so its jut nonsense talk to split Amazon. Even if they split Amazon than it changes nothing as the same shareholders will own bot companies.
@val_inv6239 Monopolies are legal but still subject to anti-trust. If the government believed Amazon was using its monopoly to harm consumers they would break it up. It wouldn't matter if the same shareholders own Amazon and AWS as the purpose would be to make it harder to subsidize the e-commerce business with the web service business.
@reggiejenkins6458 Exactly what @@Prolute is saying. Break them up to prevent AWS from allowing the e-commerce side to continue posting losses which drive out competition. If you force AWS to spin off, the e-commerce side will be forced to pursue profitability more than it does currently. This would naturally allow for more competition in the e-commerce market since Amazon prices will be forced to more accurately reflect reality. A monopsony may seem good for consumers due to low prices, but it restricts innovation by suppliers and drives worse products than we would have in a normal market. (For example, Prime 2 day shipping is incredibly expensive for Amazon, yet most of us probably wouldn't value most of our purchases enough to pay that cost ourselves and, indeed, Amazon themselves often lose money on Prime members in order to gain market share. Thus, there should theoretically be a lot of room for a competitor to meet that imbalance in the market by providing cheaper products with longer shipping times, increasing competition in the space.) As for the idea that the same shareholders owning both companies, you can look at AT&T for an example of that. While the broken up AT&T had the same shareholders, and the broken up companies did eventually merge back into one company, they did so only after competition was reignited in the market. Present day AT&T is just as it was in the past, but the breakup allowed Sprint, T-Mobile, etc. to enter the space while it was busy consolidating. The current wireless provider market is much healthier than it was before the breakup.
I think if Amazon raises prices, exercising their monopolistic ability, that more people will move to Temu or other online retailers. I don’t think that they are going to be able to do much price gouging.
@@skyfeelan Relating to that, the US is planning to pass the bill that restrict the tax-free shipping of items below 900 USD, something that Temu, and other Chinese e-retailers widely exploited it to their advantages. If imposed, they'll hardly be able to survive long ...
Amazons profit is 2% as is Walmarts, target, Costco, dollar general ish. End of the day retail is not profitable on a small scale AND that’s why you have to posses a HUGE market.
@@robertm3951 $79bn I’d say so. That being said you’re talking about a specific form of retail only and that’s electronics that they design and manufacture while also having a duopoly in the smartphone market.
@@robertm3951Because they sell their own products. They're a luxury brand, not a retail company. Selling other people's products doesn't make much money.
It's about WHO is harmed. Smaller businesses are harmed. That was her original point in that law school paper and that is that is the opposing point to the Bork test.
eBay just stinks. It's loaded with scammers and fake auctions. The latter coming from how the seller can back off if they don't like the winning bid. I use Amazon because I don't know any other trusted site, although beware fake reviews.
Lmao no amazons costumer service is the best and they NEVER denied my return even for a $10,000 product i believe a trillion dollar over the companys own D2C anyday.
I would warn you about all the counterfeit products on eBay, but TBH Amazon has the same problem. Hitting up the company directly is the only safe bet. They'll either sell you the product or link to the official product listings on ecommerce websites.
I'm from eastern Europe, and the closest Amazon to me is in Germany. I'm baffled how they can have so much presence in the USA, to me the website looks like shit, compared to many of my local e-commerce websites, especially the ones which specialize in tech. They really need to up their game.
Keyword there is "specialize", its a lot easier to manage a botique with limited scope compared the vast amount of product categories available in amazon as well as third-party sellers etc.
Insane financial black holes like Amazon Prime originals like De Perifferull, De Rings of Powah, Goliaf, Krysis in Sick Scenes etc are a sure drain on profits.
I don't know why people can't live without Amazon! For the past five years I'm not buying anything from Amazon and I'm still living, breathing and enjoying life!
For years we've been told that their profits are low because they just reinvest their money back into the company. And that reinvestment does not count as profit. Is that true?
It's not considered reinvestment, in case the money is spent on expansion, R&D, etc. within the same year it has been earned. It's just additional costs.
@@TheWood005 If they let the money accumulate in the bank rather than pay it out as dividends, like Microsoft did for many years, that isn't considered cost.
@@TheWood005That's not how that works. Many companies with low P/E ratios have low dividend yields, and vice-versa. Volkswagen (VOW3.DE) has a price-to-earnings ratio (stock price ÷ earnings per share) of 3.81, but the dividend yield (annual dividend ÷ stock price) is only 7.92%, not 26.25%. Berkshire Hathaway paid no dividend at all but their earnings was $96 billion last year.
Good luck proving the monopolistic nature of the company that consistently offers the best price to consumers and has also driven down competitor prices. Behavior towards 3rd party sellers is not monopolistic. It might be immoral, but not illegal.
Isn't a monopoly only dangerous in an industry with a high barrier of entry? As far as I can tell, starting up an e-shop is no big deal. The only problem could be delivery discounts based on volume (small shops pay higher rates at UPS etc.). Or volume discounts from the producer. For as long as Google crawls the smaller retailers and puts up their offers on Google Shopping (which can be switched to sort by price), there should be no problem with exposure and visibility. If people don't just go straight to Amazon, that is.
A monopoly is not bad per se. It's about how the business conducts their enterprise. If lumber jack #1, offers the best lumber, with the best service, at the best price, and consumers just chase him with their money, it's not an issue. If he schemes and undercuts the competition, then it's an issue.
@@sblijheidFor as long as Amazon undercuts the competition, it means the customer is getting the best value. When, at some point, Amazon switches to "milking" mode (increases prices, assuming no competition), it would not take long for someone to set up an e-shop and undercut them instead (the point of my OP). I still do not see how Amazon could ask outrageous prices for any length of time, unless they somehow get a monopoly over the entire supply chain (suppliers, parcel delivery, etc.).
Well, if Amazon is a monopoly, I would be using them to purchase all of my stuff, but I very rarely purchase anything on Amazon these days, so how is it a monopoly?
good recap. disagree on one count: pay to play advertising is inherently anti competitive because it favors incumbents. the fact that slotting fees have existed before amazon’s ad model doesn’t make it any fairer.
3:35 I was really disappointed when I heard Photoshop was going into a SAAS business model. However, they really changed my opinion of them when they released the Adobe chicken with Quinoa & Kale Enchiladas.
food for thoughts, Amazon and all the pure online sellers are killing the high street commerces which are often the main source of tax revenue of local administrative government. There is then incentive for government to try to break down Amazon
There is a better reason. When so much business is concentrated in one company, they need less workers to do more. If there were more companies doing the same in that market, more people would be employed. Every government is well served with more people employed; they get more taxes and have less welfare recipients.
First capture the market with cheaper prices. Once on top, slowly raise the prices. (Just don't call it a monopoly) What do you think of this business plan?
people buy from amazon because of the competitive prices. If they raise prices, sellers can just build their own website, it's pretty cheap. Amazon charges for it's logistics which is a legit cost.
Great video. I was aware that most of their income came from AWS I was not aware their "retail" profit margins were so thin. I've often thought that Amazon facilitated higher prices due to the fact that many independent sellers of the same product did so on Amazon. Thus it is so easy to see what others are charging and thus charge the same or some insignificant amount less. I collect used CDs and over time it's gotten harder to find "good deals" as everyone charges about the same these days.
Amazon e-commerce loses money, even more than stated. This is even after the boom of lockdown. But the aws makes it hand over fist. If they ever split them up, it would go under within the year.
@Zuranthus If the retail part is being subsidized by AWS, then splitting them up would make the retail dept go belly up. It's common sense. The business structure is different now than '05.
I find the biggest problem with amazon is the sheer volume of trash, I'm very surprised that people buy from there so much. I actually prefer to go to other retailers that have a more curated offering so I don't have to spend 3 hours wading through garbage search results and barely know tf I'm even buying in the end.
[0:55] I find this info a little funny - Amazon does have a massive lead over its competitors, but is it right to call it a monopoly when they have 36% of the market share? Especially when we look at companies like Nvidia that have a much greater market share (in the range of ~80%). AWS has a ~32% market share in the cloud market, which is the greatest, but is also hardly a monopoly either. On the other hand though, I don't think it's wrong for the FTC to go after Amazon for acting in an anticompetitive manner, even if they're not a monopoly
@@sblijheid Sure, but that doesn't mean you are or aren't a monopoly. A company can engage in anticompetitive behavior but that doesn't necessarily make them a monopoly.
@@sblijheidNvidia does actively try to weed out the competition. Whilst AMD is constantly developing open standards such as FreeSync and ROCm, Nvidia uses proprietary solutions such as GSync and CUDA, and makes it illegal for competitors to use them, so once you build on Nvidia technologies, you can't easily switch away.
Amazon is definitely not a monopoly. There are other options besides that does better in many ways. I have never needed Amazon for anything. I can get everything at Walmart. Actually, I think Walmart is more of a monopoly than Amazon because it can undercut it's local competitors
The thing is that most businesses that are squeezed out due to low prices will be replaced with new ones the moment the prices rise again. Hence the ability to abuse market power is very low. Amazon focuses on logistics from the start to minimize costs, they are sucessfull because they increase price pressure by their superior logistics, not the other way around
Amazon may have the largest market share in North America and are still selling with low margins. Imagine if they practiced price gouging with their “monopoly” then consumers will have no choice but except it 😮
15% is only the listing fee, if you incorporate other pieces including fulfillment and customer support, this fee is now close to 50% for sellers. The fact that they can't turn it into massive profits on paper and the margin is razor thin is a story of the inefficient operation of the business. IE: Excessive bonuses to fat executives on top.
@@phoneywheeze Amazon Prime fee should cover this and more. Let's not forget that close to 50% of the vendors are vendors from China where Amazon takes no part in international logistics. The US logistics that Amazon do handle are outsourced as well, so the cost to Amazon is minimal.
Amazon is the biggest player in the market because of their first mover advantage and the network and scaling effects that internet businesses are known for. Their margins are thin because they still face significant competition who are just waiting for them to lose their edge, and NOT because they're inefficient. Apart from the price fixing you mentioned, there is nothing suspicious about their business model. They are clearly not a real monopoly.
Not just Amazon, but Google and Microsoft all are essentially running on AWS, GCP and Azure money. UA-cam, Xbox, Prime Video are loss making, Windows OS, Amazon store are scraping by. Walled garden app stores were profitable but they are under legal scrutiny around the world.
"Insider Intelligence reports that Amazon dominates e-commerce in the United States with 33% of all online sales, six times more than its closest competitor, Walmart". The rest of that % is made up of millions of small companies, and giant companies selling their own brands like Apple, HP, Sephora etc. 33-37% is actually a behemoth. Life must be tough being so uninformed yet so sure of yourself. @@kevinnguyen7689
Amazon isn't an online retailer, is a logistics company. They don't need to make a profit from a sale, but just to deliver that sale. Why it is so hard to understand?
The FBA cost is covered by hiked seller fees. Creating a worse experience for both sellers and customers by allow an influx of terrible/dubious sellers to run rabid across the site and bloat it with junk then charge the seller advertisement fees along with the threat of shadow banning. These are not weak arguments. Apart of it is similar to what Google does. Create a problem and sell the solution. Only possible and monopolies and oligopolies.
This is a PR video probably funded by Amazon. Amazon is shutting down small businesses nationwide. Does China pay Amazon to offer Chinese made products?
Amazon is a fine example of monopolies not leading to high prices and instead just being horrendously mismanaged and leading to everything being crap quality and treating customers poorly. Money isn't the only way for monopoly to be abused.
Why are the profits so small? Maybe heaps of R&D as well as tossing money away on space-fairing projects? The dragon getting lazy (leading to stagnation) while the tiger works hard?
#4 Maybe they manipulate the numbers so that it appears they aren't very profitable. Bc how can u be the richest man in the world with a business that's barely profitable??
I use Amazon more because I have a shared prime account, & if I order off another site I have to have a minimum on my order to get free shipping. There’s also some stuff they don’t have at my stores for pickup. I definitely try not to shop too much 😂bedsides stuff for the kids, but when it’s a shared account it’s useful enough for me.
I see that most of the arguments are correct. However on the third point, as a consumer why would I choose to buy any given item from at merchant with a higher price. The merchant listing the lowest price is one to buy from. Eliminating the lowest price rule amount to consumers taking more time to look up prices for each item.
That would mean Amazon is always cheapest so always buy from them making them the monopoly. Where they could keep increasing fees on sellers taking a bigger and bigger cut. Sellers wouldn’t be about to sell anywhere else. Because everyone would by the cheapest from Amazon.
@anywhereroam9698 For a short period, because the sellers would go out of business. The combination of low prices and high seller fees is not sustainable.
"a few run by republicans...." There's two on that list. How is Amazon a monopoly? You can buy everything from another place. Walmart took this title for a long time.
amazon spent billions upon billions of dollars growing and perfecting their logistics business. wanting a return on that investment is completely warranted
Taxes are only paid on profits. Expenses can be written off. So why would they intentionally increase their expenses so that they don’t pay taxes? It doesn’t make any sense.
@@tradingpost431 The same reason film studios spend hundreds of millions on some advertising agency in Bolivia or (insert other tax haven here). By spending inflated amounts on companies/services you own, but have registered in another country, you can make a 'loss' and pay no tax whilst also keeping the money. As long as it exits the country you want to avoid paying tax in on it's way to your shell company all is well. Every large enough company does it, there's no reason to think Amazon would be any different.
Very nice work here, the third point (anti-undercutting measures) is indeed the strongest one and a prime example of how capitalism (via the profit motive) is inconsistent with itself, resulting in other anti-competitive acts like patents, mandatory anti-compete agreements for workers, and lobbying third parties to abstain from competitors.
You got it right, they use AWS to finance this monopoly, they can drive out competition and there will be very2 little competition. I would say it's a close oligopoly.
3 minutes in. Nah, Amazon is doing it on purpose. I wont think bezos will intend to barely scrape by if not for something else. Since AWS is basically subsidizing the ecommerce part, bezos is just maintaing it to gather more data from consumers and suppliers to sell them, which is more lucrative.
On the monopoly point I feel like this video answered the question itself with a historical recount of Walmart. 15 years ago all everyone talked about was Walmart being the monopoly coming to town, taking all the jobs and displacing small vendors… and now they’re a 6% market share with little intervention.
He said 6% of e-commerce. They're still a giant in "brick and mortar" sales. Most of us live very close to a Walmart so I never feel the need to order online from them. Thus we do not contribute to their e-commerce sales but we definitely give Walmart way more money than Amazon. Lots of us get all of our groceries from Walmart which again does not contribute to their e-commerce sales.
and look at what that "little intervention" has cost, you have entire town centers boarded up and shut down, they have left a trail of devastation across the world
@@DAWMiller lived in a town where i saw it happen in real time, Walmart came in and obliterated even other shopping centers like K-mart, then they added a grocery store to their complex and it was all over. couple o years later they moved out of the supermall unit they were renting (said mall is now 90% shuttered) to build their own Sams/Walmart facility leaving everything dead in it's wake, this same story has been repeated all across the world in which Walmart has opened stores
@@Zuranthus ok and did those business owners die when Walmart came to town? Or maybe the owners and employees go off and work somewhere else while Walmart employed more people than those shops combined? The car destroyed many horse-related businesses, the clock destroyed those who's job it was to sell the time to people, and clean energy has killed coal miner jobs. It's technological and market advancement. People forget that Amazon is a marketplace for small businesses to sell goods on their platform, and as a result, for $9/month I can get almost anything I need for work or pleasure within 48 hours. That is a game changer. Old mom and pops stores didnt sell the things i wanted or needed, and if they did but were sold out it took weeks to restock. How is that a better world?
Def a monopoly for marketplace. Would love to see it split up in to two companies or three at least. There’s no other online market place that’s nearly as usable. eBay comes to mind but it’s for second hand stuff and to be honest is ancient, bad UI.
Big, competitive retail chains (like Walmart also) typically have low profit margins, because that's what it takes to win in that market. Amazon won by often undercutting even Walmart... And that's what consumers like. Amazon Web Services - the tech side of Amazon - has large profit margins. Because it can.. Although to be fair, AWS also became successful in part because it was fairly cheap and offered a lot of flexibility. Which likely goes to Jeff Bezos' instincts as an entrepreneur.
never ever bought anything from Amazon. hahaha. its just a US / EU problem. there are tons of players like Alibaba, Taobao, Aliexpress etc for buyers. but maybe seller options are just limited to Amazon, esp in US.
Amazon gross profit for the twelve months ending September 30, 2023 was $256.202B, a 18.52% increase year-over-year. There aren't many companies that have ever even profited that much. Probably time we all unsubscribe.
@realfun7188 Unadjusted for inflation. The oly reason they made so much money on paper, is because prices are up. Prices are up because operating costs and costs of goods are up across the board. You should learn how the numbers are generated.
36% of any market is, and this is true, not a monopoly. Literally 64% (more than half) of that market is served by other companies. Not even close to a monopoly.
Give credit where credit is due. For instance, Amazon is the world's greatest bookstore, because they have everything that can possibly be sold due to all used bookstores being on the platform.
That's actually it, basically - Amazon has a (near) monopoly on being the sales platform. If you're not on their site, you're not going to survive. They get a 15% cut of every third party transaction, without any risk or investment on their part except the cost of web hosting. That's not good for either the independent sellers or the customers.
They and B&N destroyed small bookstores which had competent staff. You can't ask Amzn employees something specific about a book, author, or genre. They are good at giving BS responses with thick Indian accents.
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Profits are low because its still monopolizing by lowering profit margin it chokes out smaller businesses who cannot compete with their low prices and pushes them out of the market
Simply not the case. Small businesses are on Amazon, and beating the competition is not a sign of monpolies. If they have to aggressively cut margins to maintain their position, they are simply not a monopoly.
@@samsonsoturian6013 you mean small businesses are being consumed by Amazon. Amazon is continuing to increase their own Amazon branded product lines based on what is selling on the platform, pushing these small businesses out.
It's one thing if Amazon just provides the platform for businesses to compete against each other. It's a different thing if Amazon also competes with these businesses when it's in charge of the very platform these businesses have to use.
@@samsonsoturian6013 if u never sold on amazon you shouldn’t be yappin
This is the correct answer
Yep, waiting for them to force everyone else out before something is done will be a disaster.
Its entirely possible that Amazon is following the operate at a loss/near loss until the competition is dead business model.
They've certainly done it before.
But how can they truly monopolize it? As long as shipping companies exist competitors can pop up if Amazon ever tries to get unreasonable prices
but if they did, And followed up with an increase of price, that is textbook monopoly
They will be forced to justify their rising prices with inflation only
There is this rule in anti-trust laws that. Operating at a loss/near loss is okay, given that they NEVER increase price once the competition is gone/
this is due to not all big companies/huge marketshare necessarily=monopoly
and they added that rule to distinguish the two
I wasn't a fan of it until I looked around and saw
Google which im sure 90-95% agrees that their free service is mostly good. Imagine having to pay google on top of paying your ISP's
I'm fine with using my data (for products, not for propaganda. Propaganda ruined my country. We voted for a guy that glorified a dictator and smeared the era of democracy)
It's good/accurate. One "Not interested to this topic/advertiser" The ads change almost immediately
Coca-Cola, not entirely a monopoly (plenty of competition), still some would argue that coca-cola's share is still dangerous enough. Lack of competition between giants etc.
But honestly, I expect giants to barely move. and there is enough space for the lil guy to overtake. (Case in point, my country has 2 new pizza chains, being able to compete with giants/"giants that barely compete", It's soooo good, I expect them to branch out to Asia then Globally)
So good that said giants copied their flavoring (still failed)
They literally made that model popular. And by they I mean Jeff.
He did say "your margin is my opportunity".
doesn't low profits just translate to "we're spending all our money, despite making tons of money. so it's just not hitting the books". like how uber says low profits while they simultaneously invest in their helicopters
i think that stuff comes under the "technology and content" line of expenses
@@perfectallycromulent right, but it's pretty obvious these big tech companies are making unbelievable amounts of money, and just because they spend it...on themselves and their co....doesn't mean they didn't actually profit. (that includes insane CEO bonuses, etc)
You confuse the company money with the execs personal money
😅
They are shifting those profits to their numerous R&D initiatives. Healthcare, drones, all sorts of other crap they are doing.
Amazon isn’t that cheap. It’s mostly junk for sale on it. Other retailers are often cheaper in UK
AWS is basically subsidizing the rest of Amazon. There have been many calls to split of the way more profitable AWS from Amazon by investors
If your paying an employee to retrieve an item in some warehouse, then your paying another employee to pack the item, then another to deliver the item, and then consider how many items get returned, and on top of that this occurs with a lot of super cheap products. Imagine paying a bunch of employees to process a $7 product for shipping only for that item to get returned and the customer refunded.. i realize they’ve gotten more lean over the past few years with layoffs and better efficiency but still….
Amazon is less of a monopoly than it is a monopsony. Consumers have many choices to buy from, but sellers have real trouble if they don't also list on Amazon.
Minor point, though. A monopsony is just as bad for a free market as a monopoly, and they still need to be broken up. It's just a lot harder to do so since a monopsony harms suppliers more than consumers, and US laws are much more focused on protecting consumers.
Broken up? It’s basically one company doing one thing. What would you do, only allow them to sell certain knick knacks and not others? Or allow them to sell stuff, but not have third party sellers?
You could spin off AWS, but I’m not sure it’s not already separate.
Monopolies are legal in USA so its jut nonsense talk to split Amazon.
Even if they split Amazon than it changes nothing as the same shareholders will own bot companies.
@val_inv6239
Monopolies are legal but still subject to anti-trust. If the government believed Amazon was using its monopoly to harm consumers they would break it up. It wouldn't matter if the same shareholders own Amazon and AWS as the purpose would be to make it harder to subsidize the e-commerce business with the web service business.
@reggiejenkins6458 Exactly what @@Prolute is saying. Break them up to prevent AWS from allowing the e-commerce side to continue posting losses which drive out competition. If you force AWS to spin off, the e-commerce side will be forced to pursue profitability more than it does currently. This would naturally allow for more competition in the e-commerce market since Amazon prices will be forced to more accurately reflect reality. A monopsony may seem good for consumers due to low prices, but it restricts innovation by suppliers and drives worse products than we would have in a normal market. (For example, Prime 2 day shipping is incredibly expensive for Amazon, yet most of us probably wouldn't value most of our purchases enough to pay that cost ourselves and, indeed, Amazon themselves often lose money on Prime members in order to gain market share. Thus, there should theoretically be a lot of room for a competitor to meet that imbalance in the market by providing cheaper products with longer shipping times, increasing competition in the space.)
As for the idea that the same shareholders owning both companies, you can look at AT&T for an example of that. While the broken up AT&T had the same shareholders, and the broken up companies did eventually merge back into one company, they did so only after competition was reignited in the market. Present day AT&T is just as it was in the past, but the breakup allowed Sprint, T-Mobile, etc. to enter the space while it was busy consolidating. The current wireless provider market is much healthier than it was before the breakup.
@@Proluteunderstood.
High profit just means the crime was completed. You don't wait to stop a robber after he's already finished.
I think if Amazon raises prices, exercising their monopolistic ability, that more people will move to Temu or other online retailers. I don’t think that they are going to be able to do much price gouging.
Well it depends because if they raise prices by like 5% on products. They sell 700B$/y -> 35B$/y . It could make it as profitable as Aws
Temu is just a platform for Ponzi schemes. All exposure goes to the cheapest item in class, no exceptions
Temu won't last, their predatory pricing will soon get noticed by the FTC
@@skyfeelan Relating to that, the US is planning to pass the bill that restrict the tax-free shipping of items below 900 USD, something that Temu, and other Chinese e-retailers widely exploited it to their advantages. If imposed, they'll hardly be able to survive long ...
@@tenglim4406 rare government W
Amazons profit is 2% as is Walmarts, target, Costco, dollar general ish. End of the day retail is not profitable on a small scale AND that’s why you have to posses a HUGE market.
Great point.
Apple Store profits are huge.
@@robertm3951 $79bn I’d say so. That being said you’re talking about a specific form of retail only and that’s electronics that they design and manufacture while also having a duopoly in the smartphone market.
@@robertm3951 Because they sell stuff they manufacture themselves. That is direct to consumer rather than retail.
@@robertm3951Because they sell their own products. They're a luxury brand, not a retail company.
Selling other people's products doesn't make much money.
It's about WHO is harmed. Smaller businesses are harmed. That was her original point in that law school paper and that is that is the opposing point to the Bork test.
That sort of reasoning leads to enforced monopolies.
"Allowing another grocery store in this area would harm the existing grocery stores!"
I try to use Amazon as little as possible. I always check if the same product is available on eBay, or directly through the company's website.
eBay just stinks. It's loaded with scammers and fake auctions. The latter coming from how the seller can back off if they don't like the winning bid. I use Amazon because I don't know any other trusted site, although beware fake reviews.
Lmao no amazons costumer service is the best and they NEVER denied my return even for a $10,000 product i believe a trillion dollar over the companys own D2C anyday.
@@prav077 people who can’t spell customer are usually the shoppers on amazon 💀
I would warn you about all the counterfeit products on eBay, but TBH Amazon has the same problem. Hitting up the company directly is the only safe bet. They'll either sell you the product or link to the official product listings on ecommerce websites.
Me too. They're punishing me for not using prime by delaying my orders for days. Now I only buy digital products that I can't find anywhere else.
Amazon is extremely expensive compared to ebay, I barely buy two items per year at Amazon.
Because Amazon is basically big box retail at this point expect Walmart like profit margins outside of AWS going forward.
I'm from eastern Europe, and the closest Amazon to me is in Germany. I'm baffled how they can have so much presence in the USA, to me the website looks like shit, compared to many of my local e-commerce websites, especially the ones which specialize in tech.
They really need to up their game.
Keyword there is "specialize", its a lot easier to manage a botique with limited scope compared the vast amount of product categories available in amazon as well as third-party sellers etc.
100% agree. Always thought this too... As an eastern European living in the west
Insane financial black holes like Amazon Prime originals like De Perifferull, De Rings of Powah, Goliaf, Krysis in Sick Scenes etc are a sure drain on profits.
But the fact remains they aren't making bank, they are paying the bills.
I don't know why people can't live without Amazon! For the past five years I'm not buying anything from Amazon and I'm still living, breathing and enjoying life!
Connivence is why. People will pay for easy and time.
I always wondered what the "see buying options" button was there for. That is very scummy
😮
For years we've been told that their profits are low because they just reinvest their money back into the company. And that reinvestment does not count as profit. Is that true?
It's not considered reinvestment, in case the money is spent on expansion, R&D, etc. within the same year it has been earned. It's just additional costs.
Amazon is a public corporation, so any money that is not paid to stock shareholders as dividends is considered cost.
@@TheWood005 If they let the money accumulate in the bank rather than pay it out as dividends, like Microsoft did for many years, that isn't considered cost.
@@TheWood005That's not how that works. Many companies with low P/E ratios have low dividend yields, and vice-versa. Volkswagen (VOW3.DE) has a price-to-earnings ratio (stock price ÷ earnings per share) of 3.81, but the dividend yield (annual dividend ÷ stock price) is only 7.92%, not 26.25%. Berkshire Hathaway paid no dividend at all but their earnings was $96 billion last year.
Great insight. What does it mean to have a monopoly? When maximising profit is not the primary goal of management, we have an interesting puzzle.
Good luck proving the monopolistic nature of the company that consistently offers the best price to consumers and has also driven down competitor prices. Behavior towards 3rd party sellers is not monopolistic. It might be immoral, but not illegal.
Isn't a monopoly only dangerous in an industry with a high barrier of entry? As far as I can tell, starting up an e-shop is no big deal. The only problem could be delivery discounts based on volume (small shops pay higher rates at UPS etc.). Or volume discounts from the producer.
For as long as Google crawls the smaller retailers and puts up their offers on Google Shopping (which can be switched to sort by price), there should be no problem with exposure and visibility. If people don't just go straight to Amazon, that is.
Sure, but we like to demonize the monopoly itself so we have an excuse to extort rich chumps.
A monopoly is not bad per se. It's about how the business conducts their enterprise. If lumber jack #1, offers the best lumber, with the best service, at the best price, and consumers just chase him with their money, it's not an issue. If he schemes and undercuts the competition, then it's an issue.
@@sblijheidFor as long as Amazon undercuts the competition, it means the customer is getting the best value. When, at some point, Amazon switches to "milking" mode (increases prices, assuming no competition), it would not take long for someone to set up an e-shop and undercut them instead (the point of my OP). I still do not see how Amazon could ask outrageous prices for any length of time, unless they somehow get a monopoly over the entire supply chain (suppliers, parcel delivery, etc.).
Well, if Amazon is a monopoly, I would be using them to purchase all of my stuff, but I very rarely purchase anything on Amazon these days, so how is it a monopoly?
Companies have a lifecycle. Amazon's seams to be still in the groth-startup phase even though it's huge. It's an exception and a nightmare to value.
good recap. disagree on one count: pay to play advertising is inherently anti competitive because it favors incumbents. the fact that slotting fees have existed before amazon’s ad model doesn’t make it any fairer.
3:35 I was really disappointed when I heard Photoshop was going into a SAAS business model. However, they really changed my opinion of them when they released the Adobe chicken with Quinoa & Kale Enchiladas.
😂
food for thoughts, Amazon and all the pure online sellers are killing the high street commerces which are often the main source of tax revenue of local administrative government. There is then incentive for government to try to break down Amazon
There is a better reason. When so much business is concentrated in one company, they need less workers to do more. If there were more companies doing the same in that market, more people would be employed. Every government is well served with more people employed; they get more taxes and have less welfare recipients.
Amazon pays sales tax in most jurisdictions.
You may have to make a video on your sponsor soon
First capture the market with cheaper prices.
Once on top, slowly raise the prices.
(Just don't call it a monopoly)
What do you think of this business plan?
people buy from amazon because of the competitive prices. If they raise prices, sellers can just build their own website, it's pretty cheap. Amazon charges for it's logistics which is a legit cost.
And they throw away 1 billion on rings of power a show no one watched
Great video. I was aware that most of their income came from AWS I was not aware their "retail" profit margins were so thin. I've often thought that Amazon facilitated higher prices due to the fact that many independent sellers of the same product did so on Amazon. Thus it is so easy to see what others are charging and thus charge the same or some insignificant amount less. I collect used CDs and over time it's gotten harder to find "good deals" as everyone charges about the same these days.
It s inline with companies like Kroger. Retail is low margin business
Amazon e-commerce loses money, even more than stated. This is even after the boom of lockdown. But the aws makes it hand over fist. If they ever split them up, it would go under within the year.
you do know that Amazon has existed since the 90's right? if it was going to go under it would have done so ages ago
@Zuranthus
If the retail part is being subsidized by AWS, then splitting them up would make the retail dept go belly up. It's common sense. The business structure is different now than '05.
@@sblijheid Amazon existed for about 10 years without AWS propping them up, I'm sure they will manage
@@ZuranthusYeah when it was a shitty online bookstore
Warehousing and distribution used to lose money but as stated in the video now they barely break even.
I find the biggest problem with amazon is the sheer volume of trash, I'm very surprised that people buy from there so much.
I actually prefer to go to other retailers that have a more curated offering so I don't have to spend 3 hours wading through garbage search results and barely know tf I'm even buying in the end.
[0:55] I find this info a little funny - Amazon does have a massive lead over its competitors, but is it right to call it a monopoly when they have 36% of the market share? Especially when we look at companies like Nvidia that have a much greater market share (in the range of ~80%). AWS has a ~32% market share in the cloud market, which is the greatest, but is also hardly a monopoly either.
On the other hand though, I don't think it's wrong for the FTC to go after Amazon for acting in an anticompetitive manner, even if they're not a monopoly
Nvidia doesn't actively tries to weed out copetition. They just do their best to produce good products and their customers chase them.
@@sblijheid Sure, but that doesn't mean you are or aren't a monopoly. A company can engage in anticompetitive behavior but that doesn't necessarily make them a monopoly.
@@sblijheidNvidia does actively try to weed out the competition. Whilst AMD is constantly developing open standards such as FreeSync and ROCm, Nvidia uses proprietary solutions such as GSync and CUDA, and makes it illegal for competitors to use them, so once you build on Nvidia technologies, you can't easily switch away.
Amazon is definitely not a monopoly. There are other options besides that does better in many ways. I have never needed Amazon for anything. I can get everything at Walmart.
Actually, I think Walmart is more of a monopoly than Amazon because it can undercut it's local competitors
The thing is that most businesses that are squeezed out due to low prices will be replaced with new ones the moment the prices rise again. Hence the ability to abuse market power is very low. Amazon focuses on logistics from the start to minimize costs, they are sucessfull because they increase price pressure by their superior logistics, not the other way around
The government cannot attempt to punish a company for being too good at their mission and customers. Terrible reasoning, they have nothing.
Profit is not the same as cash flow.
Amazon has huge revenue, but makes little money. That is what you mean to say
Love your content
Amazon may have the largest market share in North America and are still selling with low margins. Imagine if they practiced price gouging with their “monopoly” then consumers will have no choice but except it 😮
Long term control v short term profits there you go I summed it up before the video started
i dont get how they want 39 euros now for free delivery so they can deliver 6 items from 6 places in 6 packages instead of the one thing you wanted
Capitalism gets more people out of dire poverty faster that other schemes BUT late stage capitalism needs anti monopoly laws (and enforcement)
Well for one they did burn over a billion dollars to make customers despise them (fyi i am talking about 'rings of power')
15% is only the listing fee, if you incorporate other pieces including fulfillment and customer support, this fee is now close to 50% for sellers. The fact that they can't turn it into massive profits on paper and the margin is razor thin is a story of the inefficient operation of the business. IE: Excessive bonuses to fat executives on top.
It's simple demonstration that logistics are costly. The executives who get that much pay work on AWS,Alexa, etc.
@@phoneywheeze Amazon Prime fee should cover this and more. Let's not forget that close to 50% of the vendors are vendors from China where Amazon takes no part in international logistics. The US logistics that Amazon do handle are outsourced as well, so the cost to Amazon is minimal.
I live in America, buy stuff online (ebay, etc.). But I've never bought anything from amazon.
Amazon is the biggest player in the market because of their first mover advantage and the network and scaling effects that internet businesses are known for. Their margins are thin because they still face significant competition who are just waiting for them to lose their edge, and NOT because they're inefficient. Apart from the price fixing you mentioned, there is nothing suspicious about their business model. They are clearly not a real monopoly.
Once Amazon no longer allows returns…it is game over. Too many poor quality products and bad listings…
Not just Amazon, but Google and Microsoft all are essentially running on AWS, GCP and Azure money.
UA-cam, Xbox, Prime Video are loss making, Windows OS, Amazon store are scraping by. Walled garden app stores were profitable but they are under legal scrutiny around the world.
doubt about google, doesn't most of their money come from advertisement?
In my country we have like 5 companies fighting each other for market.
Amazon is dominant but calling it a monopoly is complete nonsense.
Clearly you're not in ecom.
@@msau9747 UA-cam doesn't show dislike anymore but I disliked your comment. Amazon has 37% market share in ecommerce in the US.
@@kevinnguyen7689 clearly you’re not in ecom. Dig into those numbers. See what the other % consists of.
@@kevinnguyen7689For a monopoly lowest should be 50%+ and in strictest way it should be 90%+. Amazon is atmost market leader.
"Insider Intelligence reports that Amazon dominates e-commerce in the United States with 33% of all online sales, six times more than its closest competitor, Walmart". The rest of that % is made up of millions of small companies, and giant companies selling their own brands like Apple, HP, Sephora etc. 33-37% is actually a behemoth. Life must be tough being so uninformed yet so sure of yourself. @@kevinnguyen7689
Amazon isn't an online retailer, is a logistics company. They don't need to make a profit from a sale, but just to deliver that sale. Why it is so hard to understand?
Logistics companies need to be profitable too
It's a monopoly in act 2. Act 3 is when it's TOTAL and the prices go sky high because there's no one left!!
Well have they been audited? That money is going somewhere and not on the books.
The FBA cost is covered by hiked seller fees. Creating a worse experience for both sellers and customers by allow an influx of terrible/dubious sellers to run rabid across the site and bloat it with junk then charge the seller advertisement fees along with the threat of shadow banning. These are not weak arguments. Apart of it is similar to what Google does. Create a problem and sell the solution. Only possible and monopolies and oligopolies.
Amazon should hold a gambling license to offer pay to win, (or lose to win) advertising.
Yeah, Amazon is playing the long game
This is a PR video probably funded by Amazon. Amazon is shutting down small businesses nationwide. Does China pay Amazon to offer Chinese made products?
Amazon is a fine example of monopolies not leading to high prices and instead just being horrendously mismanaged and leading to everything being crap quality and treating customers poorly. Money isn't the only way for monopoly to be abused.
Why are the profits so small?
Maybe heaps of R&D as well as tossing money away on space-fairing projects?
The dragon getting lazy (leading to stagnation) while the tiger works hard?
Blue Origin is not a part of Amazon. Your personal bias against Bezos is showing.
#4 Maybe they manipulate the numbers so that it appears they aren't very profitable. Bc how can u be the richest man in the world with a business that's barely profitable??
I use Amazon more because I have a shared prime account, & if I order off another site I have to have a minimum on my order to get free shipping.
There’s also some stuff they don’t have at my stores for pickup.
I definitely try not to shop too much 😂bedsides stuff for the kids, but when it’s a shared account it’s useful enough for me.
I see that most of the arguments are correct. However on the third point, as a consumer why would I choose to buy any given item from at merchant with a higher price. The merchant listing the lowest price is one to buy from. Eliminating the lowest price rule amount to consumers taking more time to look up prices for each item.
That would mean Amazon is always cheapest so always buy from them making them the monopoly. Where they could keep increasing fees on sellers taking a bigger and bigger cut. Sellers wouldn’t be about to sell anywhere else. Because everyone would by the cheapest from Amazon.
@anywhereroam9698
For a short period, because the sellers would go out of business. The combination of low prices and high seller fees is not sustainable.
"a few run by republicans...." There's two on that list.
How is Amazon a monopoly? You can buy everything from another place. Walmart took this title for a long time.
so, they base a monopoly by the % of market share?
Then At what % is not a monopoly ?
amazon spent billions upon billions of dollars growing and perfecting their logistics business. wanting a return on that investment is completely warranted
They intentionally increase it, so not to pay taxes
Weird distortion. Job-producing infrastructure is a big tax write off, so when they were growing (and losing money) they got out of a lot of taxes.
Taxes are only paid on profits. Expenses can be written off. So why would they intentionally increase their expenses so that they don’t pay taxes? It doesn’t make any sense.
@@tradingpost431 The same reason film studios spend hundreds of millions on some advertising agency in Bolivia or (insert other tax haven here). By spending inflated amounts on companies/services you own, but have registered in another country, you can make a 'loss' and pay no tax whilst also keeping the money. As long as it exits the country you want to avoid paying tax in on it's way to your shell company all is well. Every large enough company does it, there's no reason to think Amazon would be any different.
Very nice work here, the third point (anti-undercutting measures) is indeed the strongest one and a prime example of how capitalism (via the profit motive) is inconsistent with itself, resulting in other anti-competitive acts like patents, mandatory anti-compete agreements for workers, and lobbying third parties to abstain from competitors.
You got it right, they use AWS to finance this monopoly, they can drive out competition and there will be very2 little competition. I would say it's a close oligopoly.
3 minutes in. Nah, Amazon is doing it on purpose. I wont think bezos will intend to barely scrape by if not for something else. Since AWS is basically subsidizing the ecommerce part, bezos is just maintaing it to gather more data from consumers and suppliers to sell them, which is more lucrative.
That was really interesting! Thank you!
On the monopoly point I feel like this video answered the question itself with a historical recount of Walmart. 15 years ago all everyone talked about was Walmart being the monopoly coming to town, taking all the jobs and displacing small vendors… and now they’re a 6% market share with little intervention.
He said 6% of e-commerce. They're still a giant in "brick and mortar" sales. Most of us live very close to a Walmart so I never feel the need to order online from them. Thus we do not contribute to their e-commerce sales but we definitely give Walmart way more money than Amazon. Lots of us get all of our groceries from Walmart which again does not contribute to their e-commerce sales.
and look at what that "little intervention" has cost, you have entire town centers boarded up and shut down, they have left a trail of devastation across the world
@@Zuranthus are you suggesting Walmart singlehandedly destroyed small town economies?
@@DAWMiller lived in a town where i saw it happen in real time, Walmart came in and obliterated even other shopping centers like K-mart, then they added a grocery store to their complex and it was all over. couple o years later they moved out of the supermall unit they were renting (said mall is now 90% shuttered) to build their own Sams/Walmart facility leaving everything dead in it's wake, this same story has been repeated all across the world in which Walmart has opened stores
@@Zuranthus ok and did those business owners die when Walmart came to town? Or maybe the owners and employees go off and work somewhere else while Walmart employed more people than those shops combined?
The car destroyed many horse-related businesses, the clock destroyed those who's job it was to sell the time to people, and clean energy has killed coal miner jobs. It's technological and market advancement.
People forget that Amazon is a marketplace for small businesses to sell goods on their platform, and as a result, for $9/month I can get almost anything I need for work or pleasure within 48 hours. That is a game changer. Old mom and pops stores didnt sell the things i wanted or needed, and if they did but were sold out it took weeks to restock. How is that a better world?
Def a monopoly for marketplace. Would love to see it split up in to two companies or three at least.
There’s no other online market place that’s nearly as usable. eBay comes to mind but it’s for second hand stuff and to be honest is ancient, bad UI.
Amazon just launched in my country. Interesting times ahead.
🇿🇦
Eliminate competition after provide efficient service for low profit margins... Aca German model
The non compete practice is still in effect for books.
You should do a video on Ryan cohen and Marc Cuban
Duh it simply reinvests most of the income to grow hence low profits, BTW Profits = Taxed income
Big, competitive retail chains (like Walmart also) typically have low profit margins, because that's what it takes to win in that market. Amazon won by often undercutting even Walmart... And that's what consumers like.
Amazon Web Services - the tech side of Amazon - has large profit margins. Because it can..
Although to be fair, AWS also became successful in part because it was fairly cheap and offered a lot of flexibility.
Which likely goes to Jeff Bezos' instincts as an entrepreneur.
Every corporation should cut smaller sections. This is mad to allow to go these corporations so big. They ruin everyehing
it would crash and burn. As mentioned in the video, Amazon is subsidized by AWS. If they that into different part, amazon would struggle to exist
they still operate as if they have stiff competition
I don’t believe the profits are low
7:16 - Check out the hips on that stallion.
never ever bought anything from Amazon. hahaha. its just a US / EU problem. there are tons of players like Alibaba, Taobao, Aliexpress etc for buyers. but maybe seller options are just limited to Amazon, esp in US.
36% market share is a monopoly?
Khan is full of nonsense.
In the US there are major competitors like Walmart and Costco.
Finally bro dunking on the big guys 😂
Malfeasance knows no size
Does WSM still do DD?
Bezos has a sizable bank account…seems Amazon makes at decent profit
Amazon gross profit for the twelve months ending September 30, 2023 was $256.202B, a 18.52% increase year-over-year.
There aren't many companies that have ever even profited that much.
Probably time we all unsubscribe.
@realfun7188
Unadjusted for inflation. The oly reason they made so much money on paper, is because prices are up. Prices are up because operating costs and costs of goods are up across the board.
You should learn how the numbers are generated.
Soon: ACME inc.
36% of any market is, and this is true, not a monopoly. Literally 64% (more than half) of that market is served by other companies. Not even close to a monopoly.
When monopoly isnt mandated by government power, monopolies exist because they provide the most value to customers at the lowest cost.
All the dumb chinese garbage brands are clogging all the search results. I dont want to buy anything off of there
nice!
inneficient company...look at the asian rivals, they can be profitabl, how is that?
2:34 Both have the same nose?
Money.laundering.bezos
Give credit where credit is due. For instance, Amazon is the world's greatest bookstore, because they have everything that can possibly be sold due to all used bookstores being on the platform.
That's actually it, basically - Amazon has a (near) monopoly on being the sales platform. If you're not on their site, you're not going to survive. They get a 15% cut of every third party transaction, without any risk or investment on their part except the cost of web hosting. That's not good for either the independent sellers or the customers.
@@jonathanj8303 watch the video, try 40%.
They and B&N destroyed small bookstores which had competent staff. You can't ask Amzn employees something specific about a book, author, or genre. They are good at giving BS responses with thick Indian accents.