Please post some numbers. Anything logical that you wish. That would simulate profitability for AMZN in whatever year you choose. Let's assume that marketing expense as a percentage of sales will reduce. However, you nor I know how much is marketing and how much is fulfillment expenses. An example would be nice before you state to GW that he would be better off learning more about this. Where is the inflection point? Inquiring minds.
Glenn-
That's a tough one. On the same side of unknowns, do you have any devil's advocate ideas about how Amazon could surprise you after a couple or few years and become not only profitable, but dearly so? If anyone could come up with a feasible scenario, I'd guess it might be you. Maybe you've tried already, as an exercise to test your bearish position...?
I guess one scenario which is most likely is that they continue with their recent success at garnering the trust of many internet users, continue acquiring new users as customers, continue expanding their product offerings, and eventually put in place some higher margin lines. If they get that big (how big is big? $10B in revenues?), they may have built a web-place where all kinds of services and products are offered (travel, hardware, software, music, books, calendar, videos (possibly w/ electronic delivery further in the future), clothing (hypothetical -- "Gap signs deal to sell jeans at Amazon"), etc. That doesn't point the way to profitability, just more revenues. It'll take some high margin sales to bring the black. No quantitative analysis here, just some thoughts.
Any examples from history of companies which have gotten huge (as measured by revenues) without turning a profit? How long can they last? If they 'crash and burn' as many bears predict, what will become of what could conceivably become $2B in revenue for FY00, or $4B in FY01? I realize that growth may seem unlikely, but it appears feasible by a small stretch...
Randy |
