Deffinitely a twisted piece of word smithery. Though it looks like not all of fulfillment
costs are included in the marketing and sales numbers.
Junior,I should have continued. Here is the next paragraph on that issue from the 10Q
"Marketing and sales expenses consist primarily of advertising, public relations and promotional expenditures, as well as payroll and related expenses for personnel engaged in marketing, selling and fulfillment activities. All fulfillment costs not included in cost of sales, including the cost of operating and staffing distribution centers and customer service, are included in marketing and sales. Marketing and sales expenses increased primarily due to increases in the Company's advertising and
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promotional expenditures, increased payroll and related costs associated with fulfilling customer demand and increased credit card fees resulting from higher sales, as well as increased marketing and sales activities associated with the entry into music sales, the launch of new stores in Germany and the United Kingdom and the acquired entities. Such expenses decreased as a percentage of net sales due to the significant increase in net sales. The Company intends to continue to pursue its aggressive branding and marketing campaign and expects its costs of fulfillment to increase based primarily on anticipated sales growth. In addition, the Company intends to increase investments in marketing, promotion and fulfillment activities related to its product and international expansion, as well as in marketing and sales activities of Junglee and PlanetAll. As a result of the foregoing, the Company expects marketing and sales expenses to increase significantly in absolute dollars. "
Have you seen a break out of the cost of sales numbers and what, if any, fulfillmet costs
are listed there?
This is as close as the company provides and is from the same 10Q:
"RESULTS OF OPERATIONS
Net Sales
Quarter Ended September 30, Nine Months Ended September 30,
----------------------------------------------- ----------------------------------------------
1998 1997 % Change 1998 1997 % Change
------------ ------------ ------------ ------------ ------------ ------------
(in thousands) (in thousands)
Net sales .................... $ 153,698 $ 37,877 306% $ 357,103 $ 81,747 337%
Net sales are composed of the selling price of books, music and other merchandise sold by the Company, net of returns, as well as outbound shipping and handling charges. Growth in net sales reflects a significant increase in units sold due to the growth of the Company's customer base and repeat purchases from the Company's existing customers and, to a smaller extent, increased sales of music. Music sales totaled $14.4 million for the quarter ended September 30, 1998. This increase was partially offset by a decrease in prices effected in June 1997. International sales represented 20% and 26% of net sales for the quarters ended September 30, 1998 and 1997, respectively, and 21% and 27% of net sales for the nine months ended September 30, 1998 and 1997, respectively.
Gross Profit
Quarter Ended September 30, Nine Months Ended September 30,
----------------------------------------------- ----------------------------------------------
1998 1997 % Change 1998 1997 % Change
------------ ------------ ------------ ------------ ------------ ------------
(in thousands) (in thousands)
Gross profit............... $ 34,875 $ 7,170 386% $ 80,424 $ 15,905 406%
Gross margin............... 22.7% 18.9% 22.5% 19.5%
Gross profit consists of sales less the cost of sales, which consists of the cost of merchandise sold to customers, and outbound and inbound shipping costs. Gross profit increased in absolute dollars, reflecting the Company's increased sales volume. Gross margin increased as a result of improvements in product costs through improved supply chain management, including increased direct purchasing from publishers, as well as higher overall shipping margins, which together more than offset the impact of lower prices and lower music margins.
The Company believes that offering its customers attractive prices is an essential component of its business strategy. Accordingly, the Company offers everyday discounts of up to 40% on hundreds of thousands of titles and certain "special value" editions discounted up to 85%. The Company may in the future expand or increase the discounts it offers to its customers and may otherwise alter its pricing structure and policies.
The Company over time intends to expand its operations by promoting new or complementary products or sales formats and by expanding the breadth and depth of its product and service offerings. Gross margins attributable to new business areas may be lower than those associated with the Company's existing business activities. In particular, in June 1998 the Company launched its new music store and has announced plans to launch a video store. Music and video gross margins are lower than book gross margin. To the extent music or video becomes a larger portion of the Company's product mix, it is expected to have a proportionate impact on overall product gross margin. "
Note that the cost of goods sold does not include any operations costs.
In summation, all of the costs of operations for AMZN are placed in marketing. This not only includes payroll for people doing boxing, unloading, stocking, etc. it also includes, distribution center and office rent, utilities, taxes and anything one thinks of such as toilet paper.
Here is the complete relevant part of the 10Q grouped together:
"NOTE 1 - ACCOUNTING POLICIES
"
Glenn |
