How does amazon make money?

[The motor guy]

Isn't it kind of the same as ebay? They use independent sellers to sell items? I've ordered stuff in the past and found that the wrong item was shipped. Or they let you ship stuff back for free if you call them up the next day to cancel an item. They just seem to unorganized that I don't see how they make so much money. My guess is it's the sellers who get screwed over. It makes a lot of sense to pay to ship an item and then have me ship it back when they could have just cancelled it and not paid for all the shipping fees.

 

[OneEyeJack]

Is there a rumor that Amazon makes money?

 

[Alfred_B]

If you are asking about making profit, they don't.

 

[The motor guy]

Originally Posted By: OneEyeJack
Is there a rumor that Amazon makes money?


My apologies, looking on the internet apparently they don't make money. lol I wonder why.

 

[SuperDave456]

Then there are books. All E-Books/Kindle.
A great place for little known authors to get better known, but a very cut throat environment.
Better in some ways, worse in others.

I wish the textbook industry was more competitive. When I went to college it was a minimum for $500 a semester in books that weren't always useful, but were "necessary" due to the racket between publishers, schools, and professors. $500 was if you got everything used at a good price.
I can only imagine how much a decent e-book would cost.

I wouldn't say sellers get screwed. It's just business as usual. Things get mis-shipped, things get lost, returned, broken on a pallet and not inspected. It happens, not that often, but it happens.
I used to be a warehouse manager for a relatively small network hardware place.

It's all in the logistics, and much of that comes from economy of scale.
UPS, Fedex, and USPS will bend over backward to make Amazon happy.
Not so for the small business.
(I had to get there at 7am and leave at 7pm most days. As Sales folks almost always make promises that cannot be kept.)
Who else has the capital for a couple completely automated million square foot shipping facility?

Then there is Amazon's "cloud".
You need a bunch of processing power fast you can rent it from them. WAY WAY WAY CHEAPER than buying the hardware.

Think cheeseburgers.
Would you rather sell a few $30 cheeseburgers, or a few hundred $2 cheeseburgers?
You make more immediately on the $30 burgers, but you make volume and repeat business on the $2 burgers.

It's a business of volume.

 

[Bottom_Feeder]

Amazon is their own store. They ALSO happen to sell stuff for other smaller companies and individuals, somewhat like eBay minus the bidding.

Amazon's customer service is first class assuming what you purchased was sold by Amazon directly. Personally I avoid buying items from anyone but Amazon themselves. You just need to be aware of what you're buying and from who. They make it pretty clear.

 

[Pop_Rivit]

Originally Posted By: Alfred_B
If you are asking about making profit, they don't.



That simply isn't true.

Amazon Recent Profits

 

[rslifkin]

They do sell a lot of stuff themselves in addition to the other sellers that sell via Amazon.

If you call them up the next day, they may have already shipped the item, so having you send it back is the only thing they can really do.

 

[hattaresguy]

AWS!

 

[Alfred_B]

Originally Posted By: Pop_Rivit
Originally Posted By: Alfred_B
If you are asking about making profit, they don't.



That simply isn't true.

Amazon Recent Profits


Page not found

 

[hattaresguy]

No that's not a joke, that's a link to an article. They turned a profit.

 

[dareo]

They take 15% and $1.35 from each person who sells a book on there.

 

[Andrew1972]

The web services they host bring in a lot of revenue. Basically bit and parts to build web applications and sites.

Netflix, pintrest REDDIT are massive sites that uses it. I uses them all over the place in my work.

 

[HTSS_TR]

Originally Posted By: Pop_Rivit
Originally Posted By: Alfred_B
If you are asking about making profit, they don't.

That simply isn't true.

Amazon Recent Profits

Amazon had some small profit in some quarters, but they rarely had full year profit. The main reason is they were expanding like crazy, almost every year they had new business(es).

 

[itguy08]

They make money on their cloud computing stuff. Before AWS was big, Amazon lost money darn lear every quarter for all of its existence. Their prices when counting shipping and now tax in many states are no better than B&M stores. Never have been all that great price wise. They do have the depth of product though.

 

[The motor guy]

Originally Posted By: itguy08
They make money on their cloud computing stuff. Before AWS was big, Amazon lost money darn lear every quarter for all of its existence. Their prices when counting shipping and now tax in many states are no better than B&M stores. Never have been all that great price wise. They do have the depth of product though.


I remember back in 2000 when they were first getting started that their products were about 40 percent higher then just buying at a normal store. I'm starting to notice them doing it again.

 

[3800Series]

I'm not positive as I'm not a seller but I think Amazon charges sellers $50 a month for the service. I could be wrong probably am but I think the membership is $50 a month. It might be less if you sell less or they might have a variable price membership model but I do know they charge sellers.

Remember hearing they lease severers to others as well.

 

[Brasileno]

Originally Posted By: motor_oil_madman
Originally Posted By: itguy08
They make money on their cloud computing stuff. Before AWS was big, Amazon lost money darn lear every quarter for all of its existence. Their prices when counting shipping and now tax in many states are no better than B&M stores. Never have been all that great price wise. They do have the depth of product though.


I remember back in 2000 when they were first getting started that their products were about 40 percent higher then just buying at a normal store. I'm starting to notice them doing it again.


Oh man... Amazon is no longer the cheapest around?

They can only take their cost-cutting measures but so far, lol.

 

[901Memphis]

Amazon is making a huge income from prime membership

 

[Donald]

Originally Posted By: motor_oil_madman
Isn't it kind of the same as ebay? They use independent sellers to sell items? I've ordered stuff in the past and found that the wrong item was shipped. Or they let you ship stuff back for free if you call them up the next day to cancel an item. They just seem to unorganized that I don't see how they make so much money. My guess is it's the sellers who get screwed over. It makes a lot of sense to pay to ship an item and then have me ship it back when they could have just cancelled it and not paid for all the shipping fees.


The bulk of the normal stuff comes from Amazon and they bought it wholesale. They also sell other companies stuff and make a fee and can warehouse and ship other companies stuff and make a larger fee.

Amazon is trying to grow their customer base rather than make a huge profit. So they are OK with not having a huge markup.

Then there is the devious tax haven parts of Amazon. Somewhat like this: Amazon Luxembourg owns the Amazon intellectual property technology (such as one-click ordering) and leases the technology to Amazon US, Amazon UK, Amazon Europe. Amazon US might make $500 million in profit, but has to pay Amazon Luxembourg $400 million in royalties for the Amazon technology. So Amazon US pays tax on $100 million and Amazon Luxembourg pays tax (at about a 5% rate) on lot of profits funneled into that country as royalties.