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Monday, September 24, 2012

Amazon Loses – Or Does It?


Amazon, the behemoth the book industry both loathes and loves, took a hit the other day when Wal-Mart announced its chain of thousands of stores would stop selling the Amazon Kindle. Target did the same thing this past May.

Why would these stores stop selling a popular product that nets them money and customers? Because that product contributes to putting them out of business.

Though Amazon has no physical stores, its online reach is everywhere. Its tablet, the Kindle Fire, allows e-readers to also shop online. Amazon, which last year released a shopping app that encouraged consumers to browse at competing stores like Wal-Mart and then to shop for a lower price at Amazon, wants to sell everything to everyone, even at a loss.

Amazon netted a profit last quarter of less than 1% of what it took in. That means for every dollar it collected from consumers it had expenses that exceeded 99 cents. Wall Street, however, is banking that Amazon will be super profitable. Its stock price was around $170 per share a year ago – now it is $260 – but its net profit as a percentage of overall revenue has been shrinking. Go figure.

Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer, the nation’s largest book promoter. You can follow him on Twitter @theprexpert and email him at brianfeinblum@gmail.com. He feels more important when discussed in the third-person.

1 comment:

  1. The buoyancy of Amazon's stock price really is puzzling.

    ReplyDelete