The smaller ones piggybacking off of Ebay and similar generally turn a (small) profit immediately. However, the large ones with innovative storefronts and the Google-like classy looking top notch websites are always making massive losses, often for many years at a time.

The reason for this is that investors hope that the wave of people moving their lives/shopping online will turn these big players into the next Walmart - which is almost exactly what is happening with Amazon now. So the strategy is not a terrible one, just a risky one.