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This is a bit of a naive analysis. Amazon's margins aren't "razor thin". They're thin in some places but huge in others. AWS, for example, has a 50% gross profit margin, and their gross margins on digital goods (mp3s, ebooks) are also high. These aren't small potatoes, these are multi-billion dollar businesses in their own right.

As for shipping, amazon already has a delivery service (amazon fresh) but I don't think they have a strong desire to completely own delivery, they have very cozy relationships with all of the major shipping companies. If you knew how much money amazon actually pays for shipping you'd be astounded, they're very good at using their volume as negotiating leverage.

Logistics is at the core of amazon's business though, and it's a big reason why they are succeeding where others are not. If you order through amazon you can expect most items to be en route in less than 24 hours. That takes a lot of work especially considering the sheer quantity of stuff they offer.

Aside from that, they aren't just trying to do one thing, they are trying to diversify the company, so that it will rest on multiple multi-billion dollar divisions over the next decade (retail, AWS et al, ebooks, mp3/VOD, etc.)

> They're thin in some places but huge in others. AWS, for example, has a 50% gross profit margin, and their gross margins on digital goods (mp3s, ebooks) are also high.

How do you know this? I don't think they have ever released this information in their financial reports. Are you going by analysts' estimates?

In the UK, a lot of deliveries for Amazon is done by Amazon Logistics. They're not doing end-to-end deliveries, but have set up a bunch of "small" (50,000 square feet) warehouses to act as depots, and hired smaller local courier companies to do the final deliveries, apparently.

So their cozy relationship with the big shipping companies might not remain so cozy.

I've seen a few Amazon vans in the US as well. (Midwest)

I think that's a great point that they can get away with it because they've been doing it for so long. It's built into the core of the company. In the boom days, while Pets.com was betting on sock puppets and others were making ludicrous Super Bowl half-time ad buys, Amazon was building warehouses. And they still are. The seem to understand that infrastructure, over all other things, is what will let them win in the long run, no matter how unsexy it seems.

Their own logistics / delivery component would be a gargantuan undertaking, even for them. They seem to understand what businesses they can get into and do very well in (cloud computing, generic branding (Amazon Basics), eBooks), and which ones to steer clear of. I suppose they could launch this in urban areas, but that would be shortsighted in an area that they are particularly smart, so I wouldn't count on anything past a pilot program.

Regarding what could be done to make more Amazons... You can't. Walmart is the closest competitor (although they are a bigger company, but let's see about that in 15 years). If there is one company on Earth that can beat Amazon at efficiency (warehouses, shipping, and general business ops), it's these guys. They've made an empire around it. But it seems their only strength here is their storefronts, so it seems like their online strategy would be to go the "pick up in store" route, which is a giant hassle for most. So as Amazon finds ways to improve selection and reduce costs, Walmart will go the way of Borders, and a lot of other brick and mortar stores that came before it, albeit very very slowly. Unless one of the big box retailers is willing to say "screw this storefront crap, we're totally up-ending our business model", there is absolutely no one.

I think you hit the nail on the head where Amazon needs to go. Logistics and shipping are pretty much where that company must go to continue its path. I wouldnt be surprised if Amazon did try to venture into that arena by acquisition/merger.

I think they already started going there, at least in the UK. All my latest orders were delivered by 'Amazon Logistics'.

I've just integrated all of our 7,000+ products into Amazon and one of the things Amazon is trying to do now is persuade us to use Fulfilled by Amazon (FBA).

It's quite attractive to us as a retailer as they take all the negative feedback, handle returns, etc etc. FBA makes us, as a retailer, look good and saves us money (no shipping costs), while protecting our reputation.

From a logistics point of view it simplifies things immensely (we just need to manage stocks in another warehouse).

Coding this should, however, be interesting :)

I would love to chat with you (email in profile). We have 20,000 products in FBA right now and I've been selling on Amazon for years with separate companies. The only issue is that you can't ship international multichannel yet, even if you get your products approved for Global Export.

The odd thing I see with fulfilled by Amazon is that nothing is necessarily stopping them from buying the goods themselves and selling them in the long run if they see fit.

Amazon logistics in the UK at least seems to be a cover for using a variety of no-name low-cost couriers, which for me at least has resulted in most deliveries now involving at least one fake 'delivery attempt' and needless runaround. I'm starting to buy things elsewhere as a result, it's not worth the hassle.

I'll purposefully try and pick an option that results in a DHL delivery to avoid the risk of Yodel/Hermes instead, as they're just awful.

Report it to Amazon customer service, they can't do anything if they don't know.

My guess is 3rd party logistics. If you follow amazon, you see 3pl logistics's share of the company revenue growing. And they ordered a place at 2015 in an important supply chain convention.

They will probably be announcing some sort of global supply chain and fulfillment service.

And the building blocks look interesting: robots, amazon level customer service and fulfillment, better supplier financing(enabled by sales data), global handling services(customs ,etc), offering better IT tools(for example demand prediction, A/B testing globally), Advertising deals on the amazon platform, etc. Almost like telling the manufacturer: you just build stuff, we'll do the rest for you.

If this guess is true, seeing all this packaged would be very interesting.

Makes sense Amazon would start a logistics service for other businesses to use. And maybe storage too.

AWS and MechTurk both came from Amazon realising it could commoditise and spin off what it was using internally as separate products. A kind of reverse dogfooding.

Here where I live, AMZ has partnered with some terrible delivery companies, and a lot of buyers are complaining about the awful shipping experience and are starting to look elsewhere. So I suppose that's correct, they need to handle that themselves.

They use LaserShip for a lot of deliveries here. They seem to have improved lately, but they used to be tremendously bad. They'd deliver packages a day after their tracking system said they were delivered, they'd just lose stuff, once they delivered my package to the wrong city.

On the flip side, I have to wonder if this is actually something of a benefit for Amazon. They get to save a ton of money by using a cheap delivery service, but the delivery service takes much of the heat for bad service. I'm a little annoyed with Amazon for using LaserShip, but I'm much more annoyed with LaserShip for sucking. If Amazon handled the delivery, they would have to do better just to get the same amount of satisfaction from me.

It seems like Lasership is basically "some dude with a car". If you start measuring metrics in that situation, it tends to lead to people lying, like marking a package delivered when it isn't. Only 1% of people will actually complain.

http://www.lasership.com/contact-us/independent-contractors

They really are hilariously unprofessional. They drive shoddy white vans with "PACKAGE DELIVERY" slapped on the side. It doesn't even say "LaserShip". The vans look like the kind of thing a pedophile would drive while looking for children to kidnap.

http://www.amazon.co.uk/gp/help/customer/display.html?nodeId...

To make more companies like Amazon, I think you answered your own question: They get a free pass because Bezos is convincing and for Amazon its sort-of-always-been-this-way.

You're right in thinking that would only really work for new companies (with strong leaders), but if the stock punishment is an issue, then these two happenings will allow older giants to be this ambitious too: 1) Amazon succeeds wildly & shareholder demand these older giants copy that success 2) These older giants' stock starts to tank and must scramble to try something new.

There are certainly more, but this is what I can think of from the top of my head.

If you're working at an Amazon fulfillment centre, you might not want more Amazons.

Yeah, having other companies compete for your labor would probably be terrible for you, wouldn't it.

It all comes down to whether you think the market for unskilled labor is a buyer's market or a seller's market. What do you think?

No, it doesn't at all. Increasing the demand for unskilled labor makes it slightly less a buyers' market than it currently is, regardless of how much of a buyers' or sellers' market it is to start out.

You're assuming labor is as mobile as capital, which it isn't. If labor were as mobile as capital, no-one would offshore factories.

No, I'm not. Labor and capital mobility affect the extent to which more demand for labor is a positive for your putative Amazon worker, they do not affect the direction.

If we convert demand for two shop assistants into demand for one Amazon worker, that's actually NOT a benefit to the Amazon worker in any way, shape, or form, because supply of labor has increased as well. And that's assuming perfect mobility.

Now you can make big picture arguments about the improvements in efficiency ultimately leading to structural improvements for everyone overall -- that's Econ 101 -- but we've been doing a whole lot of that for the last 20 years and it's mostly making people in China better off and it's not at all clear that more factory jobs in China has positively affected the direction of demand for factory workers in the US.

But don't let facts get in the way of hand-waving theory.

Oh and your ground assumption is that Amazon fulfillment center workers want to be paid more for their jobs. No, they want different jobs. Creating more Amazon fulfillment center jobs at the cost of other jobs is not what they want.

Can you explain why that is?

http://www.motherjones.com/politics/2012/02/mac-mcclelland-f...

Just Google stories on what it's like working in fulfillment centers for online retailers.

> If successful, on that day/year/eon dollar bills might as well be printed with Jeff Bezos' face on them.

I see this sentiment all the time--that Amazon is simply still in its growth phase, and once it's "big enough" it will pivot and reap huge profits. I don't see any reason to believe that is true. I can't remember Bezos every saying anything like that, for instance.

With negative EPS and stratospheric market share, doesn't it stand to reason that everyone involved in AMZN believes it to be in a growth phase?

Of course; the question is whether they have a secret plan to crank up prices and profits once they hit some particular level of market saturation.

I don't think so. I think Amazon expects to run at essentially break-even forever, or at least until Bezos leaves.

There's no pivot required.

Once they're "big enough" they simply won't need to spend as much as they're currently spending on infrastructure and growth, and the profit (re)materializes without any business change at all.