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Comment by guiambros | Hacker News Reader

That's pretty impressive.

Even if they restrict the donations to only a few "eligible products" (which doesn't seem to be the case [1]), 0.5% for a retailer is an incredible amount of money.

Wondering if they're compensating this move with tax rebates. Amazon already operates under razor thin margins; they can't afford to take another 0.5% from the bottom line.

[1] From http://smile.amazon.com/gp/charity/pd.html/ref=smi_se_saas_p... Purchases Eligible for Donations Tens of millions of products on AmazonSmile are eligible for donations. You will see eligible products marked “Eligible for AmazonSmile donation” on their product detail pages. Recurring Subscribe-and-Save purchases and subscription renewals are not currently eligible.

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"0.5% for a retailer is an incredible amount of money." It's not nothing, but Amazon makes pretty healthy margins on a lot of what it sells. It's $.50 on a $100 purchase, which is cheap for an Amazon leader.

It's just really smart. Surely less than the difference between Prime shipping costs and the annual subscription fee, and with the same purpose: chipping away at the reasons people would buy anything anywhere else ever.

Wait, how can you say that Amazon makes "healthy margins" when they've been operating at a very-close-to-loss, or at a loss since their creation?

Their last quarter was a loss of $25,000,000.

> Amazon makes pretty healthy margins on a lot of what it sells

I guess you're not following Amazon earning reports closely. In Q2 this year, Amazon's margin was number 1,428, out of 1,515 US companies [1] [2]. That's barely 1% after-tax margin. In several quarters they reported close to break-even or losses.

At these levels, a "mere" 0.5% donation would be unsustainable for shareholders, unless there's a way to claim most/all donations to reduce their own tax payments.

Margins got better in Q3, but still (intentionally) low.

[1] http://www.forbes.com/sites/greatspeculations/2013/05/21/ama...

[2] http://247wallst.com/investing/2013/07/25/amazon-com-company...

Margin on an item is different than gross operating margin.

Amazon makes 20%+ margin, "pretty healthy", on "a lot of what it sells" (almost all retail items that are marked down 30% or less from their MSRP) and .5% isn't a lot of that. It is less than Amazon loses on popular books, and less than they lose on prime shipping.

Of all the things Amazon loses money on to incentivize customers, it's a small one.

Gross operating margin is only tangentially related and can be increased by them at any time by spending less money on other investments.

I'm going to assume shopping on smile.amazon.com removes the affiliate fees. This could be saving them money.

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