Amazon gets a lot of ink about its innovations and business practices. Deservedly so. Wired magazine’s Tim Carmody has even compared them to Walmart. In a provocatively titled article penned last year, Carmody asked: “If Amazon Out-Walmarts Walmart, Can Anyone Out-Amazon Amazon?”
Good question. Flawed premise. Amazon’s biggest problem, a persistent one, is that after twenty years it still doesn’t know how to manufacture a decent profit. We go to MG Siegler of TechCrunch for the most recent evidence:
- “Not only did Amazon only make $177 million on sales of $17.4 billion last quarter, they’re warning that they could actually lose money this quarter.”
- “Last quarter, Walmart pulled in $109.5 billion in revenue, which led to $3.3 billion in profit. As with Amazon, the margins are awful, but at that scale, it doesn’t matter.”
- “In fact, Amazon’s margins are so slim that Facebook, which just filed to go public [...], recorded nearly double the profit of Amazon last year ($1 billion versus $631 million).”
Notes Siegler: “Compare this to Apple’s most recent quarter in which they posted a record $46.33 billion in revenue and, more importantly, a record $13.06 billion in profit. The margin difference could not be any more stark.”
I write this not to diss Amazon (although paying a little more attention to the bottom line couldn’t hurt) as much as to put Amazon in perspective. On the publishing side, there is great fear of Amazon. A recent article by Nico Vreeland points fingers at the publishing industry for not having their act together as compared to Amazon. Point taken.
Just remember who Vreeland’s talking about when he says:
So publishers: it’s time to embrace technology, put your customers first, and entirely revamp the logistical architecture of your industry, or Amazon’s publishing arm will do it for you (and nobody wants that).