AMZN

Democratizing Amazon’s Profits with Amazon Associates

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Amazon’s share price hit an all-time high yesterday after posting its second-straight quarterly profit. (Yes, two quarters of profitability is considered a Big Deal for this 20-year-old company).

That’s great, if you’re an Amazon shareholder (Disclosure: I am not). But completely left out of the equation is you, the valiant consumer buying heaps and heaps of Amazon crap because God forbid you get off your ass and go outside.

So here is a chrome extension that allows you to keep some of that sweet, sweet EPS for yourself.

As Jeff Bezos likes to say, Your margin is my opportunity.

Note: This is probably a violation of Amazon’s Terms of Service and will likely be taken down. That’s why the source code is available here.

Public Tech Company Valuations are also Bullshit

Most tech companies don’t take stock options into account when calculating employee compensation expenses. Therefore the earnings numbers they publicize are bullshit.

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Amazon (AMZN)’s P/E ratio, when calculated using Generally Accepted Accounting Principles (GAAP) is 1192.9. That’s twice as high as any other large-cap stock out there.

Notable exceptions in the tech world include Microsoft (MSFT), Intel (INTC), and Apple (AAPL), which report only GAAP earnings.

See Also:
How Much Do Silicon Valley Firms Really Earn? –Barrons (if you have trouble viewing the page, try grappling hook)

Investing Revenue: The Business Model of Amazon and Nonprofit Startups

Big tech companies like Apple, Microsoft, and Google are hoarding big cash piles. There are speculative reasons why these companies are not investing more in R&D or future technology, but as long as the cash goes unspent, shareholders will make noise to have the profits returned via dividends or share buybacks.

Amazon doesn’t have this problem, because Amazon doesn’t turn a profit.

It is terribly inefficient for a company to collect revenue, pay taxes, and then distribute the net income towards hiring or R&D. Amazon cuts out the intermediate steps by investing the revenue directly.

By charging customers a price that’s barely above break-even, Amazon is effectively spending revenue to gain customer loyalty instead of channeling profits towards a marketing budget.

A worker walks past Amazon Fresh delivery vans parked at an Amazon Fresh warehouse in Inglewood

Amazon Fresh is operating at a loss. The profit margins on door-to-door grocery delivery are miniscule, but Amazon isn’t operating in the home grocer space to make money. It’s operating in this space to subsidize infrastructure development. Sure, Amazon Fresh could charge a huge premium, turn a profit, and then invest in building out infrastructure… but why not just barely break even, and gain both an infrastructure and customer loyalty?

UPS currently handles most of Amazon’s last-mile deliveries, but UPS does not have ostensible grocery customers subsidizing its local infrastructure development.

Amazon may be a non-profit company on paper, but only because it already invested hypothetical profits into customer commitment.

See Also:

The Prophet of No Profit –Slate