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  • ayahtolla2003 ayahtolla2003 Feb 2, 2013 7:48 AM Flag

    Another Barron's article mentions AMZN as a top holding of the fund manager: at the bottom as well, bullish in Barron's this weekend.

    wonder if AMZN will ever get into being it's own shipper: via Natgas powered vehicles ahead for example, planes? Then they could control the front to end distribtuion system for themselves and the 3rd party sellers. A complete plaform of didstribution. interesting concept. You know they are looking at swithing to delivering via Natgas power as that would place less reliance on where oil goes to cost/fufillment pressures.

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    • Maybe they could sell stock or take a loan ( 3 billion to get into that business for
      a couple of years)

    • They could also start mfg all the goods they sell too. They could control the world.

    • Yeah, the math will work even better on that than Amazon's existing business... What everyone misses when talking about NG engines is the upfront ENERGY investment required in replacing fleets.

      UPS and FedEx should raise prices on Amazon to much higher levels. Amazon has ZERO choice but to use them (or risk its brand with the USPS...), but is trying to disintermediate them over the longer term. With retail matching prices, Amazon simply cannot afford delivery risk... Let Amazon raise $20B to build out its own delivery fleet....

      I'm gonna enjoy watching Amazon get slammed from all sides. That's the problem with lack of focus and a zero profit strategy. It makes everyone your competitor or enemy...

    • After seeing this post think I will start loading up on puts. Do you really think they would have a chance against fdx/ups. NO

      • 1 Reply to pricewowens
      • Price:

        The way to #$%$ if capital investments are performing is not to look for a small increase in gross margin. It is to evaluate whether the ROIC is increasing significantly over time. For Amazon, it is dropping and hard. Why? Because Amazon makes less net profit per item sold on 3P versus 1P, yet is adding roughly the same amount of incremental CapEx to service FBA as it would have to internally (actually more, due to inventory optimization theory, but that is for another time...).

        Looking at gross margins including service revenues when those service revenues drive fulfillment costs but have no cost of product simply isn't intellectually honest. When including fulfillment, the improvement is much smaller (rather than an increase of 3.5%, it would be an increase of 2.4%. Net operating margins are still just 2.2% from 1.7%. Anchor on those numbers are let's hear all the analysts raving about higher margins at 2.2%...

        The other laughable claim is the massive savings in shipping cost. It isn't happening. Gross shipping cost as a % of revenue have actually increased to 8.45% from 8.41%. Net shipping cost have declined slightly to 4.5% of sales from 5.4% of sales because of revenue transfer from Prime in 2012 that didn't happen in 2011... The gross line is the one that cannot be manipulated (given Amazon's opacity, no one knows how it splits revenue recognition from Prime as far as I can tell). Just wait for the rest of the year to play out and follow these lines... They will get more interesting as time passes. Despite the rhetoric, the regional buildout is not providing the claimed leverage (fulfillment is GROWING as a % of net sales and GROSS shipping is also GROWING as a % of net sales).

504.41-6.14(-1.20%)3:45 PMEDT