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  • sm081969 sm081969 Jul 29, 2013 11:31 AM Flag

    AMZN moving away from efficient centralized system to de-centralized system - will become traditional brick-mortar store?

    AMZN's new strategy is confusing - de-centralized delivery system would be more expensive and if there is AMZN in every neighborhood, what's the difference between AMZN and say Target? Looks like AMZN will have hard time making money for years and PE would double from where we are today to say 600 range - how can stock price sustain at these levels?

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    • Good point. Costly distribution model. Groceries seem laughable.

    • AMZN and TGT generate the same revenue -- except TGT needs 5x the Property Plant and Equipment as AMZN -- building new distribution centers to fuel growth has always been AMZN's strategy. I've owned the stock for 10 years.

      Sentiment: Hold

      • 2 Replies to gregbent
      • OK - but if AMZN keeps adding more real estate, then AMZN is approaching brick-mortar model - isn't it? To the extent they are adding more warehouses (and therefore adding substantial costs), they would need to increase revenues in that proportion. Having more warehouses means shorter delivery times but does that lead to increased revenues in the same proportion as expense increases? Is AMZN saying that optimum solution is not a centralized system but fewer presence points than brick-mortar points? I am somewhat dubious of their new strategy and to assign a PE of 300-400 is extraordinarily risky - what if this strategy doesn't produce revenues in the same proportion then what? They are stuck with all the costs and there are no profits?

      • Scamazon is turning into a tradition TGT and WMT. This will result in red ink as far as the eyes can see. WMT, TGT, and BBY are pricematching to Scamazon. More and more states are charging sale taxes. The cost of shipping will continue to go up. So yeah, keep sitting on Scamazon and I will be able to buy it back from you for less than $30 within the next five years.

        This scam is on its last leg as growth will soon drop below 20% in the next quarter or two. Scamazon may be able to stretch out the growth scam another year at the expense of much deeper EPS loss.

        The new GOOG NEXUS 7 that's for sale now has won rave review from all the experts...HD display that rivals Apple's Retina for only $230! There will be intense pressure to kill off the ads-supported FIRE, soon.

    • I thought I raised a serious a question but only one reply? I like AMZN and their prices and service is very good. But what I am concerned is that the way they are on a spending spree (at a time when are already in losses and margins are close to zero), increased headcount and capital assets would make it even harder to make money - so is this spending spree is well thought out or AMZN is just trying to increase revenue at any cost (even losing money). Somebody needs to give a coherent explanation of what their new strategy is - what I see is that their PE would be close to 500 and less than 1% margin. At current prices, AMZN seems like a huge risk. Those who like AMZN at current levels should be able to give an intelligent rationale.

    • There is no mystery meat! Scamazon's bread and butter business is selling $1 for 99 cents. If cloud and online streaming are keys to explosive earning somewhere down the road (hehehhh...and the road is already 16 yr old), then new hiring should be focused on these technologies. We hear talk about robots boosting efficiency by leaps and bounds, but then we see more and more sweatshop workers sorting and picking parts. Only time will prove that Scamazon is only worth about $20 or less.

358.14-2.70(-0.75%)Jul 23 4:00 PMEDT

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