Amazon is What Percent of USA Retail?

Amazon is huge.  It is a growth machine with massive infrastructure, but it consistently makes no money and pays negligible taxes.  How does it do it?  Benedict Evans explains:

So, we have dozens of separate businesses within Amazon, and over two million third party seller accounts, all sitting on top of the Amazon fulfillment and commerce platform. Some of them are mature and profitable, and some are not. And someone at Amazon has the job of making sure that each quarter, this nets out to as close to zero as possible, at least as far as net income goes. That is, the problem with net income is that all it tells us is that every quarter, Amazon spends whatever’s left over to get the number to zero or thereabouts. There’s really no other way to achieve that sort of consistency.

This all started with access to massive asset-less credit, sure jump-started by venture capitalists, who were paid off after the IPO when taxpayer risk was laden on in the form of debt.

Amazon has perhaps 1% of the US retail market by value. Should it stop entering new categories and markets and instead take profit, and by extension leave those segments and markets for other companies? Or should it keep investing to sweep them into the platform? Jeff Bezos’s view is pretty clear: keep investing, because to take profit out of the business would be to waste the opportunity. He seems very happy to keep seizing new opportunities, creating new businesses, and using every last penny to do it.

Yes, it is 1% of the retail USA market.  All avenues.  Actually that is huge, but what it represents is a sweeping up of transactions and the wiping out of marginal businesses.  As one commenter noted: "so the response is retail that is carefully curated."  Just so, compete on design.

And one commenter had this to say:

Walmart has gotten serious about online and outgrew Amazon last quarter, 24% to 23%. And Walmart made more online in that Q than Amazon has ever made. Walmart has the cost edge on products it carries in their stores since they buy millions of them while Amazon only buys thousands. Walmart pays it suppliers on average in 35 days v Amazon 75 days. Moody's sees this and rates Amazon debt just a couple notches above junk. Walmart is in alignment with suppliers (IBD articles routinely list Walmart as companies' favorite customer); Amazon has had recent fights with 2 of Walmart's suppliers, Disney and Hachette. Then there is Staples that is making huge online strides, considered troubled though also making more online in a Q than Amazon has ever made. Amazon is investing in the declining warehouse market and hiring lots of near minimum wage people, many of whom publicly state they are unhappy.

Yes, but Amazon is in flux, Walmart is settled.  Actually, the Walmart ecommerce site (really online self service) is an Amazon gig, if I recall.   But what is clear is all of this is borne of financial gaming, Bezo's previous career.

What happens when the fuel for that engine, asset-less credit, not only dries up, but begins to disappear from within the balance sheet (deflation?)

What goes up...

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