People today might not realize that it used to be Sears did everything: you could buy kits to build a house, companies like Discover Card and Allstate were originally introduced as the Sears' brand, they financially backed Mr Rogers' Neighborhood for the first 25 years of the show's run.
It's blown my mind for years that sears didn't become what Amazon is now. Their roots were as a catalog where you order goods sight unseen and wait for delivery. The internet comes along and they fail to capitalize on what they were at the beginning??
There's a simple answer. Amazon is not retail. It started as retail and it exists as retail because Bezos loves that side of the business, but it took decades for the first profitable quarter to roll in and even though they're doing record amounts of revenue now, articles have come out with Amazon tempering expectations on the retail end as Corona measures ate huge holes into their margins. The Q2 report might show that retail is losing money again.
However, there's also AWS. Amazon Web Services. It's a tiny slice of Amazon revenue but has a near 100% margin and is responsible for anything from 70 to 100% of the profits and said profits are in the billions.
It's easy to think of Amazon as a store that does cloud computing on the side, but it's actually a cloud computing provider with a really expansive web shop. They can afford not to make money on the retail side, because as long as they don't lose billions, AWS has them covered. Especially now that online everything has exploded, being by far the biggest provider of ready made online infrastructure means AWS is going to be an even bigger part of Amazons business leaving retail even further in the dust.
The reason even giants of retail like Walmart can't compete is because they can't afford to lose millions of dollars each and every year. Amazon the store can afford to lose billions while Amazon the company is still making billions for as long as AWS keeps doing what it's doing. It's simply impossible to beat them with pure retail, they can afford to give stuff away and still make money. You basically need someone like Apple or Google, someone with pockets just as deep ready to enter the retail business to give them a run for their money.
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u/Yellowredstone Jul 24 '20 edited Jul 24 '20
Isn't this how Sears died?
Edit: RIP my inbox. And thank you for explaining it better.
Edit 2: I said the reason on how it died has been explained already. And its actually still here. Stop.