I'm guessing everyone is waiting until Amazon is the only game in town and can increase margins every product but those that would allow a new competitor to survive to profitability.

Once they are in a position to increase margins without risk of lost market share, the current valuation will be justified.

Fresh competition is never more than a click away.

I get that Amazon is playing the long game, forgoe profits now to build a dominant company for the future. But how long have they been playing this long game for? How much longer before it pays off? This is a 17 year old company. People younger than Amazon are getting married and having kids.

> Fresh competition is never more than a click away.

Two clicks, actually. They have a patent on one click.

During that time, they've been building an amazing infrastructure, and that won't be easy for a new competitor to match.

I ordered from a different retailer last Saturday night, and I had forgotten how long it takes to get stuff shipped in the real world: FedEx didn't receive the package until Tuesday at 8pm. With Prime, I'd already have it by Tuesday night.

Shipping speed isn't the most important aspect of online shopping, but I think it's indicative of how Amazon's size is already providing a competitive advantage that is hard to match.

The fact that people are willing to wait a couple of days for Amazon when they can buy exactly the same product immediately for slightly more money at the local Best Buy speaks to how much they're willing to put up with for a marginal cost savings. I think that anyone who expects a "sinister phase II" where Amazon takes advantage of their market share by jacking up prices fundamentally misunderstands Amazon. They are, and always will be, a low-margin retailer.

From my experience, sitting on the couch and ordering something is a whole lot easier than actually going out and getting it. And it comes right to the door. In a day or two. Subscribe and save was even better when the kids were little. Diapers and wipes. Delivered automatically.

I don't find that amazon's prices are that amazingly good. Sometimes they're better, sometimes they're not. I've found small things for half the price in local shops sometimes. Newegg will beat them for anything electronic, but their shipping is really erratic. And since I'm in WA, there's no tax savings.

Maybe I'm a special case. I don't live in a big city, but you can see one from the beach. It's 45 minutes to Walmart, 2x that to Target, Trader Joe's, the Apple Store and other pillars of civilization. Hell, it's 10 minutes to the nearest store (plus whatever time it takes to get the kids into shoes and strapped into the car).

Amazon wins on predictable convenience. They're the biggest store in the world, and they're right here. And whatever I want will be here in 2 days, shipped free. (yeah, we have prime. it's like crack)

I recall something about Bezos planning for the decade or longer, so any time they think the net present value of running a no-profit quarter is higher than the returns of profit-taking.

Could be another 20-30 years.

> Once they are in a position to increase margins without risk of lost market share

That day may never come.

edit: Every quarter with margins in the single digits is additional evidence that it won't.

Single digit margins on $14 billion dollars in quarterly sales is still lots of money. 2.5%, as an example, is 350 million dollars a quarter, which is still 1.4 billion dollars a year.

I fully expect it to never come. I don't think it really matters. Amazon will continue to take market share off physical retailers, expand its product range and push into new markets.