Explain Like I'm Five

when I sold to Amazon, they refused to do a deal at anybody else's cost structure. They demand an extra discount, but they also buy two of everything you have and everything you sell. It's a big trade off. Even getting the shipment organized because it's not correct exactly, you can be fined. So I'm sure they make a little bit off of that, plus it is direct company strategy to undercut, so they eliminate competition. They have had no problem losing money while establishing their business structure. Also, their used books are procured by local people for pennies on the dollar and typically make the seller less than a dollar in profit . They are operating on very thin margins, and making their money elsewhere with the expectation of diminished competition.

Yhey also keep some of their overhead low. The retailer that wants to sell tonAmazon has to build their own sku's into the system. It's very tedious work, and takes a very long time, and you have to fill out all of their fields, even though most of them are very repetitive. It's a large undertaking and not having to do it saves them a lot of money.

They also charge book sellers warehouse fees, so they don't have to keep the books around their house waiting to sell. Again, all of these little things add up to pennies on the dollar but when you multiply it out by Amazon numbers it adds up.

They already have the infrastructure in place, having an extra line item doesn't really affect Amazon as much as you think it might.

sometimes a company will do some thing called loss-leaders. Perhaps a new book comes out, and they want to sell it to $15 less than everybody else. They are willing to lose that money to get your business so that you do future business with them. They would like to sign up new accounts which is harder than getting existing accounts to double their spending. either way, engagement and purchases are up when you offer steep discounts.