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ELI5: How is Amazon able to sell me books so much cheaper than brick and mortar book stores in my area
(self.explainlikeimfive)
this post was submitted on 23 Jul 2023
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Amazon does not make any profit from their books. They are able to sell them cheaply because they sell them at a loss. They weren't even profitable for a long time and maintained thanks to investors. Basically, Bezos sold the idea of the future of his store's worth. And it worked.
That hasn’t been true for more than a decade. (Why be in a business you can’t make money on?) Amazon have, for a long time, invested more or less all their profits into new business lines on the promise that they could easily “flip a switch” and start making billions in profits. (They started doing that a few years ago after bad financial results.)
Are you referring specifically to the book sales or the company as a whole?
The idea that Amazon subsidises book prices or generally sells everything at a loss is based on a flawed understanding of the early years of Amazon.
Sure, but in that previous time period, they didn't make a profit but were able to destroy the brick and mortar bookstore. So I guess it would be more honest to say they demolished the bookselling industry and now can argue for whatever deals they want because the only other bookstores are weakened.
Sure, but ”They built a very successful business and uses that to squeeze publishers“ is a very different explanation than “Amazon sells books at a loss”.