retail news in context, analysis with attitude

There is a terrific piece of analysis on by Eugene Wei, a former Amazon employee, in which he looks at the company's approach to profit and loss. The pioneering e-tailer, which has continued to grow sales without showing any profit growth, has come in for some criticism because of an approach that some think unsustainable. These criticisms were crystallized earlier this year by Matthew Yglesias of Slate, who wrote that "Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers."

Wei takes issue with that:

"To me," he writes, "a profitless business model is one in which it costs you $2 to make a glass of lemonade but you have to sell it for $1 a glass at your lemonade stand. But if you sell a glass of lemonade for $2 and it only costs you $1 to make it, and you decide business is so great you’re going to build a lemonade stand on every street corner in the world so you can eventually afford to move humanity into outer space or buy a newspaper in your spare time, and that requires you to invest all your profits in buying up some lemon fields and timber to set up lemonade franchises on every street corner, that sounds like a many things to me, but it doesn’t sound like a charitable organization."

It is a fascinating analysis, and you can read it here.
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