retail news in context, analysis with attitude

The Street reports that on what appears to be Amazon's current approach to investment, returning - after a period in which it actually slowed down its spending and grew its bottom line profits - "to its heavy-spending ways, making big investments in both traditional areas and some intriguing new ones. All while assuming that the shift in Amazon's sales mix towards higher-margin revenue streams, together with the trust built up by its track record, will be enough to keep profits growing and Wall Street happy."

You can read the entire analysis here, but essentially the argument seems to be that Amazon has identified high margin businesses that it can use to fund the bets that it seems to feel it needs to make in order to maintain dominance in its categories.

But the story also seems to suggest that this remains a delicate balance, that Amazon needs to maintain growth in specific areas in order to justify - especially to investors - the expenses it is compiling in other areas. Fascinating reading.
KC's View:
Every once in a while I get an email from a reader who feels that in pointing to some of the innovative things that Amazon does, I am ignoring some basic realities - like that some feel is the unsustainability of a free shipping policy that costs the company a lot of money and reduces its profits.

It indeed may be fair to suggest that I write more about innovation than cost; I tend to have a bias that way. But I also think that over the years, Amazon always has played the balance game ... and that it is willing to use the areas where it makes a lot of money to fund the segments of its business that it believes are necessary to build what it hopes will be as close to an unassailable advantage as it can.

Jeff Bezos and his folks know that there is no such thing as an unassailable advantage ... but that's why Amazon works hard to keep the gas pedal to the floor, thinking of its various investments and businesses holistically. There are no silos in its business because Amazon never allowed them to be built in the first place.