I bought kitty litter from Amazon because I was curious. Sure enough, they shipped me a 40 lb bag with free shipping at the same price as the Petco that is out of stock half the time. I don't understand how Amazon made money off of that order. If I tried to ship 40 lbs it would probably cost me $150.
Much much closer to the source. They pretty much deal with bulk freight and control most of the logistics right as soon as it hits the ground. No brick and mortar overhead. A B/M the size of amazon would have massively more cost with leasing/owning/maintaining buildings, staffing, insurance, labor... Amazon deals with none of it. Imagine if Wal-Mart could do away with stores and operate completely out of their warehouses! That's Amazon. It goes right out of the warehouse to your nearest shipping provider a lot of the time, where they then deliver it. I'm sure they save a lot just due to their logistic scope alone. And then another chunk of it is hands-off, with 3rd parties basically using them as a service to replace frontend and backend, to the point where all those smaller outfits do is provide products and extra service. Half the time the even outsource the mfg to overseas companies. All they do is list stuff, keep their books, and answer e-mails. Of course, this is super attractive and brings a lot of products to Amazon with little effort on their part. They accept it into their whole system and off it goes. Everything goes as quickly and as easily as possible in everything they do, because they've been about controlling every step of the process from the beginning and have built up an empire based around moving tons of goods as quickly as possible. They are the developer, manufacturer/importer, storefront, and shipping agent.
Also worth mentioning... they mostly run on investment and expansion. I don't know exactly how they convince their investors that they should be okay with single digit percent margins every year, but they do. They invest everything into the value of the company... just spend it all making it bigger and more capable of doing more things for cheaper and moving more cash. That is it's own kind of value, seperate but sometimes equal to profit takeaways. Very much against the grain sort of thing to do but they get away with it because of the sheer volume and company value growth year over year. I suppose they figure they don't need the profits when they can just keep taking command of more and more markets, because more people may see other investments threatened by that and choose to invest in amazon instead. Even without pulling back crazy profits, the value of what they put in amounts to more as the company grows more. They've built something up where dumping as much of the money they get as possible into the company results in more people dumping money.
I wonder about the sustainability of it. How far does that scale? Not to mention concerns about where it leaves us in the future, and what it will do to the economy. If the pendulum swings back on them, it'll probably massively suck for everyone in commerce, and thus everyone who benefits, including consumers.
But fortunately this is all BS and I have no clue what I'm talking about.
