I have often featured Amazon as a model of success and think highly of their strategic evolution. Just last week in “You can’t stop at what you’re good at” I talked of them as an example of a highly-visible company driving lifestyles. Afterwards a reader wrote to me about Amazon’s seemingly low profit margins referring to a figure on Wikipedia showing they make a little over 1% net profit margin on sales.
In contrast, Ebay has one fifth as much in sales, but five times more in net profit, giving a net profit margin of around 30%!
Which raises the interesting question: Is Amazon’s lifestyle-driving business model sustainable? For example, there is much talk recently that Amazon is unfairly exempt from having to pay state tax on merchandise it sells. If this loophole is closed, it could potentially devour their mighty thin, 1% profit margin—given that state tax rates average around 6%.
What are your thoughts on this? Will Amazon continue its reign as a juggernaut and Slingshot success story, or will it eventually go the way of BlackBerry by failing to create a sustainable business model? Share your thoughts by getting in touch via the link in the upper left-hand corner.
[Imagine via AndroidAuthority.]
