I still purchase from Amazon, in fact I made a purchase 2 days ago, but I have greatly dialed back my Amazon purchases once I realized they are essentially a non-profit that is destroying retail shops and funneling their profits into AWS and other endeavors which in total have a negative effect on my Index Fund investments.
You have that wrong, exactly backwards in fact. AWS is the largest source of profit for Amazon.
From the analysis of their most recent earnings report:
However, on the same day that two of those rivals also released earnings, Amazon showed why AWS is the most valuable startup in tech. The company reported quarterly AWS revenue of $3.66 billion, slightly topping estimates and reflecting 42.6% growth, and operating income of $890 million. That net profit margin of more than 24% was actually higher than the year-ago quarter, wiping away more fears.
Amazon’s total operating income for the quarter was $1.01 billion. While it doesn’t take a math wizard to see that Amazon would not be anywhere near as profitable without AWS, here is the figure: AWS accounted for about 89% of Amazon’s total operating income for the quarter, with the rest attributable to e-commerce.
Thanks for correcting about the AWS profits.
I cannot find the article which I skimmed a few months ago which had some analysis...which could have been wrong or presented with a bias from the author, but IIRC one of their main points was how Amazon benefited financially from running as a for-profit entity for many years (without making any profit) as compared to if they had been a formal non-profit entity. I do know if that was around tax treatment or something else, and I was curious to understand those details better but other priorities interfered and I lost interest it that since I am not a AMZN investor. How they successfully leveraged their core not-making-a-profit business model to gain more and more customers which led to an increase in market value and enabled them to branch out more aggressively. As investors bought the story of how more customers, subscribers, etc would eventually lead to outsized profits once enough competitors had been vanquished.
I used to buy too many things from amazon but slowed down when free shipping rose to $35 and nearly stopped once it went to $4x. But the real kicker was realizing that I was working for AMZN for free by answering questions from fellow purchasers about products listed on the website. And realizing that I could buy the same products from other retailers that made a profit or otherwise paid a dividend into the ETF fund that I owned. Amazon contributes to the ETF value as well, but overall I think they may be more of a negative contribution to my future retirement than a positive one. Which is why I welcome them branching out into Whole Foods which I believe will end up being a net-drag to them or Whole Foods...that one of them will be negatively impacted by a merger. Though if anyone can pull it off it is Jeff B and his team.
