That seems like a fairly short-sighted view. Much of Amazon's strategy seems to be giving up short term profit to establish a monopoly for much larger long-term profit. They aren't perfect, and have certainly made some unprofitable decisions over the years, but I think that their overall strategy is VERY profitable, even if it hasn't yet yielded all the profits it is going to.
Bezos founded Amazon.com, Inc. in 1994. They have yet to produce an impressive profit margin (outside web services which isn't really relevant to this specific thread). How long sighted are we talking here?
The raw numbers are impressive, but they clearly aren't in the game of profit maximisation as we knew it back in the 80s. That is why nobody is really managing to compete with them.
I don't really see how they could maintain a monopoly and a margin at the same time. If they had actual profit margins then other companies would compete with them. The reason they look like a monopoly at the moment is because they have no margins. If they change that, competition will spring up like mushrooms.
Amazon is basically a web services provider by profit. All the other stuff they do is a mysterious distraction. If you want a company making for-profit decisions, look at how Apple runs itself.
This can't be rushed. Their competition is from i.e. Walmart. These competitors are big and a single major event isn't going to take them down. It requires a series of major events for a company of that size to fall out of serious competition. But it does happen: look at Sears. It took almost three decades, starting with a pricing scandal in 1992 to declaring bankruptcy in 2018, with many mis-steps along the way, but they did eventually fall.
> I don't really see how they could maintain a monopoly and a margin at the same time. If they had actual profit margins then other companies would compete with them.
By that logic, monopolies can't be profitable, but they clearly are profitable, so your logic must be faulty.
Once a company reaches a certain scale, it becomes very difficult to start a competing company for a bunch of reasons:
1. First to market advantage: name recognition. Amazon is a household name. A new company isn't. A new company could overcome this with marketing, but marketing costs money, and then they have to pass that cost on to consumers, and Amazon will win on price.
2. First to market advantage: pre-existing infrastructure. Amazon has warehouses everywhere, so they can deliver to most places quickly. In places like NYC or SF they can deliver something from a few miles away, so they can deliver it on the same day. They have already spent this money, so they can provide this speed at a lower cost. A new company could overcome this by building out their own infrastructure, but this costs money which they have to pass on to consumers, and again Amazon wins on price.
3. Efficiencies of scale: Amazon is already huge. If it costs them $10 to write a line of code or lay a brick, that cost is amortized across millions of purchases that occur each day. A new company has to write the same line of code and lay the same brick to provide the same feature or distribution center, but that cost is amortized across only a few hundred purchases a day when they're new.
There are more reasons, but basically, Amazon is well past the point where new companies could pop up and reasonably compete with them based on profit margins alone. They still have competition, but it's from the likes of Walmart--other giant companies that already have some of the same advantages Amazon does. It would be possible for a newcomer to compete, but it would require an extraordinary innovation which is highly unlikely.
> The reason they look like a monopoly at the moment is because they have no margins. If they change that, competition will spring up like mushrooms.
They don't look like a monopoly because they aren't yet. They have major competition with, for example, Walmart.
They aren't going to get a monopoly. They are operating in a market that is famously cut-throat and competitive that any motivated person can succeed in by cutting prices far enough.
> By that logic, monopolies can't be profitable, but they clearly are profitable, so your logic must be faulty.
My logic is fine. They are a middleman in a free market - monopoly is practically impossible. I don't see what is stopping anyone, including myself, jumping in to the same market as Amazon except for the fact there is no margin to be made because Amazon is the cheapest provider.
Monopoly (funny to say) isn't a reflection of number of providers in a market even though that is the outcome. Monopoly captures the idea of how easy it is for new entrants to move in to a market. Building a new company isn't easy, but it isn't especially hard.
> Once a company reaches a certain scale, it becomes very difficult to start a competing ...
These points are all off topic for monopolies. Having economies of scale (which is what you list) gives competitive advantages but it isn't going to let Amazon take the market somewhere it doesn't want to go. If Amazon isn't fulfilling a need, someone else will. If Amazon is fulfilling the need at a low price, they aren't an abusive monopoly they are a success story we are all grateful for. 'Monopolies' that brutally suppress the price of goods for decades on end are a good outcome. More to the point, they aren't monopolies, they are just effective competitors - because as you point out a monopoly should be profitable.
Amazon isn't in a market where it is possible to build a monopoly, and if they do the government can squelch it when they get there. And making sane decisions to build a competitive advantage at scale isn't monopolistic, it is an encouraged feature of most serious companies.
