Jeff Bezos Confirms Amazon's Growth Is Slowing (bloomberg.com) 111
An anonymous reader quotes a report from Bloomberg: Jeff Bezos's latest shareholder letter, released on Thursday, opens with the first-ever disclosure of Amazon's total share of sales from the merchants that use the company's e-commerce sites as a sales conduit. The company has long said that those merchants sell about half of the individual items sold on Amazon, but it has never given their contribution to the total value of physical merchandise sold on the site. That number -- a common e-commerce metric known as gross merchandise volume -- has always been a secret at Amazon. Not anymore. Based on Bezos's letter and Amazon's previous disclosures, it's possible to roughly calculate Amazon's gross merchandise volume dating back to 2015. It's a remarkable number -- nearly $300 billion worth of goods sold on Amazon last year. Compare that with the $95 billion in total merchandise and ticket sales reported by eBay, the distant No. 2 player in U.S. e-commerce. (Walmart sells more than $500 billion in merchandise each year, and China's Alibaba sells more than $700 billion in goods.)
But there's a dark cloud in Amazon's figure. The growth of Amazon's total merchandise sales slowed considerably last year, according to Bloomberg Opinion calculations based on Bezos's disclosures. This figure is not the first sign than Amazon's retail juggernaut may have slipped a bit. In 2018, Amazon's nearly $300 billion in GMV was about a 19 percent jump from the prior year. That was notably slower than the rates of increase of 24 percent and 27 percent, respectively, in 2017 and 2016. It's hard to explain the slowdown in Amazon's merchandise sales growth. If anything, it seems as if Amazon is grabbing a larger share of e-commerce sales and that the internet is stealing more sales from physical stores, which have accounted for something like 90 percent of all U.S. retail sales. And yet Amazon's retail sales growth -- although still impressive -- is slowing noticeably.
But there's a dark cloud in Amazon's figure. The growth of Amazon's total merchandise sales slowed considerably last year, according to Bloomberg Opinion calculations based on Bezos's disclosures. This figure is not the first sign than Amazon's retail juggernaut may have slipped a bit. In 2018, Amazon's nearly $300 billion in GMV was about a 19 percent jump from the prior year. That was notably slower than the rates of increase of 24 percent and 27 percent, respectively, in 2017 and 2016. It's hard to explain the slowdown in Amazon's merchandise sales growth. If anything, it seems as if Amazon is grabbing a larger share of e-commerce sales and that the internet is stealing more sales from physical stores, which have accounted for something like 90 percent of all U.S. retail sales. And yet Amazon's retail sales growth -- although still impressive -- is slowing noticeably.
Percentage growth (Score:4, Informative)
Also (Score:3)
Consider that the cost of prime has increased, delivery delays have increased, time before actual shipping has increased, the number of items subject to prime shipping has decreased, some "prime" shipping is now not two-day, their search turns up more and more items that are not reasonable results for the search terms you enter, which significantly inconveniences shoppers. They now spam searches with paid insertions. You can't specify things like "heaters -electric" to get a listing of heaters but not elect
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Um (Score:5, Insightful)
Of course growth slows. How could it not? They grew fast and they are giant.
What, do they need to take over 150% of ecommerce or something? Nothing can grow forever.
Re:Um (Score:5, Insightful)
Of course growth slows. How could it not? They grew fast and they are giant.
What, do they need to take over 150% of ecommerce or something? Nothing can grow forever.
Because Wall Street needs (and assumes) companies to have constant and continuous growth to keep the financial markets afloat. All these valuations assume companies will keep growing at 10, 15, 20% and, if they miss a target by even 1% (oh no, a company only made $990 million profit instead of $1 billion, the horror!) they all scream the company is failing and the stock price tanks. This in turn screws over other people and promotes inefficiencies as companies focus more on meeting Wall Street's expectations, cutting workforces and using other tactics to bump earnings just enough to meet some arbitrary target, focusing on short term "growth" over the long term health of the company.
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This in turn screws over other people and promotes inefficiencies as companies focus more on meeting Wall Street's expectations, cutting workforces and using other tactics to bump earnings just enough to meet some arbitrary target, focusing on short term "growth" over the long term health of the company.
This BS is what brought Enron down. The execs worrying about the share price and not focusing on things they do well. In order to keep the Street happy, someone will get desperate and start cooking the books more and more over time in order to keep the stock price going up. Finally it will all explode in their face once the truth is found out. Amazon will go down this same road if they are not careful..
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One thing that's made Amazon so successful is that Bezos seems to have the spine to ignore that sort of short-sighted "advice", at least historically. I haven't seen any evidence that's changing.
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When companies go IPO, the owners become followers. They fight shareholder greed and champion the long view.
The adversarial relationship explain why some are billionaires and some are stockholders.
Expected return on investment (Score:3)
Because Wall Street needs (and assumes) companies to have constant and continuous growth to keep the financial markets afloat.
When people say "Wall Street" they are usually talking vague generalizations that rarely hold up to strong scrutiny. No different here. Wall Street isn't any sort of coherent entity. It's like saying "hipsters" and it doesn't really describe things in a way that is very useful except as a political punching bag. What really is happening is that investors expect a return on their investment for a given amount of risk. If an investor is seeking a 10% return on their investment in a company and that comp
Re:Expected return on investment (Score:5, Interesting)
When people say "Wall Street" they are usually talking vague generalizations that rarely hold up to strong scrutiny. No different here. Wall Street isn't any sort of coherent entity. It's like saying "hipsters" and it doesn't really describe things in a way that is very useful except as a political punching bag. What really is happening is that investors expect a return on their investment for a given amount of risk.
"Investors" don't drive the market anymore. Investors are people who have been forced into relying on 401Ks for retirement since the eradication of pensions and gutting of Social Security surpluses. Most of the stock market is driven by the big investment houses who use computers, algorithms, and physical closeness to the trading floor to make hundreds our thousands of trades in the time it take an ordinary person to make 1 trade, leeching out money while providing no real benefit ("liquidity" is not a benefit if you are actually investing, only if you regularly have a large volume of turnover).
Stock prices in secondary markets are based on expectations of future returns. When the data reveals those expectations were incorrect then the stock price adjusts accordingly. For the most part this happens fairly rationally most of the time, despite all the sturm and drang you hear. If you expect a certain ROI for a given company then there is a price level for that. If the ROI turns out to be less then the price should be less too. It only becomes a problem when the company management starts thinking their job is the stock price instead of the products the company makes.
Correct, but my argument is that those expectations are never based on reality. The underlying assumption of growth is flawed. Just like a living organism, there is a point for every company where growth is no longer healthy for the company. If they keep growing they become bloated, get too inefficient, start buying up competitors or getting away from their core business, etc. Then, come a recession, market shift, or a new innovative competitor, they cannot react and start losing money, have to start spinning off or sell off products or divisions, massive layoffs, etc. If a company instead stabilizes growth once it hits a critical mass it can better weather recessions, still has the flexibilty to pivot with market shifts (if they can correctly identify the shift in time), and can focus on what makes it money and got it there in the first place, all while still generating healthy profits.
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... If they keep growing they become bloated, get too inefficient, start buying up competitors or getting away from their core business, etc. Then, come a recession, market shift, or a new innovative competitor, they cannot react and start losing money, have to start spinning off or sell off products or divisions, massive layoffs, etc. ...
Precisely this.
Mobil Oil Corporation, Fairfax, Va., ca. 1985: Mobil had so much fucking money they went into real estate, became self-insured and sold policies, bought Montgomery Ward, Container Corp., which made paperboard products.
Mobil (and other oil companies) made a killing during the oil crunch of 1973 and shareholders screamed to "invest the cash!"
When things got tighter in the mid 80s, Mobil did something that's predictable today:
It went super nova and expelled all of its non-core businesses in an
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... If they keep growing they become bloated, get too inefficient, start buying up competitors or getting away from their core business, etc. Then, come a recession, market shift, or a new innovative competitor, they cannot react and start losing money, have to start spinning off or sell off products or divisions, massive layoffs, etc. ...
Precisely this.
Mobil Oil Corporation, Fairfax, Va., ca. 1985: Mobil had so much fucking money they went into real estate, became self-insured and sold policies, bought Montgomery Ward, Container Corp., which made paperboard products.
Mobil (and other oil companies) made a killing during the oil crunch of 1973 and shareholders screamed to "invest the cash!"
When things got tighter in the mid 80s, Mobil did something that's predictable today:
It went super nova and expelled all of its non-core businesses in an effort to collapse into a well-oiled machine. (Note what I did there.)
So, these days, when I see Apple, for instance, sitting on 240 billion liquidity and buying crazy-ass assets that no one at Apple is qualified to work on, I'm waiting for the explosion.
Didn't know that about Mobil. I was thinking more along the lines of GE, who has screwed up so royally they cut their dividend to 1 cent and whose stock price is down 66% to $10 a share, roughly what it was during the 09 recession.
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Economics 101, if you aren't growing you are dying. What the problem is these days, and probably has been for a couple of decades or more, is the expected rate of growth. The bullshit from wall street needs to end.
Re:Um (Score:4, Informative)
It is because of absurd statements like this that I do not take seriously economists. The financial world can live in a fantasy bubble but hard reality and cold logic show that it is impossible to grow forever.
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Economics 101, if you aren't growing you are dying
It is because of absurd statements like this that I do not take seriously economists.
Like most statements of this nature, it is grossly misunderstood.
An individual company is dying if it's not growing, because sooner or later someone with greater economies of scale will show up to eat its lunch.
The total market doesn't have to grow for individual companies to grow. Others only have to fail.
With that said, we could have endless growth if only we had kept the space program going after winning the space race, instead of stopping when the USSR went bankrupt. Space is the only place where [effec
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"Space is the only place where [effectively] endless growth is possible. "
It's not though, assuming you mean exponential growth, which almost everyone does. People throw out the term "exponentially" without the slightest idea what it implies.
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"Space is the only place where [effectively] endless growth is possible."
It's not though, assuming you mean exponential growth, which almost everyone does.
For your convenience (and that of others) I have said what I meant.
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Cool. In that case, effectively endless growth is possible pretty much anywhere. Space isn't special.
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Cool. In that case, effectively endless growth is possible pretty much anywhere. Space isn't special.
Space is special because there's space there, and you can throw things away. On a planet, space is much more limited, and there is no "away".
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So, when was the last time you had to get bigger shoes to account for growth? When's your funeral?
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How does economic illiteracy like yours get modded up? Crazy
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" Infinite growth is impossible"
But that was not your original claim.
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Found it now? I know that as English is not my native language so I can make grammar mistakes, but I'm fairly sure it's obvious enough what I meant.
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Economics 101, if you aren't growing you are dying. What the problem is these days, and probably has been for a couple of decades or more, is the expected rate of growth. The bullshit from wall street needs to end.
Sales dollars should grow, yes. But as long as they are growing in step with inflation and your own costs (so that your actual net revenue stays at least the same) you are perfectly fine. Massive growth is unsustainable long term. Inflation is currently at about 2%. Even a 4-5% growth rate is healthy at this point for a large, established company-Amazon was still at 19%.
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Why do you hate Adam Smith?
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Somehow nobody really seemed to stop to take a look at natural systems, where everything must eventually find an equilibrium or suffer certain collapse.
Re: Um (Score:2)
You picked a horrible example.
Nature is a growth system. There is no long term stable equilibrium; the point is always shifting. The growers are considered winning and the rest are considered losing.
Every subsystem grows till the point of maximum environment saturation. There is no plant, animal, or germ that stops short of its petri dish and is content.
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Economists make a ridiculous mistake in believing that their "food supply" would be infinite.
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This. I have a corollary for it:
Shareholders want asymptotic growth over nanosecond time scales. ~ CaptainDork
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Because Wall Street needs (and assumes) companies to have constant and continuous growth to keep the financial markets afloat.
It seems like it's even worse than that. Constant growth isn't good enough, a company has to have accelerating growth.
Re:Um (Score:5, Insightful)
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"No wonder since it is killing it's host."
you just wrote
No wonder since it is killing it is host.
think about it
Growth is slowing? So what (Score:1)
Is Amazon still making a profit?
Then shut up tax dodger
No wonder... (Score:3)
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You almost certainly neglected to uncheck the box offering a "free trial of Amazon Prime" when you placed your order. This one's on you.
Re:No wonder... (Score:5, Insightful)
neglected to uncheck the box
IMHO these kinds of traps are definitely on the company. They try to trick people into buying add-on services with patterns designed to slip by unnoticed. It's shady as fuck.
I would assert it is retail as a whole (Score:5, Insightful)
If it isn't obvious, we are starting to see signs of a recession coming our way. Amazon is a retailer, and just like any other, they are subject to how well-off people are doing financially. Come crappy times, retail sales are going to suffer.
This isn't to say Amazon will go the way of Sears. AWS will ensure that they are not going anywhere, because businesses always outsource/offshore when a recession hits, even if it costs them more, so more businesses will be doing lift-and-shifts to the cloud in order to save on CapEx costs, even though their monthly burn rate will spike.
Of course, if Amazon really starts hurting, they can always raise rates on AWS services, and with so many companies shackled to the cloud with no way to leave (good luck getting away from Lambda), they will pony up the higher rates, and pray the deal doesn't get altered further.
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If it isn't obvious, we are starting to see signs of a recession coming our way. Amazon is a retailer, and just like any other, they are subject to how well-off people are doing financially. Come crappy times, retail sales are going to suffer.
This isn't to say Amazon will go the way of Sears. AWS will ensure that they are not going anywhere, because businesses always outsource/offshore when a recession hits, even if it costs them more, so more businesses will be doing lift-and-shifts to the cloud in order to save on CapEx costs, even though their monthly burn rate will spike.
Of course, if Amazon really starts hurting, they can always raise rates on AWS services, and with so many companies shackled to the cloud with no way to leave (good luck getting away from Lambda), they will pony up the higher rates, and pray the deal doesn't get altered further.
I would say that Amazon is more recession-proof than most retailers, because they (for the most part) don't have to deal with brick and mortar locations, just warehousing. They've outsourced a lot of their deliveries to suckers, er, "independent small business owners", and a lot of the little stuff can be handled by the Post Office which isn't going anywhere. There's always plenty of cheap Chinese knockoffs that people will buy to save a few bucks, and they become even more attractive during a recession.
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Nonsense. Their growth has slowed because there isn't much more room to grow at this point. Outside of amazon the only internet retail that's doing well is either niche and outside of what Amazon offers (such as collectibles, guns, etc) or has a model that is incompatible with Amazon's (auction model).
This is the same kind of gloom and doom bullshit you see spouted in those "the PC is dead" trash articles. Just because growth isn't massive, does not mean a company isn't healthy.
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Yeah, but the slowdown in growth will almost certainly reflect in a slowdown in share-price growth (which is normal). So Amazon will have to consider paying a divided which they currently don't.
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I suspect that's partly the problem. From personal experience, I buy less stuff from Amazon that I otherwise would for several reasons:
1. Their prices have been going up. They are often no longer competitive for many items. Movies uses to always be discounted, and now they like to try to charge full price sometimes. Same for toys. Marketplace sellers are often prices HIGHER than Amazon's prices or are selling a used movie for $1 less than Amazon. Why bother.
2. It's almost impossible to find non-crap product
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There aren't any signs of a recession. My guess is that the slow growth is caused by three factors:
1) Amazon is no longer the only game in town. Most retailers, especially Walmart, are competing better
2) The market for e-commerce is finite, Amazon's growth will slow eventually
3) A smaller but still relevant factor is the Washington Post. A lot of people really don't like the direction it took after Bezos bought it
Re:I would assert it is retail as a whole (Score:4, Interesting)
There aren't any signs of a recession.
Housing is becoming more and more unaffordable. More and more people have no job security (relying on "gig" jobs). The government is a partisan mess and is trying to put people who have no clue what they are doing (or even worse, know exactly what they are doing and why they are doing it) in charge of things that have a direct, negative impact on the country and economy. Healthcare and education is becoming more and more unaffordable, driving higher and higher debt. Fewer people are entering the middle class and at a later age than in previous generations. Plus recessions tend to happen every 5-10 years, so we are coming due anyway.
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Housing costs are up in some markets due to the return to normal interest rates thanks to the thriving economy and very low unemployment rate.
The gig economy is tiny, [theatlantic.com] not a factor at all.
I agree with you about government partisanship, it's always been a mess although it seems to have gotten worse over the last 25 years. But read up on some of the things that happened during the first 50 years of USA history - how about the Vice President shooting one of his political rivals? [wikipedia.org]
Of course there will be a recess
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Housing costs are up in some markets due to the return to normal interest rates thanks to the thriving economy and very low unemployment rate.
The problem isn't that so much as they aren't builing entry-level housing anymore. Where I live(where I bought my home 4 years ago for less than $200k) the cheapest a new build is going for now is $350k for a townhome. And I am on the outer edge of a major metro area, a good 30-40 minutes outside the city limits.
But read up on some of the things that happened during the first 50 years of USA history - how about the Vice President shooting one of his political rivals? [wikipedia.org]
History degree holder here (I know, queue the usual Slashdot derision for liberal arts majors-to make it worse I even have a polisci graduate degree!). I'd much rather go back to how we u
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Housing costs are up in some markets due to the return to normal interest rates thanks to the thriving economy and very low unemployment rate.
Inflation means bad things for wage earners, because the minimum wage hasn't kept up with inflation in decades, and because all wages are related to the minimum wage.
The unemployment rate is low because it doesn't account for people who are underemployed, that is, they are working one or more jobs and still can't pay all their bills, so they are simply going further and further into debt in order to survive. It also doesn't account for people who have given up looking for full-time employment, or people who
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Housing is becoming more and more unaffordable. More and more people have no job security (relying on "gig" jobs).
Maybe where you live. The rest of the country is experiencing the best jobs market in half a century and new housing projects all over the place. Move out of your shitty echo chamber of a community and see how great things really are.
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Housing is becoming more and more unaffordable. More and more people have no job security (relying on "gig" jobs).
Maybe where you live. The rest of the country is experiencing the best jobs market in half a century and new housing projects all over the place. Move out of your shitty echo chamber of a community and see how great things really are.
My wife and I both have good jobs and live in a nice, affordable house. Any new construction around us now starts at 350k, existing houses (comparable to ours) sell for about 230k+. At 32, I'm lucky to only have about 25k in student loans to pay off. Back in 2015 my town was ranked as the #50 best place to live nationally, so it's not a crappy shithole. If my wife and I were a few years younger, all we'd be able to afford right now is an apartment, probably paying in rent about what we pay in mortgage.
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If it isn't obvious, we are starting to see signs of a recession coming our way.
Such as? Its the best jobs market in 50+ years. The only people bitching about recession are in Silly-Con Valley because all their vaporware is being exposed as bullshit. No self driving cars, no AI, Machine Learning is turning out to be nothing more than really complex and shitty pattern matching. They are nothing but advertisers selling people to other advertisers.
The rest of the economy is fucking stellar and couldn't give a shit less about Facebook, Amazon, Google and Apple.
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Amazon does more retail sales than all other competitors combined
E-commerce retail perhaps, but Walmart's total retail sales are almost double Amazon's total.
Also in the letter. (Score:3, Insightful)
The news I found more intersting from this letter was this part:
"Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage. Do it! "
Of course he's going to call for his competitors to do the same. AMZN just raised their expenses, giving competitors an advantage. By calling for them to do the same, he calls for them to raise their own expenses.... it brings the playing field back to where it was, removing any advantage that may have come from the difference. Not so altruistic as Bezos would like it to sound!
quality merchandise problems catching up with them (Score:1)
I have deliberately not purchased some stuff from Amazon in the last year because I've been burned with previous sales in getting defective/bad quality merchandise. Easier to go to a local store where I can actually see and examine the item I want before I pay for it. Amazon has a quality problem in my eyes. Perhaps I am not alone.
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You are not alone. Quality is going down the drain.
I've been an Amazon customer for 20 years. Last year was the *first* time I ever returned anything. I ordered a wooden chess board. It _arrived_ with a corner damaged despite being in cardboard/foam!? Returned it, bought another one. It ALSO arrived damaged. WTF?! I don't dare take my chances a third time. Plus I can't find a comparable board. (Even tried dedicated chess shops but they don't have anything close to what I want in features, aesthetics, and p
Watch customers leave if they raise prices (Score:2)
None of the stuff for sale on amazon is essential (Score:2)
Or only a very, very low one-figure percentage of it.
The rest is people trying to put meaning into their empty lives by buying stuff they don't need from money they often don't have (or should have contributed to self-growth like reading a book or exercising - or make a contribution to their retirement fund).
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How much is books in terms of turnaround and profit at amazon these days anyway?
I'd say, the people who buy books are the least problem....
Companies can't grow forever? (Score:2)
At some point you run out of people wanting to buy your stuff so growth slows. Is this really a surprise? Either try something new or enjoy the profits and keep sailing forward.
If this was Google.... (Score:3)
Growth leveling off? If Amazon Retail was a Google product, they would discontinue it and boot off all the users 12 months from now.
predator–prey growth perspective (Score:2)
It's entirely possible for exponential growth to slow while your linear growth accelerates.
From the perspective of the whale, you might want to use the former; from the perspective of what the whale is swallowing, you might want to use the latter.
Comment removed (Score:3)
Why do economists thing the world is flat? (Score:2)
Growth slowing or sales decling? (Score:1)
With the recent large increase of lay-offs recently and lots of banks having trouble lately like "Well Fargo" it kinda looks like a recession is starting or is already here. If retail stores are closing down and Amazon/Ebay isn't responsible then people just aren't buying stuff.
https://www.axios.com/us-q1-la... [axios.com]
800 pound gorilla with muscle growth problems (Score:2)
Please send ads with Protein products to Bezos@amazon.com
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And all that radiation in space won't hurt you. Duh gubmint sez so. Bwahahaha
AE911Truth Org
Ok Timmy, pay attention to the teacher up front and quit shit-posting on Slashdot. She will catch you and make you stand in the corner!
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The other thing to mention is, if Amazon would stop ripping things down, we would be selling more and therefore making them more money.
One last parting thought We used to have a considerable amount of orders going to customers in the US military. But, our On-Time Delivery performance metric on Amazon started to suffer. Any poor metrics can result in losing sales (due to buybox being unobtainable). The reason the On-Time Delivery metric suffered is because th