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bcp2011

bcp2011
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  • Amazon Missed On All 5 Key Metrics: Business Model In Jeopardy While Analysts And Investors Are Pleased [View article]
    Tim, I'm not sure it's reasonable to assume that a high percentage of 3P sales also utilize FBA. My personal experience on the site suggests that most of the 3P products do not have FBA options. Nevertheless, my experience is just anecdotal but it does contradict your assumption. Furthermore, just because fullfilment expenses are increasing at a rate that's close to Worldwide Paid Units growth rate does prove that a high percentage of 3P sales use FBA. They are building a lot of fulfillment centers and those centers cost a lot of money to run. Since they are probably not up to target run-rate the increase in fulfillment costs may have nothing to do with Worldwide Paid Units growth. I'm not saying you are incorrect. In fact you may be. However, correlation isn't causation and you're relying on correlation to make a causation argument.

    On the point of ASP -- maybe I wasn't clear before. When ASP **AND** volume are decreasing, that's a problem when costs are fixed. When volume is growing, the math on ASP is whether the incremental sale contributes to incremental profit. In this instance, volume is growing and so is profit, so ASP is largely irrelevant.
    Feb 5, 2013. 01:03 PM | Likes Like |Link to Comment
  • Amazon Missed On All 5 Key Metrics: Business Model In Jeopardy While Analysts And Investors Are Pleased [View article]
    I think your analysis shows a lack of understanding of the 1P/3P dynamics. If you take the relevant figures from the call (32% worldwide paid unit growth, 40% 3P paid unit growth, 36% Q4 2011 3P unit share, and 39% Q4 2012 unit share), you'll see that 1P unit growth was ~26-27%. Is that higher then revenue growth? Yes, but the delta is not nearly as dramatic as your analysis indicates on the surface.

    But let's step back and think for a second. Is an ASP calculation relevant for a company that's growing at this rate? I would argue that we lack true insights into the components of that figure to have a good understanding of where the business is going. It could be a mix issue or a pricing issue, and we have no clue on what categories are contributing for the decline. Further, the whole business model of AMZN is to lower prices over time. I bet that if you go back and look at the ASP trends of WMT from the 80s you would find that their ASP was dropping too!

    I have no position in the stock so this doesn't affect me whatsoever. But it seems a little premature to bet hard earned money on a few metrics that may be marginally useful at best.
    Jan 31, 2013. 03:26 PM | Likes Like |Link to Comment
  • Amazon Missed On All 5 Key Metrics: Business Model In Jeopardy While Analysts And Investors Are Pleased [View article]
    Tim, I think your analysis shows a lack of understanding of the 1P/3P dynamics. If you take the relevant figures from the call (32% worldwide paid unit growth, 40% 3P paid unit growth, 36% Q4 2011 3P unit share, and 39% Q4 2012 unit share), you'll see that 1P unit growth was ~26-27%. Is that higher then revenue growth? Yes, but the delta is not nearly as dramatic as your analysis indicates on the surface.

    But let's step back and think for a second. Is an ASP calculation relevant for a company that's growing at this rate? I would argue that we lack true insights into the components of that figure to have a good understanding of where the business is going. It could be a mix issue or a pricing issue, and we have no clue on what categories are contributing for the decline. Further, the whole business model of AMZN is to lower prices over time. I bet that if you go back and look at the ASP trends of WMT from the 80s you would find that their ASP was dropping too!

    I have no position in the stock so this doesn't affect me whatsoever. But let's not bet hard earned money on a few metrics that may be marginally useful at best.
    Jan 31, 2013. 03:26 PM | Likes Like |Link to Comment
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