[mikeash]

Why don’t you do that now? Amazon takes in billions in profit, meaning that their prices are substantially higher than they could be. Why aren’t you (or some other competitor) taking advantage of this?

It’s funny how this sort of argument never comes up in the context of taking profits.

[blackoil]

Amazon profit from non AWS biz is in small billions and less, while it may be large in absolute, it is not high as percentage of revenue or by employee. Only way to beat Amazon in profit is have ridiculously high efficiency which is very difficult, or have a different business model which is normally a niche and will not be amazon scale.

[harryh]

Competitors do take advantage of this! There is vicious price competition for most of the kinds of goods that amazon ships from its warehouses. This competition has pushed profit margins into the single digits (probably low single digits). There's really not any room for prices to fall further with given technology.

Retail is BRUTALLY competitive.

[mikeash]

And yet some retailers make tons of profit. If it were so easy to swoop in and defeat the top dog with lower prices, how is Amazon still dominating?

[harryh]

As I said before: "This competition has pushed profit margins into the single digits"

This is not tons of profit. Your assertion is incorrect.

[mikeash]

It’s more than enough to pay their warehouse workers substantially better without making any changes to their prices.

[harryh]

I do not believe that this is true.

Again, profit margins for this sort of work are tiny. Adding significant wage costs would almost certainly consume a huge percentage of profits at which point the suppliers of capital will invest their money elsewhere.

If you are going to make such a strong claim, you probably need to back it up with data.

[mikeash]

Google Amazon profit ($11 billion and change last year), workforce size (650,000ish) and divide. That gives you a lower bound for the worst case where all Amazon employees are warehouse workers.