[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.

[harryh]

Amazon earns a lot of money from quite a few things that have nothing to do with warehouse workers. In particular I have read that half their profits come from AWS. I don't think that is enough data to support your claim.

A better set of numbers to look at might be Walmarts (more of a pure retail company). They make maybe 10B in profit per year (it varies a little) with 2M workers. That's $5,000 per worker which isn't much wiggle room.