[firebones]

How expensive are these bets, in reality? To me, they seem like long options. Minimal downside, but huge potential upside as they learn from each mistake and gradually improve and create more exposure to the potential of a hit.

But in reality, it's not the hits that Amazon counts on--it's the recurring revenue of Prime and Unlimited subscriptions and loyalty around lots and lots of low-margin purchases. To keep those memberships coming, you don't need to be a hit machine--you just need to keep offering incremental useful value, mediocre as it may be alone, to add value to the subscription.

I think that's the angle. It's not that Costco hot dogs are the best hot dogs in the industry for $1.50 (or $4.99 rotisserie chickens, or car buying services, etc.), it's just that these items add enough value to enough peoples' Costco experience that they renew memberships and spend a lot of cash on low-margin stuff.