this post was submitted on 23 Jul 2023
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Explain Like I'm Five
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Amazon does not make any profit from their books. They are able to sell them cheaply because they sell them at a loss. They weren't even profitable for a long time and maintained thanks to investors. Basically, Bezos sold the idea of the future of his store's worth. And it worked.
That hasn’t been true for more than a decade. (Why be in a business you can’t make money on?) Amazon have, for a long time, invested more or less all their profits into new business lines on the promise that they could easily “flip a switch” and start making billions in profits. (They started doing that a few years ago after bad financial results.)
Are you referring specifically to the book sales or the company as a whole?
The idea that Amazon subsidises book prices or generally sells everything at a loss is based on a flawed understanding of the early years of Amazon.