Amazon Loses Money On Both Prime And Its Entire Direct Retail Business
by Timothy Phillips
According to Moringstar analyst RJ Hottovy, Amazon (AMZN) achieved 9% operating margin in 2012 on its estimated 10 million Prime members. At first brush this sounded ludicrous as Amazon most likely spent well in excess of $200 in shipping expense and video content per Prime subscriber in return for a $79 annual fee on its already margin challenged retail business. After a deeper dive into the numbers, I am convinced that not only did Amazon have a negative operating margin on all of its direct retail business, it had even a greater negative margin on the $1,224 of purchases per Prime member during 2012. read more »
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