AMZN - Amazon.com Inc.

[fareastwarriors]

Amazon uses data from third-party sellers to develop its own products, WSJ investigation finds

 

https://www.cnbc.com/2020/04/23/wsj-amazon-uses-data-from-third-party-sellers-to-develop-its-own-products.html

 

A Wall Street Journal investigation found that Amazon uses data from third-party sellers to help develop its private-label goods.

 

Among the findings were that some Amazon executives had privileged access to data on individual third-party sellers, which was then used to develop the company’s own products, despite it being in violation of company policy.

 

The findings directly contradict Amazon’s previous messaging around how it uses third-party seller data, including testimony one executive gave to Congress last year.

[Liberty]

Amazon uses data from third-party sellers to develop its own products, WSJ investigation finds

 

https://www.cnbc.com/2020/04/23/wsj-amazon-uses-data-from-third-party-sellers-to-develop-its-own-products.html

 

A Wall Street Journal investigation found that Amazon uses data from third-party sellers to help develop its private-label goods.

 

Among the findings were that some Amazon executives had privileged access to data on individual third-party sellers, which was then used to develop the company’s own products, despite it being in violation of company policy.

 

The findings directly contradict Amazon’s previous messaging around how it uses third-party seller data, including testimony one executive gave to Congress last year.

 

Isn't this what all retailers do to make their store brand stuff? Costco with Kirkland and Walmart with Great Value and so on... They see what sells well and decide what to make their own version of based on that.

[winjitsu]

 

Isn't this what all retailers do to make their store brand stuff? Costco with Kirkland and Walmart with Great Value and so on... They see what sells well and decide what to make their own version of based on that.

 

 

Don't quite think it's 100% the same. Costco will work with a supplier to white-label their product as Kirkland so suppliers can take advantage of two separate price points. OTOH, Amazon sellers themselves are largely white-labelers that work with factories in China and Amazon is seeing what's successful and going directly to these factories to create Amazon Basics.

[johnny]

That sounds a lot like the BS pitch a Costco buyer tells you before he is about to hold you upside down and shake your pockets empty. You get to take advantage of two price points, like you’ve always wanted!!

[winjitsu]

That sounds a lot like the BS pitch a Costco buyer tells you before he is about to hold you upside down and shake your pockets empty. You get to take advantage of two price points, like you’ve always wanted!!

 

Costco holds a ton of cards over suppliers, agree with you there, but the marketing effect is real. There are people that buy Grey Goose, and there are people that buy Kirkland Polish Vodka. Same with buying name brand drugs when a generic is available.

[Liberty]

 

Isn't this what all retailers do to make their store brand stuff? Costco with Kirkland and Walmart with Great Value and so on... They see what sells well and decide what to make their own version of based on that.

 

 

Don't quite think it's 100% the same. Costco will work with a supplier to white-label their product as Kirkland so suppliers can take advantage of two separate price points. OTOH, Amazon sellers themselves are largely white-labelers that work with factories in China and Amazon is seeing what's successful and going directly to these factories to create Amazon Basics.

 

Sounds like the same to me, just done a bit differently because they have different business models. Costco has limited shelf space so they have to pick very carefully for volume and quality. If they didn't have those constraints, I think they'd be doing it differently.

[vinod1]

Reading Bezos annual letter and the sheer amount of essential services being delivered by Amazon, it looks like he is doing more for the country than Trump to get over Covid-19.

 

What an amazing person!

 

Vinod

 

And in February he created a $10bn fund to fight climate change:

 

https://en.wikipedia.org/wiki/Bezos_Earth_Fund

 

Somehow missed this news. Glad to see people like Gates and Bezos taking the lead on the big challenges of the era.

 

Vinod

[Castanza]

Anecdotal story:

 

Since I now have more free time at home I figured I would get a new guitar. Something I could play from the couch (Taylor BT2 Mahogany). Anyways I was originally going to get a Takamine parlor guitar from Guitar Center. I placed this order about a month and a half ago. It was supposed to ship about a week after ordering and take about 2 weeks to get (I could live with the wait). Well I got an email saying it wasn’t going to ship until July! Two weeks after I ordered it. Pulled up a rep online and told them to cancel my order. They said supply chains were severely impaired. I asked if they had something in stock that would ship immediately. I settled on the BT2. Well after another week of waiting the same thing happened again. BT2 ship date changed and what I was told by a rep was in stock apparently vanished....this time it was June.

 

Needless to say, I canceled my order, found it in Amazon 3 days ago and got it delivered yesterday. Currently playing some Neil Young songs.....Amazon is definitely doing something right. Will never order from guitar center again. My wife said I could have just used my other guitar and saved myself the headache  :P

 

[Liberty]

https://blog.aboutamazon.com/policy/amazons-response-to-our-wrongful-inclusion-on-the-notorious-markets-list

[Liberty]

Q1: https://s2.q4cdn.com/299287126/files/doc_financials/2020/Q1/Amazon-Q1-2020-Earnings-Release.pdf

[valueinvestor]

https://www.cnbc.com/2020/06/16/amazon-media-assets-worth-500-billion-almost-as-much-as-aws-needham.html

 

I own Amazon and not Netflix, but even I know Netflix is not the same as Amazon TV. Sure twitch is growing sporadically, but comparing AmazonTV to Netflix, where they have to make continual investments to catch up with Netflix and ascribing the same multiple is ludicrous. There's a reason why Netflix is valued higher, as it's almost a monopolistic, a pure-play streaming company that is much better at leveraging data than any other streaming company, and heavily under-monetized. I don't know their endgame with all this, but they are certainly leading the charge, imho.

 

 

[rkbabang]

https://www.cnbc.com/2020/06/16/amazon-media-assets-worth-500-billion-almost-as-much-as-aws-needham.html

 

I own Amazon and not Netflix, but even I know Netflix is not the same as Amazon TV. Sure twitch is growing sporadically, but comparing AmazonTV to Netflix, where they have to make continual investments to catch up with Netflix and ascribing the same multiple is ludicrous. There's a reason why Netflix is valued higher, as it's almost a monopolistic, a pure-play streaming company that is much better at leveraging data than any other streaming company, and heavily under-monetized. I don't know their endgame with all this, but they are certainly leading the charge, imho.

 

I agree.  If I had to pay extra for Amazon Prime TV over the price of Prime I wouldn't subscribe.  It is a nice perk for prime members, but it isn't Netflix.

 

[glorysk87]

https://www.cnbc.com/2020/06/16/amazon-media-assets-worth-500-billion-almost-as-much-as-aws-needham.html

 

I own Amazon and not Netflix, but even I know Netflix is not the same as Amazon TV. Sure twitch is growing sporadically, but comparing AmazonTV to Netflix, where they have to make continual investments to catch up with Netflix and ascribing the same multiple is ludicrous. There's a reason why Netflix is valued higher, as it's almost a monopolistic, a pure-play streaming company that is much better at leveraging data than any other streaming company, and heavily under-monetized. I don't know their endgame with all this, but they are certainly leading the charge, imho.

 

Methinks you don't know the definition of monopoly. Netflix is very very very far from a monopoly.

[villainx]

https://www.cnbc.com/2020/06/16/amazon-media-assets-worth-500-billion-almost-as-much-as-aws-needham.html

 

I own Amazon and not Netflix, but even I know Netflix is not the same as Amazon TV. Sure twitch is growing sporadically, but comparing AmazonTV to Netflix, where they have to make continual investments to catch up with Netflix and ascribing the same multiple is ludicrous. There's a reason why Netflix is valued higher, as it's almost a monopolistic, a pure-play streaming company that is much better at leveraging data than any other streaming company, and heavily under-monetized. I don't know their endgame with all this, but they are certainly leading the charge, imho.

 

I agree.  If I had to pay extra for Amazon Prime TV over the price of Prime I wouldn't subscribe.  It is a nice perk for prime members, but it isn't Netflix.

 

It makes Prime price increases easier to accept though?

[valueinvestor]

https://www.cnbc.com/2020/06/16/amazon-media-assets-worth-500-billion-almost-as-much-as-aws-needham.html

 

I own Amazon and not Netflix, but even I know Netflix is not the same as Amazon TV. Sure twitch is growing sporadically, but comparing AmazonTV to Netflix, where they have to make continual investments to catch up with Netflix and ascribing the same multiple is ludicrous. There's a reason why Netflix is valued higher, as it's almost a monopolistic, a pure-play streaming company that is much better at leveraging data than any other streaming company, and heavily under-monetized. I don't know their endgame with all this, but they are certainly leading the charge, imho.

 

Methinks you don't know the definition of monopoly. Netflix is very very very far from a monopoly.

 

True - I used the wrong term.

[valueinvestor]

There are certain nuances that one needs to consider, if I had to bet on Amazon Prime TV vs Netflix, it will always be Netflix.

 

Netflix had a multi-year head start and passed the Growth CAPEX required to create a moat. Although they are far from a monopoly in a traditional sense, they are definitely dominant. In order to reach Netflix depth of data know-how, competitors will have to spend $$$ and time to reach that level. Unless there's a major pivot on how data dictate how content is produced, marketed, and delivered, then I do not see how they will catch up. Unless we have a Sam Walton of Netflix in our midst and gunning for them through sheer cost efficiency, but that's not going to happen with Amazon, Disney, etc. Another concern is if they have a string a flops because of data dictating content, such as Bright, but I've heard that was not actually a flop from an ROI perespective. Again not invested in the name, but the core argument is to slap a $500 Billion Dollar Valuation on Amazon Prime TV using Netflix as a comp is similar to comping Tim Horton's with Starbucks.

[KJP]

 

Netflix had a multi-year head start and passed the Growth CAPEX required to create a moat.

 

How do you know this to be true?  At what point was a "moat" created and how do you know?  [Not saying you are wrong, just curious what specific facts have led you to these conclusions.]

 

In order to reach Netflix depth of data know-how, competitors will have to spend $$$ and time to reach that level.

 

I'm assume you're not an insider with access to Netflix proprietary data.  So, as an outsider, how do you know the extent of Netflix's data know-how and its real value?  I understand the hypothesis about why Netflix have built-up a big data know-how advantage, but what are the metrics you look at to determine the actual strength of this in the real world?

[gfp]

Enjoyed reading page one of this thread this morning.  2012.  100 Billion dollar market cap.  Fascinating stuff

[Spekulatius]

There are certain nuances that one needs to consider, if I had to bet on Amazon Prime TV vs Netflix, it will always be Netflix.

 

Netflix had a multi-year head start and passed the Growth CAPEX required to create a moat. Although they are far from a monopoly in a traditional sense, they are definitely dominant. In order to reach Netflix depth of data know-how, competitors will have to spend $$$ and time to reach that level. Unless there's a major pivot on how data dictate how content is produced, marketed, and delivered, then I do not see how they will catch up. Unless we have a Sam Walton of Netflix in our midst and gunning for them through sheer cost efficiency, but that's not going to happen with Amazon, Disney, etc. Another concern is if they have a string a flops because of data dictating content, such as Bright, but I've heard that was not actually a flop from an ROI perespective. Again not invested in the name, but the core argument is to slap a $500 Billion Dollar Valuation on Amazon Prime TV using Netflix as a comp is similar to comping Tim Horton's with Starbucks.

 

Prime is a legit contender, but it’s not Netflix. It could easily see Amazon adding a subscription offering for a few $/ month as they keep adding content. Right now, it is a supplementary service just like Amazon music (which I also use as a prime subscriber ) rather than a viable standalone offering.

[Xerxes]

TV Prime was really there to add to the stickiness of Prime membership.

I don’t think Netflix based comparison are valid to build up a sum of the parts for AMZN. That said we got Lord of the Ring series coming to TV Prime so we never know if they ll price it differently. I just see it as a huge turnoff if they do that. They are better off raising Prime subscription (post-pandemic) as they did few years ago. People will pay higher prime sub fee but will complaint if TV Prime would have a different pricing structure as it will feed their narrative of Bezos = Evil. Which by the way is the cover of this week The Economist.

 

That said one can value Disney break up value using Netflix multiple for its D+ 

 

Media space is a growing expanding pie. Not zero sum game I think. In that space Netflix, Disney+ and Prime will be the winners. The rest won’t matter.

 

 

Amazon future is to continue to get ad revenues and monetize its massive customer base. That is the third pillar behind e commerce and clouds. Somewhere in the future is their for-rent Cashless Go technology and whatever else they are cooking.

 

Folks often talk about Alphabet being the Berkshire of technology. I think that is Amazon. Not Alphabet and definitely not SoftBank. 

[D33pV4lue]

 

Media space is a growing expanding pie. Not zero sum game I think. In that space Netflix, Disney+ and Prime will be the winners. The rest won’t matter.

 

 

I think it is WAY to earlier to start declaring winners of the streaming wars. I think Disney + will do well because it serves a niche that may be overlooked by other players. Personally I hate Prime Video. Do I use it? Yes, but I hate how in between videos I can watch they throw in rent or buy options or shows on HBO and other sites that I need to sign up for. The User Interface is clunky and its suggestion algo IMO is terrible. That being said if you have a movie in mind that you want to rent/buy Amazon is awesome. I've been slowly building my collection of movies. Netflix is great but what is going to happen when competition for shows heats up. Streaming could become commoditized switching between Netflix, Hulu, Apple TV, and HBO depending on which shows are out and that is what scares me the most about all of these platforms.

[valueinvestor]

Amazon future is to continue to get ad revenues and monetize its massive customer base. That is the third pillar behind e commerce and clouds. Somewhere in the future is their for-rent Cashless Go technology and whatever else they are cooking.

 

Folks often talk about Alphabet being the Berkshire of technology. I think that is Amazon. Not Alphabet and definitely not SoftBank.

 

+1

[Xerxes]

 

Media space is a growing expanding pie. Not zero sum game I think. In that space Netflix, Disney+ and Prime will be the winners. The rest won’t matter.

 

 

I think it is WAY to earlier to start declaring winners of the streaming wars.

 

Agreed on WAY to early part, but i just don't see it as a "streaming wars" as everybody else like to call it, to me that implies a zero-sum game, which is not.

In my view, the three that i mentioned (and specifically D+ + Netflix) would just expand faster than the rest of them as the market naturally expands from linear TV to digital.

 

On Amazon's side, Prime TV is just there to add stickiness to the Amazon flywheel. There is a lot of marketing lesson in not confusing the customer with different pricing structures, and types of membership. i believe Amazon will do its best to stick to one pricing structure for Prime. but i could be wrong.

 

 

 

[D33pV4lue]

I don't think the end will be zero sum, but the road there will be rocky. You are right in that Prime video for amazon is more of an additional benefit than anything else, but I'm sure they are not complacent about Prime Video. Between Disney +, Netflix, HBO, Showtime, Apple TV, Youtube TV, Hulu, and Prime they are all going to be competing to get the top shows/movies. Traditional media companies are going to want their movies/shows on their own platform, not Netflix and there will be intense competition until the herd is shaken out. IDK maybe I'm too pessimistic I just don't see enough room for them all.

[Liberty]

Q2: https://ir.aboutamazon.com/files/doc_financials/2020/q2/Q2-2020-Amazon-Earnings-Release.pdf

 

Operating cash flow increased 42% to $51.2 billion for the trailing twelve months, compared with $36.0 billion for

the trailing twelve months ended June 30, 2019.

• Free cash flow increased to $31.9 billion for the trailing twelve months, compared with $25.0 billion for the trailing

twelve months ended June 30, 2019.

• Free cash flow less principal repayments of finance leases and financing obligations increased to $21.3 billion for

the trailing twelve months, compared with $16.1 billion for the trailing twelve months ended June 30, 2019.

• Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing

obligations increased to $19.4 billion for the trailing twelve months, compared with $13.0 billion for the trailing

twelve months ended June 30, 2019.

• Common shares outstanding plus shares underlying stock-based awards totaled 517 million on June 30, 2020,

compared with 510 million one year ago.

• Net sales increased 40% to $88.9 billion in the second quarter, compared with $63.4 billion in second quarter 2019.

Excluding the $582 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the

quarter, net sales increased 41% compared with second quarter 2019.

• Operating income increased to $5.8 billion in the second quarter, compared with operating income of $3.1 billion in

second quarter 2019.

• Net income increased to $5.2 billion in the second quarter, or $10.30 per diluted share, compared with net income of

$2.6 billion, or $5.22 per diluted share, in second quarter 2019.