Macy's Operating Margin:
~6% Amazon's Operating Margin:
~2% We all know that Amazon is perfectly comfortable trading profitability for growing market share. Factors driving this profitability down include a persistence to maintain their image as the low price leader and rising logistics costs.
I firmly believe Amazon wants to keep prices as close to in-store retail as possible, b/c at some point, they have two things to make this profit back:
1) Retail Presence/Distribution Centers similar to Walmarts scale which is having a location within 10 miles of 90% of the US Population. (Delivery from Whole Foods is just the start). See image included in this article.
2) Reduced Logistics costs due to the first point, and automated logistic systems like self-driving cars or dare I say drones...that they own. Sorry USPS and UPS, but I think Amazon has to own the logistics to keep their retail prices down.
I always have to remember it's still day one for Amazon. In day one profit is traded for growth. However, if Amazon is able to achieve the two items above, I believe they will be able to garner better profit and continued growth on day two.
Great article by Steve Dennis with more info: https://lnkd.in/gHbBRPt
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