The Best Thing About Amazon Was Never Going to Last | If shopping on the site feels different now, that’s because it is::If shopping on the site feels different now, that’s because it is.
The Best Thing About Amazon Was Never Going to Last | If shopping on the site feels different now, that’s because it is::If shopping on the site feels different now, that’s because it is.
The difference is who pays the markup. Amazon charges that to the seller, and passes that “discount” to the buyer effectively locking in buyers because nobody else can afford to compete
Yeah. And that’s fine.
Cost is a concept in retail that gets manipulated a lot. In my previous example there is no way the actual “cost” of the USB cable was $2. When you factor in employees, rent, bills, logistics, customer service, etc etc the cable was likely more like $5. Best Buy made have paid $2 for that cable, but the actual cost to sell it, taken as a whole, was more like $5.
That other $3 is essentially what Amazon is making. If you sell on Amazon they build and maintain the website, logistics, warehousing, etc etc. You can create an online store and have exactly 0 employees or logistical infrastructure. Amazon has spent literally billions and billions of dollars building all of that.
Amazon is the mall Best Buy is paying rent too. It’s not a store itself but overhead the store pays.
To use your example if the cost of the cables is $2 and the selling price is $20, Amazon’s rent is $10 of that. Leaving $8 as Best Buy’s profit margin.