Thursday, July 24, 2014

Amazon the "retailer of the future"?

Perhaps. But investors might be growing weary of the company losing money each quarter. Amazon's Loss Widens as Bezos Keeps Spending.

Regular readers will know that I'm generally pro-Amazon. However, Amazon must avoid two classic "Internet company" pitfalls moving forward:

1.) The temptation to try to be all things to all people. Brick-and-mortar businesses all realize that they need to define a limited, tightly focused business model and stick to it. Internet companies, by contrast, suffer from a constant temptation to expand into sidelines. 

2.) Pay attention to cash flow: A decade and a half ago, thousands of dotcoms went bankrupt because they believed that the Internet was "special", and therefore, online companies weren't bound by the first need of any viable going concern: to generate a positive cash flow.

Amazon has been around since 1995. That's almost twenty years. It is no longer a "start-up", and it should not behave like one.

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