Predatory Pricing

Jeff Bezos' Amazon is beginning to look a lot like the evil trusts of over a hundred years ago. This company has only been around for 23 years ... yet during this period it has earned virtually no profits from its Internet merchandising business, but it sales growth there has been phenomenal. In fact, if one subtracts out its Prime subscription payments, it actually has been selling on average goods below its cost (one definition of predatory pricing, a key element of a monopoly.)  Instead, it has been on a manic march toward capturing market share ... first in books and then spreading out into most every facet of goods that can be shipped.

Amazon's prices have been brutally competitive which, when combined with very efficient and well-managed logistics has created a very favorable customer experience ... and thus very impressive revenue growth, funded by a very liquid stock market ... which has been enamored by the revenue growth ... and unconcerned by lack of profits. (Actually, Amazon has generated some modest profits from its separate computer cloud business.)

The result? Devastation in the retail book selling business ... and now metastasis of this cancer into almost the entire bricks and mortar retail world. If Amazon keeps on its present path, more and more retail sectors will succumb to this predatory business model. The question, at least to me, is, has Amazon stepped over the line into illegal monopolistic practises?

This is a difficult question ... particularly since Amazon has a very loyal customer base ... people who might vote against any politician who tried to take corrective legal actions n against them. So what to do? Can we, as a country wait until some other more superior business model is invented to take down Amazon ... like Amazon's model is undercutting our previous retail near monopoly, Walmart? Unfortunately, a superior business model is not at all obvious.

However, if my careful-shopper wife is correct and Amazon has been quietly raising prices on most of its offerings, then it might be setting things up for some customer unrest ... since convenience can be achieved with other Internet shopping venues, say Ali Baba? And, if Amazon is planning to turn its Internet retail operation into a cash cow, I am certain that Bezos has his eye on another market he would like to monopolize with these expanding retail margins ... see: Bloomberg Chart/Article

My guess -- ground and air shipping (UPS, FedEx)? That is, unless President Trump, like Teddy Roosevelt once did with the trusts, decides to step on Bezos' expansionist empire. And it doesn't help Bezos' cause to keep attacking Trump with his personal megaphone, the Washington Post.