2 Huge Data Points that Matter for Amazon Shareholders

Amazon’s (NASDAQ:AMZN) business model is quite fascinating: it is a retailers’ retailer, and an online micropayment-based bookstore. That’s it. Yet, as is well known, the key  problem with retailers is margins. So take a retailer squared and the margin becomes a problemsquared. And the one problem with online bookstores is that they compete dollar for dollar with Apple’s (NASDAQ:AAPL) ap store, so one must constantly spend for “innovation”, if not actually innovate.

Which explains the only two truly relevant charts from the AMZN earnings release: their operating income profit, and their R&D spend. One, to confirm that you can remove the retailer from the retailer, but you can never remove the margins; and the no matter how hard you try, you will always have to compete with Apple (NASDAQ:AAPL), and spend accordingly. And we throw in one bonus chart for good measure.

EBIT margin:

R&D Spending:

And lest someone confuses that R&D spending implies efficiency, sorry to disappoint:

Tyler Durden is the author of Zero Hedge.

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