Bill Quango wrote about the ongoing decline of some retail brands yesterday and I fully expect this to continue not just as consolidation in an over-extended sector, but also because online will kill shops that are excessively reliant on the highstreet.
Amazon though wins me back over for 2 reasons. The first, which is related to the second, is that they never make any money. In fact Amazon has lost money continuously since its launch. Now the bulls for the stock say yes, but it has all the customers, once it figures it out then profits will be legion. Over a decade and counting on this.
What I see is a new Tiscali, I had once this ultra cheap TV/Broadband/Phone service, it was one third the price of Sky and half of Virgin with a better product. I could sense there was no way this could be profitable. Indeed it wasn't, the firm eventually going in a fire sale to SKY, an unfortunate loss for its, umm, rather shady Sicilian owners.
As a customer though I like to know I am getting a good deal, if a company is selling me things below cost that is great. Amazon is in this bracket because its margins are non-existent, yet the interface and customer experience is very good. What's not to like.
Even better, one day the soaraway stock price is going to come back to earth and boy does it have a long way to fall. I have an eye on it and will be shorting all the way once this begins in earnest - timing is everything as despite the desperate business case Amazon shares are 40% up on the year; but what goes up must come down. I'll miss it when its gone though....
Where else should I be looking though to find value in companies that really do put their customers before their profits?