Ron D. Smith Says Amazon's Success Will Impact Retailers of All Types
Amazon sales up 27% while many other retailers report losses, reports Ron D. Smith.
- Nashville, TN (1888PressRelease) November 21, 2012 - Ron D. Smith, a businessman who has found success in the book, music, and digital media and brand management fields, says it's impossible not to notice the flurry of media attention regarding Amazon's impact on the publishing industry, Just as Wal-Mart has become the go-to place for many shoppers online, Amazon has become an online conglomerate of goods of every type, notes Ron D. Smith.
According to Smith, while Amazon's sales are exceedingly high, the company's profits are down. This has turned a spotlight on the online giant, who seems to be experiencing great success despite its failure to show a profit.
The most recent quarter's $274 million loss has been attributed to the company's investment in daily deals site LivingSocial, which cost the company an estimated $169 million. However, Ron D. Smith points out that the remaining loss was due to Amazon's persistent focus on long-term profitability and market gains.
While Amazon's impossibly low profit margins are great for customers, Ron D. Smith believes that they can't be good for the company. The danger, says Smith, comes in the fact that investors continue to throw large sums of money into the retailer despite its regular losses. This, says Ron D. Smith, is puzzling when evaluating businesses that are struggling to come up with short-term profits to satisfy investors.
As Amazon CFO Thomas Szkutak explained to Bloomberg Businessweek recently, the company's expenses are presently increasing at a faster rate than its profits. This is due to investments in other companies, as well as the company's efforts to compete in the tablet market with its recent Kindle Fire HD. Ron D. Smith notes that the company tends to experience astronomical sales during the Christmas season, as consumers flock to the site to conveniently order gifts.
However, predicts Ron D. Smith, the investors' boundless faith can spell bad news for competitors, which at this point is practically every retailer in the country. The fact that investors agree with Amazon's strategy of showing sales earnings alongside dramatic losses sends a conflicting message to retailers who traditionally have found that profits were essential to success, says Ron D. Smith.
Additionally, Amazon is a fierce competitor of every other retailer, both online and off. Smith points to the one-stop-shop nature of the business, which began as a place to buy books and DVDs and has branched out into every possible sector of the market, including items like refrigerators, a product once thought unreasonable for online shopping. This can pose a challenge to specialty Internet retailers who must choose to either compete or sell their goods through Amazon's portal, points out Ron D. Smith.
A longtime consultant and publishing executive, Ron D. Smith has been part of several media company mergers. He was a pivotal liaison for Broadway Video during its relationship with Blockbuster Music. As the online retail industry continues to evolve, Ron D. Smith will continue to be at the center of the action, both as an observer and a consultant.
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