I discovered something amazing about Amazon.com this morning, while I was watching this interesting presentation on design treasures of Amazon.
Amazon.com makes $19billion every year and have total customer base which is larger than the populations of some countries combined and is known for its excellence in running experiments online based on customer behavior.
While the presentation overall is a great presentation to listen about design techniques, something caught my attention, a slide called Amazon’s ‘Negative Operating Cycle’.
Above explains the fact that why Amazon can sell products like iPod cheaper than most of the other companies including Apple itself.
Secret lies in the fact that Amazon can sell its product faster than BestBuy (for example) and uses the positive cash float to make money. What that means is they can take no-profit on most of their product and can still make money.
Interesting concept, maybe very common in practice n term in retail business, but very interesting to me. What do you feel about this?
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