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0 pointsim3w1l4y ago0 comments

Can you explain why operating income is better and why you are bringing up walmart?

0 comments

It's gives a better understanding of what's the bottom line after expenses.

You could have a ton of revenue, Walmart for example, but if you have razor thin margins that revenue won't necessarily translate into giant piles of money in the bank, which in the end is what most businesses are after.

dekhn4y ago

I think Amazon was different from Apple and Google in that on the way up, they intentionally managed their cash flows to sort of keep their margins small (always investing extra cash into growth). Walmart is that, but to an extreme. They could sort of just make money on the interest of their cash flow (I'm not an economist or accountant, so that is probably not true)

lotsofpulp4y ago

If Walmart could be making more money on interest from their cash flow, they would be already be making more money. It is not a novel or difficult idea.

The profit margins of the business of retail is not in the MAMAA league. Being a retail middleman is simply not as profitable as what the tech companies can do because they can scale at extremely low marginal costs, and barrier to entry is very high.

Amazon’s value lies in AWS and prime video/music/logistics/platform, not the part where you buy something shipped and sold by Amazon.com. Hence why Amazon removed the button to filter searches to only items shipped and sold by amazon, and why Walmart introduced their own version of a platform where they can make money as a platform, rather than a retailer.

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