Posts Tagged ‘Amazon’

Amazon lifts LivingSocial’s kimono … and, it ain’t pretty.

February 3, 2012

Punch line: Lost $558 million  last year on $245 million revenue. Ouch.

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Excerpted from the Washington Business Journal

Amazon,  which invested in LivingSocial in late 2010, disclosed limited details of the daily deal company’s 2011 performance in its annual report filed with regulators.

Accounting Note

Accounting rules required that Amazon release Living Social’s essential financial data.

As explained in Amazon’s annual report, LivingSocial is recorded using the “equity method of accounting” – a method used when an investment “gives us the ability to exercise significant influence, but not control, over an investee.”

The threshold for that designation typically runs between 20 percent and 50 percent ownership. Amazon owns 31 percent of LivingSocial.

Under that accounting method, Amazon must include some condensed financial information about LivingSocial in its own financial reports

Even though the data was buried far down in Amazon’s annual report, the numbers quickly found their way into the press and produced a flurry of unwanted headlines

Amazon, which owns a little less than a third of the DC-based daily deal company, laid out LivingSocial’s numbers, showing a $558 million loss last year on $245 million revenue, with operating expenses of $686 million.

Daily deals is a manpower-intensive field crowded with competitors. LivingSocial has about 5,000 employees.

LivingSocial’s informally claims that much of that operating loss was incurred earlier in 2011, and narrowed later in the year as the company scaled back marketing expenses.

Also, part of the loss can be attributed to LivingSocial’s acquisition spree, which was paid for through a mix of cash and stock.

Still, the $558 million loss is much more red ink than LivingSocial observers had expected, and much less revenue.

In April, CEO Tim O’Shaughnessy said his company was on track to book $1 billion in revenue in 2011.

Oops.

Now that’s a markdown for you

Thanks to SMH for feeding the lead

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Target flexes muscle to thwart “showrooming” … good luck!

February 1, 2012

TakeAway: Target is flexing its buying power over suppliers to ward off increasing competition from online retailers such as Amazon.

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Excerpt from WSJ: “Showdown Over ‘Showrooming’”

Target is asking suppliers for help in thwarting “showrooming” — that is, when shoppers come into a store to see a product in person, only to buy it from a rival online, frequently at a lower price.

Target suggested that suppliers create special products that would set it apart from competitors and shield it from the price comparisons that have become so easy for shoppers to perform online. Target asked the suppliers to help it match rivals’ prices.

Vendors are likely to have little choice but to play ball with Target because of its clout as the second-largest discount chain.

Some analysts said Target’s new tactics are unlikely to reverse the showrooming trend.

Online-only retailers have significantly lower labor costs and, at least, for the time being don’t collect sales tax in most states.

Amazon can sell products so cheaply because it uses its other profitable units — such as cloud data storage and fees it charges others to sell on its website — to subsidize the rest of its business.

Edited by ARK

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When was the last time you bought something at Best Buy?

January 6, 2012

For that matter, when was the last time you shopped at a Best Buy?

A couple of years ago, the company was brash and made headlines by categorizing its customers as angels or demons … and talking about it publically.

For example, from a Fortune article:

Best Buy concluded that companies are often oblivious to the fact that not all customers are profitable ones. Some are very lucrative to deal with, while others cost more to sell to than the business is worth.

They called the first group angel customers and the second demons.

By catering to the angels, companies can reward customers, employees and shareholders alike.

In short, here’s how it works: Figure out which customers make you the most money, segment them carefully, then realign your stores and empower employees to target those favored shoppers with products and services that will encourage them to spend more and come back often.

Sounds good.

Unless you’re slotted as a demon, in which case you get shunned as profitless instead of being cultivated for your potential.

Even at the time, critics argued that intentionally dissing a bunch of your customers was a bad idea for retailers.  Someday, you may just need those demons to keep you afloat

Well, it seems that those days have come for Best Buy.

A recent Forbes article is titled: “Why Best Buy is going out of business gradually”.

In a nutshell, the author points out that a nimble  Amazon is cleaning Best Buy’s clock, that killer electronic products are few and far between, and that having money tied up in brick & mortar isn’t where you want to be these days.

He forgot to mention the demons … maybe they’re getting their revenge.

Thanks to AY for feeding the lead

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Maybe Amazon (not Google) will control internet…

December 20, 2011

A real “hmmm” graphic from   CPC Strategy

Their take:Amazon has come a long way from *just* being the world’s largest bookseller.

This year alone the company has launched three new products or service offerings that challenge the market dominance of an established player.

CPGS may be onto something …

Amazon v. The World - An Infographic

Thanks to Tags feeding the lead

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