Very interesting post! Another facet of the Amazon business model at that point in time was balance sheet-related. They had negotiated 60 to 90 day payment terms with many of the publishers, but were receiving the customer payment at the time the book was ordered, and they maintained relatively low inventories. Typically businesses that are losing money and investing heavily end up strapped for cash as they receive customer payments some time after they have purchased the products. It is common even for new businesses that are technically turning a profit to run into significant cash flow challenges. Amazon was able to maintain positive cash flow during this time period, and that may also be difficult for other businesses to imitate. https://s2.q4cdn.com/299287126/files/doc_financials/annual/123199_10k.pdf
Yeah, that's a good point. The industry Amazon was disrupting was one of slow turns, and by getting a national audience Amazon was able to execute fairly quick turns in an industry which offered terms for slow turning stores.
Very interesting post! Another facet of the Amazon business model at that point in time was balance sheet-related. They had negotiated 60 to 90 day payment terms with many of the publishers, but were receiving the customer payment at the time the book was ordered, and they maintained relatively low inventories. Typically businesses that are losing money and investing heavily end up strapped for cash as they receive customer payments some time after they have purchased the products. It is common even for new businesses that are technically turning a profit to run into significant cash flow challenges. Amazon was able to maintain positive cash flow during this time period, and that may also be difficult for other businesses to imitate. https://s2.q4cdn.com/299287126/files/doc_financials/annual/123199_10k.pdf
Yeah, that's a good point. The industry Amazon was disrupting was one of slow turns, and by getting a national audience Amazon was able to execute fairly quick turns in an industry which offered terms for slow turning stores.